daily quotations of interest paid for "call" and "time loans" is desirable. As to political conditions;" we are always dependent upon wise and sane government at Washington; we are sensitive to war clouds, even if not at first involving our own country. The successful speculator has world-wide conditions to dwell upon now-a-days, as the large nations are so closely associated in money and industrial matters that each is more or less dependent upon the continued well-being of the other. The searching, daily reading of domestic and foreign happenings is essential. Stock market manipulation is fully explained under the subject "Manipulation," and is something to be carefully and seriously considered, and ever borne in mind by whosoever attempts to pick his way among the snares and pitfalls of Wall and State Streets. There are some shrewd investors who avoid the placing of money in any enterprise of capitalization large enough to attract the attention of Wall Street, and thereby become, possibly, a puppet in the hands of some soulless "clique." They think it better to invest in smaller companies, whose securities are offered and recommended by reputable bankers, or in local issues; in either case, the amount of the issues being too small to warrant manipulation.' It is a peculiar truth that the general public usually buys while prices are rising, instead of waiting for moderate reactions. It is better wisdom to buy after there has been a decline, and to sell after a sustained advance; but the public appears never to learn this rule. Activity argues for rest; every excess is sure to be followed by its opposite. Depression follows inflation; and the latter precedes depression. Nelson says in his "ABC of Stock Speculation: " "The elder Rothschilds are said to have acted on the principle that it was well to buy a property of known value when others wanted to sell, and sell when others wanted to buy." And also, "that if your stock has been purchased and it goes up, it is well to wait; but if it goes down, it is well to stop the loss quickly on the ground that the theory on which the purchase was made was wrong. The public, as a whole, exactly reverses this rule. The average operator, when he sees two or three points profit, takes it; but, if the stock goes against him he holds on waiting for the price to recover, with, oftentimes, the result of seeing a (small) loss run into a loss of ten points. He then becomes discouraged and sells out near the bottom." A financial writer gives expression to the following: "Value has little to do with temporary fluctuations in stock prices, but is the determining factor in the long run. Values, when applied to stocks, are determined, in the end, by the return to the investor, and nothing is more certain than that the investor establishes the price of stocks. The manipulator is all-powerful for a time. He can mark prices up or down. He can mislead investors, inducing them to buy when he wishes to sell, and to sell, when he wishes to buy; but manipulation in a stock cannot be permanent, and in the end the investor learns the approximate truth." Wall Street always builds on the future, not on what has gone. It always wants a change in security values. Either way is acceptable to the professional trader if only he can get on the track of the right way in advance, and Wall Street thus act before the public. And yet, thousands buy stocks who should not. Some buy because others do. Some because the daily quotations show a tremendous apparent buying on the part of others of a stock at the moment attracting attention. They are ignorant of the fact that many of the reported sales are not genuine, but "wash sales," i.e., fictitious: trades made in the open market, and quoted, by parties between whom there is a private agreement that they shall be void; all part of the fine art of manipulation. Some one has said that "ignorance and credulity are at the bottom of most losses in speculation," and he said well. The writer's idea of enumerating in the foregoing matter some of the things necessary for the successful speculator of the present day to be posted upon, and some of the things for him to consider, is to cause him to give time for thought and consideration before making a purchase or sale; to cause him to think for himself, act more upon his own responsibility and less upon what he may read and hear. The average stock-exchange broker is sometimes so near the scene of action that, however honestly inclined he may be, he may fail in his judgment. In the preceding pages emphasis is laid upon the investor selecting a banking house of long experience and established reputation with which to conduct his dealings. That same advice is most strenuously offered for those who desire to speculate, and still greater stress is laid upon this point in the following chapter. Finally, a few suggestions which are almost personal in their character: Keep a record in some form - either by the stubs of your check-book, or by a simple system of bookkeeping - of your receipts and expenditures, and balance at stated intervals to find where you stand. Do not destroy receipts; they should be kept at least six years. Do not allow a bill which is found correct and deserving of payment to remain unpaid more than twenty-four hours. Do as little business as possible with friends and relatives; but, when so doing, conduct it upon strictly businesslike principles. Always retain copies of business letters sent as well as the originals of all received, having some system of filing the same. In changing your address, notify all institutions or bankers with whom you have any financial dealings, and send notice to all corporations in which you are a stockholder; likewise corporations or municipalities of which you happen to be a registered bond holder. Always write a telegram without punctuation marks. Then, if it reads clearly, send it. If anybody is to do considerable investing, some form of filing information relating to the same, annual reports of the different corporations, etc., is desirable. Listed below are certain subjects which will be found in the body of the book and which those of limited experience in investment or money matters may read in connection with the foregoing: III POWER OF THE FINANCIAL WORLD AND ADVERTISEMENTS THE power of the financial world, as managed from New York, Paris, and London, and possibly other large financial centres, is such that a note of warning may be sounded here to advantage. Without the aid of the newspapers comparatively little manipulating the market or shaping public opinion in line with desires of the large powers in finance could be accomplished. Readers of newspapers should not be too often led astray in forming their opinions as to their acts relating to money and investments. The financial leaders are so all-powerful that news of an influencing nature can be circulated broadcast throughout the newspapers of the world without the management of such papers realizing, perhaps, that their columns are being used for this object. One example of this nature will, possibly, suffice to indicate the breadth of this power: It will be recalled that during the spring of 1905 a Japanese loan was offered for public subscription in London and New York. Just previous to its issue the papers in Europe and America teemed with news indicating an early peace between Russia and Japan. Telegrams were quoted from many European capitals, and the average investor was led to believe that, on account of an early and impending peace, the Japanese bonds would be an attractive purchase at the issue price. The loan was enormously over-subscribed, then peace news ceased immediately; in fact, within twenty-four hours after the closing of the subscriptions all indications of peace were authoritatively denied by both Japan and Russia. It is impossible to state that this was all done with an object, but the finger of suspicion strongly points that way. Now a word as to advertisements and the gullibility of the American public. Do the people really like to be fooled? One is almost inclined to think so, or why do these advertisements appear in such large type and at such immense cost to the advertiser if they do not pay? What is the motive behind all these philanthropists of finance; men who, at great sacrifice and cost to themselves, are willing to dis XXV credit so many investments, and to save the public from loss in buying such? Can it be possible that these same "saviours of the people" can have any object in depressing prices of the securities referred to? Can it be possible that they have some stocks or bonds of their own to sell? How many things are done in this world without an object? Banking houses of long standing and integrity do not appear in print and publicly abuse other people's goods. Well-known stocks and bonds do not need long columns of praise. A mere statement of facts suffices; description of the security; statement of earnings, etc. Beware of advertisements. It is strange that the very fulsomeness of so many of them does not in itself warn people away. Beware of advertisements of a security wherein the reader is told that he can only buy at the price then offered for a certain limited period, after which it will be advanced to a certain named higher price. Columns of "financial advice" and "logic" are better left unread. Advertisers thrive on the gullibility of the human race. |