It is not the intention, from the foregoing, to draw the conclusion that _equities_ under no circumstances are to be regarded as investments, because many of our bank and railroad stocks, and even some of our public-utility and industrial stocks, have attained a stability and permanence of value and possess sufficiently long dividend records to justify their consideration when investments are contemplated; but it is essential that the investor should have a thorough understanding of the distinction involved. The principle of distribution of risk is a simple one. It involves no more than obedience to the old rule which forbids putting all one's eggs in the same basket. The number of men who carry out this principle with any thoroughness, however, is very small. Proper distribution means not only the division of property among the various forms of investment, as railroad bonds, municipals, mortgages, public-utility bonds, etc., but also the preservation of proper geographical proportions within each form. Adherence to this principle is perhaps not so important for private investors as for institutions. A striking instance of the need for insistence upon its observance in the institutional field was furnished by one of the fire-insurance companies of San Francisco after the earthquake. It appeared that the company's assets were largely invested in San Francisco real estate and in local enterprises generally, where the bulk of its fire risks were concentrated. As a result, the very catastrophe which converted its risks into actual liabilities deprived its assets of all immediate value. This instance serves to show the importance of the principle and the necessity for its observance. The principle of selection in accordance with real requirements is more complex. It involves a thorough understanding of the chief points which must be considered in the selection of all investments. These are five in number: (1) _Safety of principal and interest_, or the assurance of receiving the principal and interest on the dates due; (2) _rate of income_, or the net return which is realized on the actual amount of money invested; (3) _convertibility into cash_, or the readiness with which it is possible to realize on the investment; (4) _prospect of appreciation in value_, or that growth in intrinsic value which tends to advance market price; and (5) _stability of market price_, or the likelihood of maintaining the integrity of the principal invested.