It promotes economic growth and contributes to a nation's wealth. When people deposit money in a savings account in a bank, take for an example, the bank may invest by loaning the funds to various business companies or to the borrower.
This experience is in line with the often observed diversity of expert opinion and has led the author of this article to discount much of the so called research that investment experts boasts about.
It is much of the statistical and field research that there are times that they will convinced clients very hard to deal in which, it does not lead to good results and it is very clear that thinking in essentials and broad mindedness appear to be more practical investment tools.
They must expect the companies in which they have invested the money to stay in business; enjoy a trend of profits at least a bit better than average; employ any additional capital with adequate profit; they must continue in order to attract favorable investment attention, to which should be added, they must pay more than a fair price for the stock.
It is possible for the earnings per share of common stock even to grow and it also hides an underlying unfavorable trend. There are several things that could happen when it talks about investment.
Any earnings, no matter how small, that arise from the investment of retained funds will be added to the earnings on the prior capital, and thus a rise in earnings will be reported.
Investors are likely to look with a jaundiced eye at ventures which must retain a large part of their earnings not to expand the business although merely to stay in business or to maintain competitive ability.
In this connection, the leverage factor which is the quality of earnings is also involved.
It will cause anxiety instead of allaying it. They will look upon the determination of the productivity of additional capital for the investors, as the owner, as a way of unpleasant surprises and an assurance that they are aware of the basic facts of life of their respective companies.
This is their nature that they should satisfy the facts and figures that will urge them to invest. For most investors, however the types of statistical data outlined in this part of article will be sufficient. At least they exemplify the fundamental statistical concepts which are required for choosing individual issues whether they are alone in decision-making or a participant.
Gart, Alan The Insider's Guide to the Financial Services Revolution. Mc Graw, 1984.
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