INTRODUCTION

This is a book about investment companies, not a book about investment. Nevertheless, I shall condense one man’s experi ence in this chapter and set forth some considerations on investment that I have developed out of many years of observa tion, activity, and reading. Understanding something about the nature of investment can help the investor who makes his own decisions about buying and selling individual securities. It can also help the investor who buys investment company shares, for greater understanding of investment problems will help him appraise the performance of his company. A restatement may even be useful to managers of investment funds themselves.

INVESTMENT INVOLVES RISK

Risk is inherent in the environment (social, political, eco nomic and natural) in which we live. Holding cash entails some risk. Using funds to produce income or increase their monetary value also entails risk. How much risk he is likely to run, the investor must learn to assess (it is presumed that he knows how much risk he is willing to run). And in spite of all that is known and has been written, the degree of risk cannot be precisely or scientifically measured. Certified Financial Planner - Read More.