Selling Investments

IT isn’t as easy for an individual investor to buy a bond as you might think. Nor is it as easy for him to buy a share of stock as it is to buy a wedding ring. In fact, the sales rigmarole of our various Wall, Congress, La Salle, and Montgomery Streets is rather complicated as far as individual investors are concerned.

The bond business is no doubt much over-sold; that is, there is too much selling. At times there are too many bonds to be sold, and not enough salesmen; again, there seem to be more salesmen than bonds. Taking it by and large, with the supply of bonds as intermittent as it is, there are more salesmen than a fair average of sales volume requires. This causes a great deal of trading and switching back and forth, and a good deal of unsettlement among investors, which only adds a certain gaiety to life in the daily stirring up of the investment waters. Of course, in the stirring some investors make a little money, and so do the bond men, while the investors buy into anxiety and uncertainty over the re-investment of their funds.

There is too much selling on the part of bond houses; not enough buying on the part of investors. As in the life insurance business, the initiative in bond selling rests with the salesmen. Nobody walks into a life insurance company’s office and says: “Please, I want to look at some life insurance.” No, indeed. That body waits until the life insurance man comes around, as come he will, and the bond salesman comes with just about the same inevitability.

It would be a great deal better if more investorswould so manœuvre their buying as to get the initiative on their side more frequently. That means working at their investment-making, as they work at their gardens, and paying more attention to seasoned securities than to new and freakish varieties. That would include a movement of investors into bond houses for consultation and buying personally at headquarters. In many bond houses one hardly sees a customer all day long. A large business is being done notwithstanding appearances to the contrary, for a stream of business comes and goes by telegraph and telephone. Many houses are much better geared up to this sort of business than any other. On the other hand, some houses receive many personal calls. As customers take the initiative more frequently, this phase of selling will become much more appreciated and houses will prepare for it, to the betterment of sales conditions all around. “Personally conducted” business will increase in bond houses; the “drumming” of business in the hinterland will decrease. This will be aided also by an intelligent increase of “buying by mail.” Investors who do not go to bond houses for personal conferences, will write to their bankers, and they, placing more reliance on their correspondence work and doing it better than they do now, will develop an additional source of business at less expense.

The barriers against buying stocks are much more difficult, and inherently so. Your “Member New, York Stock Exchange” can’t deal with all and sundry. You must be introduced. The house must have a very good idea of how much capital there is back of your desires marketwise. The bond house can deal with 95% of everybody as long as those every bodies always have good money back of their checks, but stock houses must be much more strict. Some of them, for instance, won’t accept women at all as customers, although they constitute a good share of bond house customers.

This magazine’s financial advertisements are intended to bring about profitable relationships between bankers and investors, introducing the one to the other.

No. 4 in this series will be “Investors and their Investments”