CH. 12 LONG-TERM EXPECTATION 153

idea that the only risk he runs is that of a genuinechange in the news over the near future, as to thelikelihood of which he can attempt to form his ownjudgment, and which is unlikely to be very large. For,assuming that the convention holds good, it is onlythese changes which can affect the value of his invest-ment, and he need not lose his sleep merely becausehe has not any notion what his investment will be worthten years hence. Thus investment becomes reasonably“safe” for the individual investor over short periods,and hence over a succession of short periods howevermany, if he can fairly rely on there being no breakdownin the convention and on his therefore having anopportunity to revise his judgment and change hisinvestment, before there has been time for much tohappen. Investments which are“fixed” for thecommunity are thus made“liquid”’ for the individual.

It has been, I am sure, on the basis of some suchprocedure as this that our leading investment marketshave been developed. But it is not surprising that aconvention, in an absolute view of things so arbitrary,should have its weak points. It is its precariousnesswhich creates no small part of our contemporaryproblem of securing sufficient investment.

V

Some of the factors which accentuate this precarious-ness may be briefly mentioned.

(1) As a result of the gradual increase in the pro-portion of the equity in the community’s aggregatecapital investment which is owned by persons who donot manage and have no special knowledge of thecircumstances, either actual or prospective, of thebusiness in question, the element of real knowledge inthe valuation of investments by those who own them orcontemplate purchasing them has seriously declined.

(2) Day-to-day fluctuations in the profits of existing