Imagination--an Investment Asset

IMAGINATION is not a detriment but an asset to the modern investor. The proper use of this quality means tremendous profits. Provided adequate precautions are observed, its use is attended by little if any danger, and the returns may be extraordinary.

Business, industry, commerce, and trade arc in a state of flux. Drastic and fundamental changes are being made daily. By-products are becoming major interests. Major products are being abandoned entirely. Plants but a few brief months ago deemed up-to-date and efficient are being scrapped for new equipment. More significant than all, the United States Patent Office is almost swamped with new inventions and processes.

Dissemination of facts about these developments cannot keep up with the developments themselves. They can only be measured by active and balanced imagination. It would be improper to call this imagination foresight. No foresight could have measured the developments of the automobile industry, radio, the talkies, refrigeration, or a score of other lines of endeavor. Neither could it have forecast the decline of coal as a fuel, the precarious situation of the sugar industry, or the drop in metal mining. Imagination could and did accomplish those things, however.

It is not necessary to pioneer in imagination. In investment it is sufficient to be able to follow a blazed trail before it becomes a main traveled road. For example, anyone with imagination and foresight knows that television is just around the corner and that it has tremendous commercial possibilities. This is cited merely for purposes of illustration. The writer holds no brief for any individual company or industry whatever.

Investment in the guarded securities of companies developing that new industry before it arrives is not speculation, for its coming is certain, according to the bright light of imagination. It may be long-range investment, but at least it is investment if the companies are adequately financed, strongly backed, and well run.

Pipe lines are going concerns. They have been profitable for scores of years in transportation of oil and gas. There is no uncertainty about their operation. The trail building has been done, but it is only now that imagination has shown their infinite possibilities ns carriers. It is not necessary to stretch the imagination to see that sooner or later, and probably sooner, these lines will be used to transport anything that can he ‘poured.’ Powdered coal, wheal, corn, and other grains, liquefied gases, volatilized liquids, and liquids and gases in their natural form, will shoot through these channels of transportation, leaving revenue for the investor in their wake.

Imagination will show as truly as a compass needle points to the north that the course of building materials is changing. Use of brick, masonry, cement, and heavy structural steel is lessening. The chrome and nickel steel alloys permit the use of lighter tonnages to meet the same strains. Brick and masonry do not now support or strengthen skyscrapers; they merely hang an added weight upon them. As a result, outside walls are being developed which can be put in place in huge sections. Aluminum castings and pressed plates are taking the place of ornamental masonry. Glass blocks with vacuum insulation seem likely to compete with bricks. Plaster is giving way to insulating materials. It needs no Indian scout to follow those trends if imagination lights them.

That light acts as a warning as well as a guide. It shows that the use of coal as a fuel is being endangered by the popularity of oil, and natural gas and power from hydroelectric sources. It shows that the production of coal from Russia and Germany is a factor of danger. Even if this foreign fuel never reaches America, it will displace coal now sold by Great Britain and other nations in world markets and divert English fuel hitherward. Imagination, however, may also show the marvelous possibilities in the processing and hydrogenation or liquefying of coal and make possible wonderfully advantageous investments. The same applies to sugar and a score of other lines.

Imagination, after all, is merely the imageforming power of the mind. The formation of those images will show the sure, certain lines of investment as well as those for the longer pull and with greater risks and returns.

Imagination indicates that the people of this country and the remainder of the world must eat. The food industries must necessarily be fairly stable, provided they are managed so that they take cognizance of the trend of times and fashions in food.

Imagination also indicates that the world will never again be without motor transport

and that the future of the automotive industry is essentially safe and certain. If that is so, rubber, steel, textiles, and nonferrous metals will always have a big outlet.

The statements above should not be taken as suggesting that any investor should let even a well-regulated imagination run away with him. Investments, even those inspired by imagination, can be safeguarded. That is the province of the convertible bond and of convertible preferred stock. These give a prior claim on assets during development and permit a sharing of the common-stock profits after that period.

There are many arguments waged on government bonds versus imagination. Each has advocates, but the two are not incompatible. Government bonds are the safest investment in the world if held to maturity, but many investors have not forgotten that in 1920-1921 Liberty bonds dropped more than fifteen points below par. It would, perhaps, be asking too much of imagination to foresee a development such as that.