Page:Hints About Investments (1926).pdf/49

 date ahead. But steadiness of income is the first and last consideration, and to the continuous investor who is saving and investing periodically, a fall in the prices of well-secured stocks enables him to invest to greater advantage. If the stocks that he has chosen fall for some special reason that has made them less safe, that will be a reason for getting out of them, but if the fall only reflects a rise in the general rate of interest and affects all high-class investments alike and is not significant of any weakening in real security, it is an accident that may be ignored by the genuine investor who is first concerned to provide himself with an income that he may feel sure of receiving.

There is, however, a school of investment doctrine which tells us that we ought to watch the fluctuations in the rate of interest and anticipate them, and make a profit from them by changing over from long-dated or perpetual securities to those which are due for redemption at an early date, and back again; and the possibility of engaging in this interesting system may appeal to some investors.

The idea, as far as I understand it, is something like this. Changes in the rate of interest on investments—that is in their yield to the investor at current prices—are due in normal times chiefly to the quickening or slackening of