T h is $0013 Is N ot C opy righ ted

We b eli e v e t h e p ri n c i pl es ex p o u n d e d
i n th i s b o o k a re o f i m m e n se v a l ue
t o e v e ry o n e w h o b u ys s p e cu l a ti v e

se c u ri ti es a n d w e d o n o t o bje c t to
.

an yo n e re p ro d u c i n g a n y p art o f i t ,

w h e th e r o r n o t w e a re gi v e n c re d i t

fo r i t

Nati onal Bureau of Financi al Informati on

 C ON T E N TS

PAR T 1
I NTR O D UCT O R Y C H APT ER S
C ha p ter
I TH E PURPOS E OF T H I S B OO K
.

II W H AT I S S PE C ULATI O N
.

III S O M E TER M S E XPLAI N E D

.

I" . A C ORREC T B AS IS F OR S PEC ULATI N "

PAR T 2

WH AT AN D WH E N TO B U Y AN D S E LL

V W H AT S TOC K S TO B UY
.

V I W H AT S TO C K S N OT TO B UY
.

V II W H E N TO B UY S T OC K S
.

V III W H E N N OT TO B UY S TOC K S
.

IX W H E N TO SELL S TOC K S
.

PART 3
I N FLUE N CES AFFECT I N" S TO CK P R I C E S
X M O" E M E N T S I N S TOC K PR I CES
. 41
XI M AJ OR M O" E M E N T S IN PRI CE S
. 43
XII TH E M O N EY M AR KE T A N D S TOC K PRI CE S 4 7
.

XIII M IN OR M O " E M E N T S IN PR I CES

. 49
XI V T EC H NI CAL CO N DI TI O N S
. 51
X" .M ANI PULATI O N S 53
 PAR T 4
TO P I C S OF I NT E R E S T TO SPECULAT OR S
C ha p ter P age
X V I M AR " IN AL T RADIN "
. 61
X V II S H ORT S E LLI N "
. 65
XV III B U C K E T S H O PS
. 69
XIX C H OO SIN " Y O UR B RO KER
. 71
XX PU T S A N D CALLS
. 73
XXI S TO P L O SS O R DERS
. 75

PAR T 5

C ON CLU D I N" C H A PTE R S

TH E D ES I RE TO S PEC U LATE
TW O KIN D S OF T R AD E R S
P O SSI BI LI T I ES OF PR O FI T
M AR K E T I N F O R M AT I O N
S U CCESSF U L S PECU LATI O N
 PAR T ON E

INTR ODU CTO R Y C H APTE RS

 CHA PTE R I .

TH E P URP OS E OF THI S BOOK

Th i s book is writte n f or the purpose Of

giving our clients some id ea s Of the funda

mental principles t h at guide us when we se
l ect stocks f or the m to buy but these prin
,

ci pl es are valuable t o every pers on who trades

in listed stocks or in any other kind Of spe c

ul a t i v e s tocks.

Fi rs t Of all we wan t you to get a cle ar

,

con cept i on Of the meaning Of the word spec

u l at i on w h i ch i s ex p lained i n the ne xt c h a p
,

ter O ur purp o se is t o p rotect you against

.

losses a s well as t o enab le you t o make p rofit s

.

and it is very important t h at you understand

h ow to provide for safety i n y our speculating .

It is a well known fact t hat there are t re

mendo ns losses in stock speculation but we ,

claim that almost all Of these losses would

be avoided if all speculators were guide d b y
the principles expound ed i n this book .

" ” ”
What and When are two v ery imp or
"

tant words in stock speculation and we c an ,

not urge U pon y ou t oo strongl y to st u d y care

fully C hapters V to IX . .
8 S UCCES SFUL S T O CK SP E C ULAT I O N

C hapters X t o XV. tell you m u ch abou t

.

the influences t h at afiect the prices of stocks ,

a knowledge Of which should also be a guide

to you in making your selections .

P erhaps the most important c hapter in

the entire book is XXV on Market Informa
.
,

tion . A careful reading Of this chapter

should convince you that much Of the pre
vailing information a bout t h e s toc k market
is mi sleading That fact alone accounts f or
.

many Of the losses in stoc k specula tion .

 CHAPTER II .

WHA T IS S PE C U LA TION "

TO speculat e i s t o theo rize about s ome
thing that i s uncertain We can speculate
.

about anything that i s uncertain but w e ,

" ”
use the word speculation in this book with
particular reference t o the buying and sell ing
Of stocks and bonds f or the purpose Of mak

ing a profit When peo ple b uy stocks and

.

bonds for the inco me they get from them

"

and the amount of that income is fixed they .

,

are said to invest and not to specula te In .

nearly all investments th ere is also an ele

”
vestment also conv eys t h e i dea of holdin g
‘

for some time whatever you hav e purch ased ,

while speculation conveys the idea Of selling

for a quick p rofit rather than holding f or
income .

TO t h e minds Of most p eo p le the word ,

”
"
speculation conveys the thought Of risk ,

Th e dictionar y give s f or on e Of the meanin gs

of speculati o n a risky i nv es tment f or l arge
,
"
IO S UCCESS F UL S TO CK SP E CULAT I ON

profit but sp eculation need not necessarily

,

be risky at all The author Of this book once

.

us ed t h e expression stock speculating with

,
"

safety and he was severely criticiz ed by a

,

c ertain financial magazine E vidently the .

editor Of that magazine thought that spec "

” ”
ul a t i n g
"
and safety were contradictory
t erms but the ex pres s IOn 1 s perfectly correct
, .

S tock speculating with safety is possible .

Of cours e we all know that the word

,
”
safety is seldom used in an absolute s ens e .

We frequently read s uch express i ons a s

"
The elevators in modern O ffic e buildings a re
”
ru n with safety It is possible to c ross
"
.

”
the ocean with sa f ety You can travel
"
.

do o ccur a nd p eop le do los e their lives i n

elevators steamships and railroad trains
, ,
.

Becaus e serious acci d ents are comparatively

” "
rare we us e the word safety
, .

In like manner it is possible to purchase

stock s s ometimes when it is almost cert ain
that the purcha s er will make a profit and ,

that i s stock s p eculating w ith s afety When

"
.

Libert y Bonds were s ell ing in the 8 0s many

’
, .

pe opl e bought them f or speculation They .

 S UCCE SS F UL S T O CK SP E CULAT I O N lI

were not ta ki ng an y ri s k except the S light ,

risk that t he market p ri ce might go still

lower b efore it would g o higher and that ,

did not involv e any risk for those who knew

they could hold them The fact that the
.

market prices Of L iberty Bonds would a d

vance was b ased upon an economic law that
never fail s That l a w is that when interest
.

rates go up the market

,

nd U p
s
m
Wheng o L ib erty
.

were selling in t h eSfiS interest rates

‘ ‘ u

i
,

were S O ver y high it was certai n that they

,

would come down That the market prices

.

of Li bert y Bonds would go u p was also cer

tai n but nobody coul d tel l h ow much t hey
,

woul d go u p i n a give n t i me It w as that .

element Of unce rt a i nt y that made them spec

ul a t i v e and not that there w as any doubt
,

about the fact t h at the ma rket prices Of

them would go up Buying L iberty Bonds
.

at that time w as speculating with safety .

If you read t his book with understanding ,

yo u will know m u ch a bo u t s pec ulatin g with

 CHAPT ER III .

S OME TERMS E X P LAIN E D

There are certain terms used in connec

tion wi t h s tock speculat i on that are very f a
miliar t o t hose who come in contact with
s tock broke rs and yet are not always famil
,

iar t o t ho s e w h o d o business b y mail U h .

doubtedl y t h e maj ority Of our readers are

familiar wi th these terms but we give thes e
,

definitions for the benefit Of the few w h o

are not familiar with them .

Trader " A person who b uys and sell s

stocks is u sually referred to as a trader Th e .

word probably originat ed when it was cus

t omar y to trade one stock for another and
later w as used to refer to a person who sold
one stock and bought another He was a
.

trader " but the p erson w h o buys stocks for

a profit and sells them and tak es his profit
wh en he gets an oppo rtunity may not be a
,

trader in the strict sense Of t h e word How .

ever for convenience we use the word

, ,

”
"
trader in thi s book t o refer t o an y one who
buys or sells stocks .
I4 S UCCE SS FUL S TO CK SP E CULATI O N

S p eculator " This word refers t o a p ers on

who buys stocks f or p rofit with the expec ,

t a t i on Of selling at a higher price without ,

reference t o the earnings Of the stock He .

may s ell first with the expectation Of buying

,

at a low er price as explained in C hapter

,
”
XV II on S hort S elling
.
"
In many cases
.

”
where we u s e the word trader it would ,
"
be more correct t o u s e the word spec u lator .

Investor " A n investor diff er s from a sp ec

u l a t or in the fact tha t he buys stocks or

bonds with the expectation Of holding them

for some time for t he income to be derived
from them without reference t o their s pec
,

u l a t i v e possibilities We be lieve that invest

.

ors always should give some cons i deration to

the speculative possibil i ties Of their pur
chases It frequ ently i s p o s si ble t o get spec
.

ul a t i v e p rofits without increas e Of ri s k or

loss Of income .

Bull " O ne who believes that the market

price Of stocks will advance i s called a bull .

O f course it is p ossible t o be a b ull in one

,

stock and a bear in another The word i s .

u s ed v ery freq u entl y wi th referen ce t o t h e

mark e t a b ull mark e t meani ng a rising
,

market .
 S UCCES S F UL S T O CK SP E CULAT I O N IS

Bear " The o pp osite Of a b ull is a b ear .

It refers to a person w h o b eliev es that t h e

market value Of stocks will decline and a ,

bear mark et i s a declining mar ket .

”
L ambs " "
L ambs refers to that part Of
the public that knows so little about stock
sp eculating tha t they lose all their money
sooner or later Th e bulls and bears get
.

th em going and coming If the lambs would

.

read this b ook carefully they would discover

,

reasons why they lose their mone y .

Long and S hort " Those who ow n stocks

are said to be long and those who ow e stocks
,

are said to be short S hort selling i s ex

.

plain ed in C hapter XV II .

O dd L ot " S tocks on exchanges are sold

in certain lots O n t h e New York S tock E x
.

change 1 00 s hares is a lot " and on t h e C on

,

solidated S tock E xchange 1 0 shares is a lot

, .

L ess than these amounts is an Odd lot When .

you sell an Od d lot you usually get less

than t h e market price " and when you buy an
Od d lot, you usually pay more than the
market price " that is of a dollar on each
,

share where prices are quoted in dollars .

P oint " It is a common expression to s a y

that a stock w ent up or down a point which ,
16 SUC C ESSFUL S TO CK SP E CULAT I ON

means a dollar in a stock that i s quoted in

dollars but a cent in a stock that is quoted in
,

c ents as many of the stocks a re on t h e New

,

York C urb In cotton quota tions a point is

.
,

1 1 00 part of a cent
-
F or inst ance if cotton
. ,

is quoted at it means 1 8 c ent s and

1 2 1 00 Of a cent per pound and if it went
-
,

U p 3 0 points the quotation would be

Reaction " E very p erson who ha s traded
in listed stocks probabl y is familiar with this
word It means t o act in an opposite dirc e
.

tion but it is used especially to refer to a

,

decline in the price of a stock that has been

going up .

Rally Rally is the oppos ite of the s ense

”
in which reaction usual ly is u s ed When .

a stock is going down and it turns and goes

up it is calle d a rally
, .

C ommitment " This term is used refer

ring to a purchas e of s tock It is more com .

monl y used by inv es tm ent bank er s wh en they

contract to buy an issu e b ut the term s ome
,

times is used by traders .

Floating S upply " The stock Of a com pa ny

that i s in the hands of that part Of the public
who is likely to s el l is referred to as floating
,

supply .
18 S U C CES SFUL S TO CK SPECULAT I ON

Y ou always should k eep in mind t h e fact

that when you buy a stock at a higher price
than its intrinsic valu e you are taking a ,

risk The stock may have great future pos

.

s i bi l i t i es but it is risky to buy stocks when

,

p resent a s se t s a nd earnings do not warrant

their market prices no matter how a t t rac
,

tive prospective future earnings may appear .

However the possibilities Of profit sometimes

,

are s o great that one is j ustified in taking

this risk .

It is our belief that the maj ori t y of traders

buy stocks becaus e they are active in t h e
market and some b ody s ai d th ey were a good
buy even though the real values may not
,

be nearly as much as t he m a rket prices .

A s an example of this kind Of trading w e ,

want t o call your attention to a news it em

that appeared in a New York paper It stated .

that on April l s t some brokers in Detroit

, ,

as an April Fool j oke gave out a tip to buy

,

A F P meaning April Fool P referred but

. . .
, ,
"
when asked what it meant replied Am er ,

ican Fire P rotection O f course there was

.
,

no such stock but there was active trading

,

in it until the j oke was discov ered E vi .

d ent l y it i s not necessary t o list a stock on

 S UCC E S S F UL S TO CK SP E CULAT I O N I9

the Detro i t S to ck E xchange in order t o trade

in it
.

Thi s s t ory ma y or may not be true but ,

we b elieve t h e statement that people trade

in stocks the y d o not know anything about
is true You should be careful not to buy
.

a stock merely be cau s e some body s ays it

i s a good thing t o bu y unless the person
,

making the s ta tement i s in the bu s ine ss Of

giving information on stocks be cause it ma y
"
,

b e only a rumor wi th no su bs tantial b a s i s .

O f course if many people a ct on the rumor

, ,

there will b e active trading in the stock and ,

it is freq u ently f or that pu rpose that such

rumors are started .
PAR T TWO

an d WHEN TO BU Y
an d S E LL
 CHAP TE R V .

W HA T S TOC KS TO B UY

In deciding what stock s to b u y i t i s well ,

to consider first the classes Of s tocks and ,

then what particular stocks you s h ould bu y

in the classes y ou select We would firs t of .

all divide all stocks into two classes those ,

listed on the New York S tock E xchange and

those not list ed on the New York S tock E x
change A s a rule it is b etter t o buy s tocks
.
,

listed on the N ew York S tock E xchange al ,

though there are frequen t exception s t o t h is

rule.

Then the stocks listed on the New Yo rk

,

St ock E xchange may be di v i ded i nto cl as s es

,
,

such as railroad stocks p ublic utility stocks

, ,

motor stocks tire stocks oi l stocks cop p er

, , ,

stocks gold stocks and s o forth A t cert ain

, ,
.

times certain stocks are in a much more f av

ora bl e c ondition than at other times In .

1 91 9 when the i ndustrial stocks were sel l i ng

,

at a ve ry high p rice the public u tility s t ocks

,

and gold stocks were sell ing l ow because it ,

was impossibl e to in crease in comes in pro

portion to the increase i n o p erat i ng co st s .
24 SU C C E SSFUL S T O CK SP E CULAT I O N

Bu t si nce the be gi nn i ng of 1 921 th e cond i

,

tion of the s e tw o cla s se s of s t ocks h a s bee n

i m prov i ng and the marke t has refle ct ed t hat
i mpro vemen t .

At the time of t h i s writi ng ( ea rl y i n Ap ril ,

1 922) w e are recomm endin g t h e s t ocks of

onl y a very fe w manufactu ri n g comp an i e s "
but we are recommend i ng a n u m b e r ( no t al l )
of t he rai lroad a nd p ubli c uti l i t y s t o ck s and
,

a few speci al l y s e l e cted s tocks among t he

o th er cl a s se s
.

In eve ry i n s t ance w h en y o u make a s e l e c

,

ti on y o u s h o ul d c o ns i de r the com p an y s a s
,
'

s e t s p re s en t ea rni ngs and p ro sp e cti ve t u

, ,

tu re earn i ng s and th e n t ak e i n t o c o nsi de ra

,

ti o n all th e i nfl u e nce s t h a t aff e ct p rice move

ment s as ex pl ai ned i n s ub seq u ent ch apt e rs
, .
26 S UCCE S SFUL S T O CK SP E CULAT I O N

lose your money ent i rely i n promotion stock s .

We believe that most of the promotion com

pani c s are started in perfectly good faith ,

although some Of them are swindles from the

beginning " but no matter how honest and
well meaning the organizers are the chances ,

of success are against them Therefore we .

,

say that promotion stocks should not be

bought by the ordinary man who i s looking
for a good speculation beca use hi s chan ces
,

of making a lar ge p rofit wi t h a minimum

risk are very much better when he buys
stocks listed on the New York S tock E x
change and uses good j u dgment in doing s o .

Among the li s ted s tocks there are many

you should not b u y F ir s t Of all e liminate
. ,

them by classes D O not b u y the cl as s e s of

.

stocks that are selling t oo hig h now You .

may s a y that there are some exceptions in

all cl asses That may or ma y not be s o but
.
,

in any event you have a better chan ce of

,

profiting by confining most Of your purchase s

t o the clas ses of stocks that a re in the mo s t
favorab le po s ition .

AS a rule when stock s are first li s ted they

, ,

sell much higher than they d o a s ho rt time

afterwards . O f course that is not always
,
 S U C CE SSFUL S TO C K SPECULAT I ON 27

tru e It is more li kel y t o be true when a

.

stock is listed during a v ery active market ,

when prices are more easily influenced by

publicity .The high p rice Of it is usually
due to the fact that publicity is given to it ,

and as soon as the e ff ect of this publicity

w ea rs Off the marke t price of the stock de
,

clin es .

It i s a good rul e never t o b uy stocks that

brok ers urge you to buy Your own common
.

sense ought to tell you that a stock that i s

advertis ed extensively by brok ers is likel y
to sell U p in price whil e the advertising is
going on and w i ll drop in pri ce j ust as soon
a s the advertising stops .

Many people notice that and t h e y t h i nk

they can profit by buying when the advert i s
ing starts and s ell out when th ey get a good
profit but the maj ority of t h em los e mon ey
, .

The stock may not respond t o the advertising ,

or if it does go u p they may w ai t too long

,

b efore s elling Those who do sell and

.

make 200% or 3 00% profit in a very short

time are almo s t sure to lo s e i t all in an eff ort
to repeat the transaction Many Of tho s e
.

who read this know it is true from their own

ex peri ence .
28 S UCCE SS F UL S T O CK SP E CULATI O N

You should leave s uch s to cks s tri ctly alone .

You may win once or tw ice b u t you are sure

,

to lose if you k eep it up A s a rule s tocks

.

Of this kind have very lit t le value and the

brokers who b oost t hem make their own

money from the lo s se s Of t heir f ol
lower s.
 CHAPTER VII .

W HE N TO B UY S TOC KS

S tocks s ho uld be b ought wh en they are

cheap B y b e i ng cheap we mean that the
.
,

market pri ce i s mu ch less than the intrinsic

v alue In C hapters X t o X V w e talk ab o ut
. . .

influences that aff ect the price movements

of stocks .By studying these carefull y you
should b e able t o decide when stocks gen
era l l y are cheap O f cours e not all stoc ks
.
,

a re cheap at the s ame time b ut the maj ority ,

of l isted stock s d o go up and down at t h e

same time as a rule
, .

A t the time of this wri ting ( in the ear ly

part of A pril 1 922) there are a great many
,

stocks listed on the New Yo rk S tock E x

change that are selling at pri ce s much le ss
than their intrinsic values but there are some ,

stocks that should not be bought now nor ,

at any other time There are some stocks

.

listed on the New York S tock E xchange now

that perhaps have no intrinsic valu e and
n ever will have an y Nevertheless we con
.
30 S U CC ES SFUL S TO C K SPECULAT I ON

sid er that right now is one of the times for *

buying stocks There are unusual bargains .

to be had although keen discri mination is

,

n ecessary in order to be abl e to pick out t h e

bargains .

A s a usual thing it i s a good time to bu y ,

stocks when nearly everyb ody wants to sell

them When gen eral business conditions a re
.

bad trading on t h e stock ex ch a ngeS v ery

,

light and everybody you me et app ears to be

,

pessimistic then we advis e you to look f or

,

bargains in stocks The last s i x months of .

1 921 was an unusually good time for buying

stock s .

It is well known that the large interests

accumulate stocks at such times T hey bu y .

o nl y when the stocks are Off e red at a low

price and try not to buy enou gh at any one
tim e to giv e an appearance of activity in
the mark et but they buy continually when ,

the market is very dull It seems to be char .

a ct eri s t i c of human nature to think that bu s

i nes s conditions are going to continue j ust

as they are Wh en business is bad nearly .
,

* In dvi ry L tt r f Ap ri l 25 1 9 22 w advi sed o

ou r a so e e o e ur
cl i ts t r f rai n f r m margi buy i g f a w h i l becaus t h
. ,

en o e o n n or e, e e
mark t w
e ad anc i n g t rap i dl y S h rtl y af t r th at ther
as v oo o e e
a d ci d d r a cti n i n th mark t
.

was e e e o e e .
 S U CC E S SFUL S TO CK SPECULAT I O N 31

ev erybody thinks business will b e bad for a

long time and wh en business is good nearly
, ,

everybody thinks business will be good a l

most ind efinitely A s a matt er of fact con
.
,

di t i ons are always ch anging It never is pos

.

sible for either extremely good times nor for

extremely b ad times to continue indefinitely .

You can b u y stocks cheaper when there is

v ery little demand for them and y ou S hould
,

arrange your a ff airs s o as to b e prepared to

buy at s uch times .
34 S U C C E S S F UL S T O CK SPECULAT I O N

There are also when the technical

cond i tion of the m arket is s uch t hat we ad
vise our cl i ents t o refrain from b u yin g f or
a while S ee C hapte r XI"
. .
 CHAPTER IX .

WHE N TO S E L L S TOC KS
i f
You S hould sell s toc ks when the market
pri ce 1 8 too high That i s a genera l rule but
.
,

it is nece ss ary f or y ou t o stud y al l the i n

fl uences aff ecting stock p ri ce s t o be able t o
decide more accurately when you sho uld sell
your s tock s We give you i n future cha p
.
,

ters much more information on j ud ging the

,

market s .

‘
Another general ru le i s t o sell stocks wh en
,

nearly everybody is b uyi ng the m It i s a .

w ell known fact that the great maj ority Of

people buy stocks near t h e t op and sell near
the bottom Naturally when everybody is
.

optimistic stocks will sell up hi gh b u t sooner

, ,

or later the y will come down again and when ,

ev erything looks v ery promising i s a good

time t o s ell It is better t o lose a little Of the

.

profit that you might have m ade by holding

on lon ger than not t o be on the safe sid e .

The man who trys t o sell at the top nearly

always loses because stocks s eldom sell as
,

high as it is predicted they will or in other , ,

36 S UCCES SFUL S TO C K SPECULAT I ON

words the prediction of higher price s is a d

,

v a n ced more rapidly than the prices .

We remember r eading in 1 91 6 when U S , . .

S teel sold up around $1 3 6 a s hare a predic ,

tion that it was going t o s ell up to $1 000 a

share P robably man y people who read such
.

news items consider the m seriously Of .

course that was a most exaggerat ed predic

,

tion but during the extrem e activity of a

,

bull market it seems that n early everybody

,

i s talking in exaggerated terms of opti mism .

That is why most traders seldom ever take

th eir profits in a bull mark et They w ai t .

until stock prices start to come down and ,

th en th ey are lik ely t o think there will be

rallies and keep on waiting until they l os e
,

all their profits .

O n the oth er hand some people make the

,

mistake of s elling t oo soon J ust b ecause.

your purchase shows a liberal profit i s no

reason why you S hould s ell The stock may
.

hav e been v ery cheap when y ou bought it .

In 1 920 P eoples " a s sold below $3 0 Those

, .

who bought it then were able to double th eir

mon ey by the cl os e of 1 921 and many sold ,

out and took their profits O f course if they

.
,

invest ed t h e proceeds in other s tock s that

 SU CC ES SFUL S TO CK SPE CULAT I O N 37

w ere j ust starting upward the y ma y not

,

have lost anythin g b ut th er e wa s no pa rt i c

,

ular reason for selling P eoples " a s at that

time. The public utilities g en erally were
coming into their own and nearly all Of them
,

w ere regarded by economic stud ent s a s hav

ing unusual opportunities for profit .

Then again it is not always a mi stake t o

,

sell a stock in order to get funds t o put into

som ething else that seems more promising ,

even though the stock y ou sell is likely t o

go much higher .

It is v ery important that you should try

to sell y our stock s at the ri ght time That .

i s the main thing t o keep i n mind and i t is

better to sel l too soon than t oo lat e Don t
.
’

be t oo greedy and hold on f or a big p rofit .

R ead C hapter XXI V on the P ossibilities

.
"

”
of P rofit .
 PAR T TH R EE

INF LUENC ES
PRIC ES
42 S UCCES S F UL S T O CK SP E CULATIO N

We do not attemp t in thi s b ook t o ex pl ain

the fundamental stati s tics u p on w hi ch the
predictions of busine s s cycle s are b ased b ut
,

in the next five chapter s we ex pl ain s ome

Of the influences that aff ect the movements

in stock prices Read these chapters very

.

carefully for your su cc ess in stock specu

,

lation will depend very l a rgely upon your

corr ect prediction of these movements .
 CHA PTER XI .

MAJ OR M OV EME N TS IN PRICE S

S tock prices move up and down in cycles .

Thes e are the maj or movements in prices ,

but there may b e many minor movements U p

and down within the maj or movements Th ese .

stock price movements nearly always pre

cede a chan g e in busine ss conditions " that
i s an U pw ard movement in s to ck prices is
,

an i ndi cat i on t hat b usiness conditions are

go i ng to improve a nd a downw ard mo v e
,

m en t i n stock pr ices i s an indi cation that

busines s condi t i ons are goin g t o get worse .

At t h e p resent w ritin g we are in a p eri od

—

Of improvement S tock pri ces be gan t o go

.
'

up in Augu s t 1 921 The upwa rd movement

, .

ha s b een s low but gradual In a period of

, .

s even mont hs forty represent ative s tocks

,

S how an U pward movement of about 20

poin ts al t hough busine s s h as not s hown
,

much i mprovement A ste ady U pward move

.

ment i n s tock pri ce s i s a sure S ign that b us

i ness con d it ions are b e gi nning t o improve ,

even thou gh that improvement is not

noti ceabl e .
44 SUCCE SSFUL S T O CK SPECULAT I O N

These maj or stock movements are not an

exact duplicate of any previous ones and it ,

is impossibl e to tell how long they will last

or j ust what course they will take C ertain .

influ ences could change a period of improve

m ent into a period of prosp erity very quickly .

A p eriod of prosperity is noted f or high

prices high wages and increasing produc
, ,

tion in all lines . E very b ody is optimistic .

Most peopl e sp end their mon ey fre ely and ,

that makes times better A s prices go up .

and business increas es more money is re ,

quired in busines s a nd interest ra t es go u p . .

A s a consequen ce when i ntere s t rates go up

,
.
,

bond prices gon d own D uri ng th i s peri od

. . .
,

speculative stocks are sel ling at t he i r h i gh est

pri es " and under t h e i nfl uen ce of thi s move
c
me nt many stock sthat have no a ctual " alu e
,

sell Up at high pric es O f course wis e spec

.
,

ul a t ors sell all their s tocks duri ng t h i s period .

Following a per iod of prosperity comes a

peri od of d ecline Th e first S ign of it usually
.

is a severe break in the stock ma rket A t .

that time general bus i nes s i s running along

at top s pe ed and there i s no S ign Of a let p -u
,

but this b reak in the stock market should

be a warning Most p eople think the break
.
 S U C CES SFUL S TO C K SPECULAT I ON 45

is merely a temporary reaction they may —

refer to it as a H EA LTH Y reaction and —

they start buying stocks again and put the

,

market up but it do es not go up as high as

,

it w a s before the break occurr ed When .

stock prices do not rally be yond t h e prices

at which they were before the break occurred ,

it is a S ign that the turning point has been

reach ed and that the b ear market has started ,

although the maj ority of p eo ple do not real

ize this u ntil a long time afterwards .

Next comes a period of depression when ,

we have low p rices low wages hard time s

, , ,

tight mon ey and many comm ercial failure s

, .

Many peopl e who lost all their mon ey dur

ing the speculation period b ecome thrifty
'
,

and economize during the period of d epres

sion and s tart in to s ave again
, Nearly .

everybody is pessimistic durin g this period .

Trading on the S tock E xchange is irregular

and as a rul e very light .

This is the time to get stock bargain s ,

but t h e gen eral public as a rule doesn t take ’

advantage of it P eople are scared and think

.

prices will go still lower The big int erests

.

accumulate s tocks during this period and ,

s ell them during the period of prospe ri ty .

 CHAPTE R XII .

TH E M ON E Y MAR K E T AN D S TOC K
PRIC E S

P erhaps no other one thing influences the

movem ent of s tock price s s o much in a large
,

way a s money condi tions It is impossible

, .

t o have a big bull market without plenty of

mone y During a bull market nearly all stock s
.

are bought on margin which is explain ed in

,

C hapter XV I. This makes it necessary f or

brokers to b orrow large sums Of money .

When money is tight it is impossible to get

,

enough to carry on a large movement in

stocks .

Y ou will s ee therefore that the F ed eral

, ,

Reserv e Bank has it in its power to regulate

the stock market to some extent In 1 9 1 9.

speculation was carri ed very much further

than it should have been but undoubtedly
,

it would have be en much worse had the

Federal Res erve Bank not raised interest
rates and u rged member banks to withdraw
money from Wall S treet While th ere was
.
48 SU CC ESSFUL S TO C K SPE C ULAT I ON

consid erable criticism Of that action it cer

,

t ai nl y was a good thing for the entire

country.

In a p eriod of depression the banks ac

,

cumulat e mon ey and there always is an

,

abundanc e of mon ey at the b eginning Of a

bull mark et During a period of prosperity
.

t h e banks reserves decrease and their loans

’

increase When y ou s ee these reserves go

.

down to a very low point it is us u al l y time

,

for you to sell your stocks .

50 SUCCE SSFUL S TO CK SPECULAT I ON

T h es e minor price changes mean more t o

t h e maj ority Of traders than the maj or move
m ents The maj or movements are S O slow
.

that people get out of patience and yet tho s e

,

who are guid ed only b y the maj or movements

are Operating on a much safer basis We .

b eli eve that a greater amount of money can

be made with a minimum risk by being
, ,

guided pri ncipally by the maj or movements ,

while taking advantage of the minor move

ments in a minor way However stocks d o
.
,

not move uniformly and there frequ ently is

an Opportunity t o buy some particular stock

at a b argain when nearly all stocks are sell
ing t oo high We try t o pick out these
opportunities for our clients .

Reports of earnings b y various compan i es

influence stock prices as does also the pay
,

ing of extra divid ends or the passing up of

dividend s A peculiar psychological influence
.

is noticed when a company declares an extra

dividend The price Of the stock usually goes
.

up while as a matter of fact the int ri nsic

,

value of the s tock is decreased by the amount

of this dividend " and sometimes it is advi s
able to sell a s tock S hortl y aft er an advance
in its dividend rate .
 CHAP TER XI V .

TE CH N ICA L C ON D I TI ONS

Technical conditions refer to the condi

tions that usually a ff ect the supply and de
mand such as short interes t s floating su p
, ,

ply and stop loss orders

, .

It is sometimes said that supply and de

mand must be equal or else there could not
be any sal es but that is not so
, There a re
.

alway s som e p eopl e who a re willing to sell

at some pric e above t h e market who will not
s ell at the market " and when t h e demand for
stock is gr eater than the supply it goes up ,

until it is suppli ed by some of th ese people

who are holding it at a higher pI I C C ‘
.

It works t h e same way when the S uppl y

is greater than the demand There are al
.

ways some peopl e who will b uy at some price

b elow the market Therefore when the sup
.
,

ply is greater than the demand prices must

go down .

A stock may hav e an intrinsic value of

$ 00 a share and yet be selling at $5 0 a
1
S hare and it can never sell higher than $5 0
,
52 S UC C ESSFUL S TO C K SPECULAT I O N

until all stock that is off ered at that price

I S bought.

Howev er you S hould keep this in mind " if

,

the real value is $1 00 a share soon er or later

,

the market pric e will approach that figure .

That is why w e so strongly urge our cli

ents to b uy stocks that hav e actual values ,

or at least prospective values far greater

than their market prices and eith er to buy
,

them outright or margin them v ery heavily ,

and then hold them until t h e prices do go up .

O f course wh en one finds that a mistak e

,

has be en mad e the sooner one sells and takes

,

a loss t h e b etter .
 CHAP TE R X V .

M AN IPU L ATION S

S tock prices are influenced largel y b y ma

ni pu l a ti on
. Years ago when the volume of
trading on t h e New York S tock E xchange
was small compared with what it is today ,

it was possibl e to influence the entire market

by manipulation but it would be very d i ff i
,
‘

cult to do that today It is only certain

.

stocks that are manipulated " but if condi

tions are favorable many other stocks may
,

be influenced by them .

There are di ff erent kinds of manipulation .

O ne i s f or the insiders of a company to give

out unfavorable new s abo u t their company
if they want the price Of the s tock to go
down s o that th ey can buy it in " or to give
,

o u t very favorable news if th ey want the

price to go up s o that they can s ell out
, .

This method i s not practiced now to the ex

t ent that it was years ago P ublic opinion .

is s t i ongl y opposed to it and w e believe

'

busines s men are acquiring a higher s t and

ard of business ethics Methods Of this kind
.

a re legal but they are morally reprehensible .

54 S UCCES SFUL S TO CK SP E CULAT I O N

Another method Of manipu l ation i s t he

forming Of pools t o b uy in the stock of a
company and force it up If the market.

price Of a stock is far below its real

value we believ e it is j ustifiable for a pool
,

to force it u p but t h e ordinary pool is merely

'

a sch eme t o rob the public .

There are four periods to the operation

of such pools . Fi rst is the period Of accum
ul at i on. A numb er of large holders Of stock
in a certain compan y will pool their stock ,

all agreeing not to sell except from the pool ,

in which all benefit proport ionatel y Then .

they gi ve out bad news about the company .

T hat is very easy to do because financial

,

wri ters u sually acce p t the news t h at i s gi ven

to them w i thout much inve s tigat i on espec ,

i al l y wri ters on daily papers becau s e they

,

have not the time to investigate Their c op y .

must be ready in a f ew hours after they get

the information . S ee C hapter XXV on .

”
"
Market Information f or fuller expl anat ion
Of the reason why financial news usually is
misleadi ng The mani p ul a to rs Of s t o ck p rice s
.

" ”
can have financial news made t o order .

Wh en th e general publ i c reads this new s

and s ees the s tock going down many of them ,
 S UC C E S S F UL S TO CK SPECULATI O N 55

get discouraged and s ell It i s j ust the time

.

they should not sell but it is a well known

,

fact that the maj ority Of p eople do in the

stock market j ust what they should not d o .

T he more they sell the more the price goes

down and the pool ope rators accumulate the
,

stock .

Having secured all the stock the y want ,

th ey give out good news and continue t o b uy

the stock until it starts to go up T he public.

reads this favorable news and s ee i ng the

,

stock go up will go into t h e market and b u y

, ,

which puts it up higher Al l the time finan

.

ci al writers are s upplying g ood new s a b o ut

the stock and the p u b lic b uy s i t A ft er t h e y

.

have sol d al l of it t h e p u b li c ma y s till be

,

anxious f or more and t h e pool O perators may

,

go short of the stock Then they will begin

.

giving out bad news s o that they can buy

,

in stock at a lower p ri ce to cover their S hort

interest s.

After that they have very li ttle interest

in the marke t If it i s decli ni n g t oo fast
. ,

they may sup port it occa s i o nall y b y b uying

some stock and gi vin g out s ome favorable
news That wi ll mak e the mark et ral l y and
.
56 S U CC ES SFUL S TO C K SPECULAT I O N

they will sel l out the newly acquired s tock

n ear t h e top Of t h e rally .

Manipulations of this kind appear to be

"

goi n g on n early all t h e tim e and th ere does ,

not s eem to b e any limit to the number Of

suckers who fall for them But th en one .
,

can t blame the public wh en you real iz e how

’

thoroughly unreliabl e is most of the market

information giv en to th em .

S till anoth er kind of manipulation is one

”
man manipulation wh ere one man controls
,
” "
compani es which a re known as one man
,
-

compani es U sually t h e directors of these

.

companies are friends or employees of his ,

and in many instanc es he has th eir resigna

tions in his poss ession so that th ey must do
,

what ever h e wants t h em to do O wing to .

t h e strict rules Of t h e New York S tock E x

change it is rath er diff icult for such manip
,

u l a t i on s to b e carri ed on th ere But there .

hav e been many of them on the New York

C urb . Wh en the C urb was op erati ng on the
street and was not under v ery much control ,

manipulations of th 1 s kind were very

frequent .

A s an example suppose a man of this kind

,

has a mining company When he wants the .

58 S UCCE SSFUL S TO CK SP E CULAT I O N

deal a b ou t the enormous los s es i n them Pro.

motions that are failures ma y be perfectly

l egitimate and conducted in the utmost good
faith but manipulations are n early always
,

for the purpose Of swindling the public H ow.

ever , the lure Of the m i s so great many

p eople cannot withs t and the t emptations Of
”
th em even after they hav e been trimmed"

several time s .
 CHAP TER XV I .

MAR " I N AL TRAD IN "

Most peopl e who trade in stock s b uy on
margin The ordinary mi ni mum margin is
.

about 20% of the purchase price because ,

banks usually lend about 8 0% of the market

value of stocks .

If you put up 20% of t h e purchase price

of your stock s w i th your brok er he has to ,

pay t h e other but h e can do that by

borrowing that amount from his bank and ,

putting up the stock as s ecurity In thi s .

w a y brok ers a re able to handl e all t h e mar

gin busin ess that comes to th em as long as ,

mon ey can b e borrowed O f cours e there

.
,

a r e some stocks that a r e not acc epted by

banks as collateral for loans and you should

,

not exp ect your brok er to sell such stocks

on margin In fact if he Off ers to do so it
.
, ,

looks as though he w ere ru nning a bucket

shop S ee chapter XV III
. .

Many p eopl e think that buying s t ocks on

margin is gambling and that peopl e should
not do it for that reason but buying on mar
,

gi n is done in all lines of business although it

,
62 SU CC E S SFUL S TO C K SPECULAT I O N

may not b e known und er that name If you .

bought stock outright but borrowed 8 0% Of

,

th e purchase pri c e from your banker t o com

p l et e your payment for it and put u p the
stock with him as security you would b e,

buying on margin j u s t the same .

In like manner if you bought a home and

,

paid 20% with mon ey you had and borrowed

t h e other 8 0% Of the purchase p rice you ,

would be buying a home on margin The .

principal di ff erence is that when you buy

from a broker on margin one Of the condi
,

tions of his contract is that he has the right

to sell your stock provided the market p rice
drops down to the amount that you ow e on
the stock wh ereas if you borrow mon ey on
,

a h om e it is usually for a certain sp ecified

,

tim e and the lender canno t sell you out until

that ti me expires However in principle
.
, ,

th ere is very little di fference between the

t w o transactions .

Most margin traders do not put up suf

fici ent margin If you put up only the mi n i
.

mum margin y our broker has th e right t o

,

call on you for more mar gin if the price of

t h e stock declines at all Unl ess you are
.

fully prepared at all times t o put up an

 S U CC ES SFUL S TO C K SPECULAT I ON 63

additional margin when cal led Up on you ,

s h ould make small er purchases and put u p

a h eavy margin when you buy T he amount

.

Of margin d epends upon the transaction but ,

w e advise fro m 3 0% to and at times

w e advise not less than 5 0% margin on any
purchas e In fact ther e a re times when
.

w e advise not to bu y stocks On margin at

all
.

Tho s e who wi sh to be entirely free from

worry should buy stocks wh en the prices
are very low pay for them in full get their
, ,

c ertificates and put th em away in a safe

,

deposit box How ev er when stocks are low

.
,

t h e risk in buying on a liberal margin is

v ery small and the possibilities of profit a re
,

so much greater w e do not s ee any Obj ec

,

tion to takin g advantag e of thi s m ethod Of

tradi ng.
66 S U CC E SSFUL S TO CK SPECULAT I ON

get t h e u s e of the money without any i n

t eres t .

Therefore there is an advantage to the

,

broker in lend i ng stock and f or that reason ,

i t is nearl y always possible for a broker t o

arrange delivery Of stock for you if you
wish to sell S ho rt Wh en y ou instru ct him
.

later on to b uy the st ock f or you h e will d o ,

S O and deliver i t t o the broker from whom h e

borrowed it wh o wil l re t urn the mone y he

,

re ce i ved f or it .

When y ou sell st ock short and the price

goes up you will have to pay a high er price
,

for it Therefore to prot ect himself against

.
,

the possibility Of losing your brok er d emands

,

a payment from you j ust the sam e as you

pay margin when you b uy stock .

S hort selling is something that we do not

recommend very much to our clients We .

think it is not advisabl e t o d o any short s ell

ing as long as there a re go od opportunities
to make money by buying " but wh en all bar
gains disappear as they do someti mes you
, ,

must either sell short or els e k eep out of the

market entirely A t such tim es there may
.
,

be many Opportuni t ies t o make money b y

S hort s elling and we d o not consider that
,
 S UC C ES SFUL S TO CK SPECULAT I O N 67

there is any reason why our clients S ho u ld

not take advantage Of them .

O f cours e great care must be exerci sed

,

in selling stocks S hort You might s ell a

.

stock short because you know the market

price is 1 00% greater than its real v alu e ,

but it is possibl e for manipulators t o for ce i t

up a great deal higher " and if you are not

able to put up su fficient money with y o u r

b roker to protect him he will buy at a h igh
,

price and you will los e the mon ey you have

p u t up with him In
. som e instances stocks ,

a re cornered and t h e short interests are

forc ed to buy the stocks at prices that re p
resent enormous losses .

It is a common thing to read about the

S hort int erests in certain stocks All stocks .

that a re sold S hort must be bought sooner or

later and wh en that buying takes place it
, ,

may aff ect t h e market very much Th ere .

fore i f it is known that th ere is a big S hort

,

interest in a ce rtain stock we should expect

,

t h e stock to sell at a high er p ri c e " but s ome

times the short interests break the market
and force the price down especiall y when ,

general c onditions a re in th eir favor .

 CHAPTER XV III .

B U C K E T S H OP S

There h as been s o much pu b licity gi ven

to b ucket shops nearly ev erybody is familiar
,

with the term A broker runs a bucket shop

.

when he s ells stock to his clients on margi n

and e i ther n ev er buys the stock for their a o
counts or els e s ells it immediat ely aft er buy
,

ing it The bucket S hop simply gets your

.

mon ey on t h e supposition that you are more

li kely to be wrong than to be right Of .

’
course if you ta ke the b ucket shop s advice
,

you surely are likel y to be wrong Bu cket .

sho p s get their clients I nto the very spe en

lative stock s where t h ere i s likely t o be a
,

gr eat deal of fluctuation in the pri ce of the

stocks which gives them f requent opportun
,

ities to sell out their clien ts .

When the mark et is going down or when

there are many movements up and down in
t h e p rice of stocks the bucket shops make
,

money rapidly but occasionally there i s a

,

long period when the marke t i s working

against the b ucket s hops and unless they
,

have a great deal of money t he y must fail .

70 S UC C ES SFUL S T O CK SPECULAT I O N

In A ugus t 1 921 S tock E xchange stock s

, ,

started to go up The upward movement

.

was very slow but it was continual U p to .

the tim e of this writing there has not been ,

a three point reaction except in a few stocks

-
, ,

in all Of that time Without a fluctuating

.

market the bucket shop has no chance t o

,

cl ean out its customers As a consequen ce .

,

t h e buck et shops began to fail in the early

part of 1 922 and up to t h e pres ent writing
,

( A pril 1
, 9 22 ) ther e h ave been more than fif ty
of these failures However it is not likely
.
,

that all the bucket s h ops will be put out of

business T he more successful one s are
.

”
likely to weather the storm .

Many l aws h ave b een e nacted aga l ns t buck

et S hops a nd we belie v e some way will b e
,

found t oget rid of them at some future time "

but we do not expect that to happen soon ,

and we warn our readers not t o get into their

hands because if the y do not get y our mon ey
,

away from you one way th ey are likely t o

get it some other way T he man w h o runs .

a b ucket shop usually h as no conscience and ,

it cert ainly i s an unfortunate thing f or any

one t o get mixed up wit h s uch a man .
 CHA PTE R XI X .

CH OOS IN " A B R OK ER
It is very important that you choo s e a
good broker N O matter h ow careful you are
.
,

it is possible to make a mi s take Howeve r

.
,

if you choose a broker who is a mem ber Of

the New York S tock E xchange you h ave ,

eliminated a very large percentage of yo ur

chances of getting a wrong broker .

O ccasionally a member of t h e St ock Ex

chang e fails and once in a whil e one is s u s
pend ed for running a bucket S hop or be i n g
connected with one but these instance s are
,

very rare compared wi th the nu mber of bro

kers who get into troub l e w h o are no t mem
bers of t h e New York S tock E xchange The .

rul es and regulations of the S tock E xchange

prot ect you t o a great extent .

When you b uy stock on margin you leave ,

your money in the han d s of a broker and ,

you S h o u ld know that he is responsible NO .

ma tter who your b roker is you should get a

,

report on him If you are a s u b s cri ber t o

.

’
Bradstreet s or Dun s A genci e s ge t a rep ort
’
,

from them If you are not a sub s cri b er to

.
72 SU C CES SFUL S TO CK SPECULAT I O N

any mercantile agency you perhaps have a

,

friend who can get a report for you or your ,

bank may get one for you Banks make a

.

practic e Of getting r eports Of this kind for

their clients Wh en ask ed to do s o we s end
.
,

our clients the names Of brokers who are

memb ers Of the N ew York S tock E xchange ,

bu t we prefer not to recomm end any brok er .

O f course we cannot guarant ee that a broker

,

is all right We simply u s e our best j udg

.

ment but a s w e said b efore you eliminate

, , ,

a larg e percentage of your chances of going

wrong when y ou trade with a broker w h o
is a memb er of the New York S tock E x
cha n ge .
74 S UCCESS F UL S TO CK SP E CULATI O N

your call If S teel should go up t o 1 01 you

.

could have your broker buy it at 97 and sell

it at the market and you would make a
,

r
'

p o fit of four points le s s the cost,of your

ca ll and commissions .

A s a method Of operating in the sto ck

market we do no t recommend the buying of
,

puts and calls P rofessional sp eculators may

.

be abl e to use th em to advanta ge sometime s ,

but for the outsider w h o is not in close t ouch

,

with the market th ere is noth i ng about them

,

to recommend .

Here is one p oint " the people who sell puts

"

and calls fix the terms If the mark et i s

.

irregular they will s et the po i nt of bu ying

,

or selling far away from the market p ri ce .

These peo ple are shrewd traders and they

make the terms in their own favor It is .

generally said that nearly al l the buyers Of

puts and calls lose and that is our opi ni on
,
.

Therefore we ad vise you t o leav e t hem alone

, .
 CHAPTER XXL
S TOP LOSS OR D ER S

A stop loss i s an order t o your broker

-

to sell you out if the market s ells down a

certain number of points Many speculators
.

place stop loss ord ers only two points from

the market price The id ea is that wh en the
.

market starts t o g o down it is likely to con

tinne going down and by taking a two point
,
-

loss yo u may save a much greater loss It .

also can be applied to a S hort sal e whe n you

,

give your broker instructions to buy in th e

stock for you if it goes U p a certain number
of po i nt s
.

We read s o m uch i n t h e fina ncial news

about stop loss orders or m erely stop orders
-
,

which is the same thing the averag e reader

,

i s likely to get t h e id ea that it is something

he must use for his own prot ection but it ,

is our opinion that it is something that S hould

b e used very seldom by those who trade along
the broad lines recommended b y us If your
.

p u rchases were made in stocks that were

very cheap you should continue to hold them
,

in case Of a reaction If you bought them

.
76 S U CC ES S F UL S TO CK SPECULATIO N

o utright or on a s ubstantial margin you are ,

not in danger and y ou should l ook upon your

,

loss merely as a paper loss In t h e great .

m a j ority of cases you will be a gr eat deal

,

b ett er Off to hold on to your stocks than you

would be if you had a stop loss ord er -
.

A large numb er of stop loss ord ers is a -

good thing for the short in t erests L et u s .

tak e U S S t eel again as an example S up

. .
, .

pose i t is selling at 94 and it is believed

that th ere are a large number of stop lo ss -

orders at 92 The short interests may s ell

.

the stock h eavily and force it down to 9 2 .

Then the brokers with stop loss ord ers would -

b egin to sell " that would force the price down

still lower and the short interest s coul d buy
,

in to cover at this lower price "

Th erefore we believe t h at stop loss orders
,
-

are a bad t hi ng and a s a rule do not recom

, ,

mend them .

There is one instan c e where a s top lo ss -

ord er can be used to advantage and that is ,

near the top of a b ull market It is i mpos .

sible to t ell when the market h as reached t he

top If you sell out too soon you ma y los e
.
,

a profit of s everal points O f c ourse it i s .

,

b ett er to do that than t o t ake a chance Of

 S U CC E SSFUL S TO CK SPECULAT I ON 77

a large loss In that cas e you might instruct

.
,

your broker to place a stop loss ord er at two

-

or more points b elow the market and k eep ,

moving it up as the ma rket price moves up .

Then when the reaction do es come h e will ,

s ell you out and prev ent you from losing a

large part Of your profit That is about the
.

only instance where we recommend a stop

loss ord er but we do recomm end it to our
,

clients sometimes although seldom

, .

If the stock you own is selling at more

than 1 00 we wou l d suggest that you make
t h e stop loss Ord er at l east three points from
t h e mark et but for stocks selling below 1 00
, ,

a two point stop loss ord er might be used

- -
.

How ever the number Of points should be

,

d ecid ed upon in each particular cas e In t h e .

special instructions to our clients we tell ,

th em when w e thi nk th ey can u s e a stop

loss order to advantage .
 PAR T

C ONC LU D IN" C H APTERS

82 S UCCE SS F UL S TO CK SPECULAT I ON

mon ey f or the promotion Of their inventions

and did not succeed .

It is the same thing with every new busi

ness It is purely a speculation It is a com
. .

mon saying that 9 5 % Of commercial under

takings fail We do not know that that
.

statement is correct but there is no question

,

b ut that the number of failures is very great ,

which shows the great risk in going into a

new undertaking It is far greater than the
.

risk i nvolved in stock speculating when it is

done in accordance with the advice given in
this b oo k .

Yet there would be no progress without

,

speculating Of t his kind If those entering .

a new b usiness would make a careful study

of the venture before entering it and would ,

ex erci se greater care and j udgment in con

ducting it the number Of failures would be
,

very much less The s ame thing i s true of

.

stock speculating Th e failures in stock spec

.

u al t i ng are caused mainly by ignorance and

gr eediness Many peo ple who would be satis

.

fied with a fa i r ret u rn on their money in a

business enterprise think they ought to make
,

a 1 00% profit in a few weeks in stock

speculati on .
 S UCCE SS F UL S T O CK SP E CULAT I O N 83

There is something ab o u t s to ck spec ul a

tion that a ppeals t o the greediness and p ure
gambling instincts Of p eople In the chapter
.

on Ma nipulation we have told you how s tock

,

prices are put up and do w n S ome outsider

.

accidentally buys one of the se stocks j ust

before the price s t arts U p In thirt y days
.

he has made s ev eral hundred per cent p rofit .

He does not real ize that it w as purel y ac ci

dental as far as he was con cerned and he ,

tri es t o d o the s ame thing again and lo s es

,

all of his profits and p robably all of hi s ca pi

tal a s wel l .

A stock gambler ( we use the word g am

bler to refer to a man who o perates i gnor
”

a nt l y ) i s watching a large number Of ex

t r emel y speculative st ocks and suddenly

noti ces one th at takes a big j ump in price .

Then he says t o hi ms elf If I only h ad

,
"

bought that stock on a ten point margin I

-
,

would have made several hundred per cent

profit . He picks out another stock that
som e one tells him is going to do equally
as well He b uys as much of it as he can and
.

puts up al l the money he has as a mar gin ,

but the price doesn t go up P erhaps the

’
"

price goes down and he loses h i s ma rgin " but ,

 84 S U C CE S SFUL S TO C K SPECULAT I ON

it may remain almost stationary for a l ong

p eriod som etimes for a year or more and
, ,

during all of this time this man is worrying ,

for fear he will lose his money If he does .

not los e his money it i s tied Up for a long

,

time wh ere he cannot u s e it to take a dv ant

a g e Of real Opportunities that com e his way .

It does not pay to take big risks Th at is .

true in stock speculatin g the same as in any

other undert ak ing Most speculat ors are
.

ke eping their minds all the time on the pos si

bi l i t i es of profit and not thinking about the
possib i liti es of losing .

If you want to be successful in stoc k spec

ul a t i ng there is one thing you must learn
,

to do and that is never to think about the

,

big profits you mi ght have mad e if you had

bought s uch and such a stock becaus e t h e ,

probabiliti es are you could not h ave afforded

to take the n ec essa r y risk in buyi ng that
stock .

O f course after it is all over it may look

, ,

to you as though the buyi ng Of that stock

was a s u re thing but t h e buying of such
,

2 stocks is never a sure thing The risk always .

exists . Th ere is an Ol d saying and we b elieve,

a very true one that a man w h o speculates

,
 S UCCES S F UL S TO CK SPECULAT I O N 85

with the idea of getting rich quickly lo s e s all

his mo ney quickly but that the man who
,

speculates with the idea Of making a fair

return on his money usually gets rich .

In our advice to our clients w e seldom ,

recommend highly sp eculative stocks be ,

caus e we consider t h e avoidan ce Of loss more

importa nt than t h e making of profits You .

may Obj ect to that stat ement becaus e you

,

speculate to make profits and not for t h e

,

purpo se of avoiding loss es Neverth el ess if

.
,

you are careful in keeping your losses down

to a mi ni mum your profits are lik ely to be
,

very liberal A ny trader who trades for any

.

great length Of time i s likely to make large

profits sometimes and yet the maj ority of
,

them hav e greater losses than profits It is .

said that more than 8 0% of all margin trad

ers los e " but w e do not consid er that an argu
ment against trading on margin becaus e ,

th ese losse s are mostly d ue to ignorance ,

greediness and the taking of too great

,

chance s.

D O not S uppress your desire to speculate .

Al l progress w ould s t op if peopl e did not

speculate But do not speculat e in stocks
.

nor in anyt hing else without any knowled ge

86 S UCCES S F UL S T O CK S P E CULAT I O N

of w h at you are do i n g and t ry t o u s e as

,

much good j u dgment and care as p ossible in

all of your transactions If you do not know
.

what to do get adv i ce from s omeone w h o is

,

supposed t o know and wh o i s not interested

in havi ng you buy or sell S tock speculating
.

wi th safety is possibl e for those w h o make

the eff ort t o b e guided by correct p rinciples .
 CHAP TER X XIII .

TW O KIN D S O F TRA D ER S
T h ere are two kinds of stock trad er s O ne .

kind nearly always makes a p rofit and the ,

other wins sometimes and loses o t her time s ,

but eventually l ose s all i f h e doe s not change

his methods Th e firs t kind buys stocks on
.

liberal mar gin or outri ght and is not worri ed

wh en the market goes against him becau s e ,

he has good re asons f or believing that prices

eventually will go up If h e doe s have t o
.

take a loss occasionall y i t i s likel y to b e

,

small compared wi th hi s p rofits Th e s e cond

.

kind wants to mak e a b ig profit quickl y and ,

he buys stocks th at h e t hi nk s are goi ng to

make big gains in the near fut u re but his ,

sel ections are not based upon good j udgment .

We might desi gnat e these t wo tr ader s as

the careful trader and the reckles s trader .

The careful trader tries t o get go od advi ce

on the markets and the value s of stoc ks If .

the advi ce appears t o hi m to b e conse rv ative ,

he i s guided by i t " b u t i f the reckle s s trader

gets advice on stocks he i s not gu i ded by it
,

if it is Of a conserv a tive nature If h e does

.
88 S UCCES SFUL S TO C K SPECULAT I O N

take advice it is likely t o be from one of

,

those unreliable market tipsters who is very

emphatic in h i s stat ements about what the
market is going to do The reckless trader
.

l ets his gr eed and d esire for large and quick

profits influence his j udgment .

O nce in a while one of these reckless trad

ers realiz es that he has made a great mis
take and he wants to change his at titude
, .

U sually he is holding several stocks that

show a big lo ss and he does not know what
to d o with the m He reasons that they are
.

sellin g so low now they surely will sell hi gh er

some time P erhaps h i s reasoning is good
.

a nd perhap s it is not Th e stocks may h ave

.

no chance of g oi ng Up f or a very lo ng t i me ,

if at al l b u t even though they have a good

,

chanc e to go Up later it is better for him t o

,

sell them now if he can put the money derived

from the sale i nto som ething else that has a
bette r chance to make a profit
O ur advice is never to hesitate t o s ell and
take a lo ss if you can p u t the proceed s
from the s ale in t o s omething better rather
than leave it i n the s tock in wh i ch i t i s now
.

It is not so much a question whe th er or not

t h e stock you are holdi n g w il l go up as it
,
 CHAP TER X XI V ‘
.

POSS IB ILI TIE S O F PR OF I T

What are the possibilities Of profit in s toc k
speculation " Tha t question is frequently
asked but it is di ff icult to answer J ames R . .

Keene i s quoted as having said " Many men

come to Wall Street to get rich " they al wa ys
go broke O thers come t o Wall S treet t o op
.

era t e intelligently f or fair returns " they u s

”
ual l y get rich .

While it is true that nearly all stock t rad

ers who try to m ake unu s uall y large p rofits
i n a very s h o rt t i me In stock trading lose y et ,

unus ual p rofit s can be made if you exerci s e

good j ud gmen t and have p atience .

Roger W Babson i n hi s book en t itled

.
, ,
”
Business Barome ters speaks of the possi
,

bi l i t i es Of profit in language that would be

nons i d ered greatly exaggerated i f used by a
promoter and y et he i s extremely cons erva
,

t ive in his advi ce t o trader s He advi s es

.

never t o b u y on mar gin never t o Sell s hort

, ,

and s tayi ng out of the market entirel y ,

neither b u ying or selling for a great p art

,

oi the ti me Here is a quo tation from hi s

'

.
92 S U C CES SFUL S TO CK SPECULAT I O N

book which follows a detailed statement of

,

an investment Of over a period Of fifty

y ears "
Th e p receding exam p l e show s that con
s ervativel y inves ted in a f ew s tandard s tocks a b out
fifty year s a go would toda y amount to o ver
T h es e a re not onl y s trictl y inves tment
s toc ks b ut a re al s o s tocks which ha ve fl uctuated
,

comp arativel y littl e in p rice T hi s moreo ver wa s

.
,

p o ss i b l e b y gi vin g order s to b u y or sell only once

in every three or four years .

If oth er s toc ks which w ere not di vid end p a yer s

"

and which have s hown greater fluctu ation s were

p urcha sed and ad va nta ge had b een ta ken of t h e
,

intermediate fl uctuation s t h e wou l d hav e

,

amounted to much larger figures B y interm ediate .

movement s i s not meant t h e weekl y movements

which t h e ordin ary p rofes sional Op erator notes b u t ,

t h e b road er mo vem ent s exten d ing o ver man y month s

and p ossi bly a year or mo re Nevertheless these .
,

b roader interm ed iate mo vem ent s sh oul d not be

notic ed by a c on serv ati ve inves tor a s it i s p o ssi bl e
'

to correctl y diagno se onl y t h e mo vem ents extending

o ver longer p eriod s Ma ny broker s b eli eve th at it
.

i s p o s s i b l e to di s cern al s o thes e interm edi ate move

m ent s Of s ix or eight month s " and if s o t h e fol l owing ,

res ult s would h ave b een p o ssi bl e .

inves ted in S t Paul in 1 870 wo ul d

‘
.
’

amount to o ver toda y .

inves ted in Union P acific in 1 870

‘ ’

would amount to o ver toda y .

in ves ted in Central of N ew J er s ey

‘ ’

w ou l d amo u nt to Over tod a y .

inv es ted in N orth ern P acific woul d

‘ ’

amount to o ver toda y .

T h ese figu res a re not b a s ed on th e s u pp o s itio n

‘

that t h e in vesto r w as sellin g at th e top of every

 SU C CE SSFUL S TO CK SPECULATI ON 93

ri s e or b uying at t h e b ottom of every d eclin e b ut

that t h e tran s action s were mad e at a verage if igh ‘ ’

and a verage low p rices b a s ed up on th e stud y Of

‘ ’

t echnical condition s ”
.

If such large profits can be made by fol

lowing Bab son s advic e Of course larger
’
,

profits can be made by buying on conserva

tive margin and by sel ling short wh en all
t h e conditions are in favor of it .

While there are possibilities of making

extremely large profits without taking great
risks by those who are patient and ex erci se
,

good j udgment one s h ould be satisfied with

,

a small profit if it is t h e result Of great care

, ,

in an e ff ort to eliminat e risk O f course you .

,

can aff ord to tak e a much great er risk with

a small part of your sp eculativ e fund than
you can with all of it Th e less mon ey you
.

have with which to sp eculate t h e more care ,

ful you should be S om e p eopl e cannot aff ord

.

to sp eculat e at all Th ey S hould invest their

.

funds in good safe investments but this

, ,

book is written f or Specula t or s .

C areful stock speculati on carri ed on regu

l a rl y over a p eriod of y ears we believe brings
,

larger returns than almost anything els e and ,

in the n ext ch apter we t ell you som ething

about where to g et information to guide yo u .
 CHAPTER XXV .

MAR K E T I N F ORMATI ON
Where do you get your market informa
tion " P erhaps most people get it from the
daily paper s When y ou loo k over the financial
.

news of one of t h e l eading metropolitan pa

pers and s ee h ow much there is of it you can ,

get s ome idea of the enormous volume of

work necessary t o get this matter ready for
t h e press in a few hours There is no time to
.

confirm reports It is necessary that many

.

of the articles be written from pure imagi

nation based on rumors
, .

Weekly and monthly p eriodi cals can be

more accurate i n their inf ormation but even ,

they are not always dependable Much of .

the financial news published comes from

agenci es that are not reliabl e Read what .

H enry C lews says about them

P rinci p all y among th es e caterer s a re th e financial
n ews a gencies and th e morning W all S treet n ew s
S h eet b oth sp eciall y d ev oted to t h e sp eculati ve inter
,

e s t s that c entr e at t h e S toc k E xchange Th e o b j ect of

.

th es e agenci es i s a u s eful on e " b ut th e p u b lic ha ve a

right to ex p ect that wh en they sub s cri be for informa
tion u p on which immen s e tran s action s ma y be un d er
taken th e utmo s t ca ution s cru tin y and fidelity
, ,
96 S UCC E S S FU L S TO C K S P E CU L AT I ON

s hould b e ex erci s ed in th e p rocurem ent and p ublica

tion of t h e n ews An ything that fall s short of thi s
.

i s s om ethi ng wor s e than b ad s ervice and b ad fa ith

with s ubs crib ers " it i s di shones t and mi s chi ev ou s .

A nd yet it cannot be d eni ed that much of th e s o

call ed n ew s that reach es t h e p ub lic through th ese
in s trum enta l iti es mu s t com e und er th i s condemnation .

Th e p oint s t h e t h e alarm s and th e canard s

‘ ’
, ,

p ut out ex p ress l y to d eceive and mi s l ead find a wi de ,

circulation through thes e m ed ium s with an ea s e ,

which admits of no p o ss i b l e ju s tification H ow far .

thes e la ps es a r e d u e to th e ha ste in s ep arab l e fro m t h e

com p ilation of n ew s of s uch a character how far to ,

a lack of p ro p er s ifti ng and caution how far to l es s ,

cul p ab l e rea s on s I do not p retend to d ecid e " b ut

thi s will be admitt ed by every ob s erv er that t h e ,

circulation of ps eudo n ew s i s t h e frequ ent cau s e

of i n calcula b l e lo ss es N or i s it a l on e in th e matter
.

of circulating fal s e information that th es e n ew s v en

d er s a re at fault Th e ha b it of retailing p oint s
.
‘ ’

in t h e i nt eres t of cli qu es t h e volunteering of ad vice

,

a s to what p eo p l e s hould b u y and what th ey S hould

s ell t h e s trong sp eculati ve b ia s th at run s through
,

t h eir editorial o p inion s th e s e thing s a pp ear to mo st

,

p eo p l e a revolting a b u s e of t h e true function s of

j ournali sm
”
.

O f course every trader gets marke t letters

,

from one or more brok ers These are many .

and vari ed in character S ome of them are .

prepared with great care and give reliable

information but you must rememb er that
,

a broker s market letter is published f or the

’

purpose of getting business and busine ss is ,

’
creat ed only b y the customers trading .

’
Therefore it i s to the broker s interest to
98 S UCC E S S FU L S TO C K S P E CU L AT I ON

cl i n ed s teadi ly afterward and by th e time h e got

b ack from B o ston it s howed a hea vy l o ss Th e man .

who ad vi s ed it s p urcha s e had no sp ecial knowled ge

a b out t h e s tock b ut s imp l y took a chance know
, ,

i n that t h e market had onl y two wa y s to go and it

g ,

mi ght go u p in which ca s e b es id es ma kin g twenty

, ,

fiv e dollar s in commi ss ion s for t h e hou s e h e would ,

be p atted on t h e b ack for hi s g ood j udgment If th e .

market went down a s it did h e would s ti ll make , ,

tw ent y fiv e dollar s
-
.

I v enture to s a y that 99 % of t h e S p ec ulati on s

"

on t h e N ew Y ork S tock E xchang e a re b a s ed on

s uch s o call ed ti ps Th e manag er ha s got to g et
-
‘ ’
.

t h e b u s in ess to k eep hi s p o s ition and s alar y and thi s ,

can onl y b e don e by touting p eo p l e into t h e market ‘ ’

.

S o h e draw s on t h e do p e s h eet s of th e p rofess ional

‘ ’

ti ps ter s and hi s own feelin gs and gi ves p o s itive ,

information to t h e b l eating lamb that t h e S tandard

O il i s p utting u p S t P aul or that c ertain in fl u ential
.
,

b ank er s a re bulling U nion P acific Th e lamb b u ys

‘ ’
.

t h e st ock t h e b ro k er g et s t h e commi ss ion and th en

, ,

t h e lam b worri es hi s h eart out a s h e s ees hi s on e

thou s and dollar mar gin j ump in g around in v alu e
-
.

N ow it h a s increa sed to el even hundred do l lar s then ,

d eclined to nin e hundred and fifty dollar s th en nine ,

hun dred dollars eight hundred dollar s th en b ack to

, ,

ei ght hundr ed and fifty dollar s and th en it ta k es t h e

‘
to b oggan to three hundred dollar s u p on whi ch t h e
’

b ro k er call s for margin s and s ell s t h e cu stome r out ,

if th ey a re not forthcomin g t h e whol e sp ecul a tion ,

b eing b a s ed on th e manager s feeling that stocks ’ ‘ ’

o u ght to go u p .

M en of a ff air s who will not p la y p o ker at hom e

"
,

and a re shocked at t h e mention of faro and roul ette ,

which an y old time r wil l tell y ou a re ea s i er t o b eat

-

than t h e s tock mark et thi nk th ey a re u s ing b u s in es s

,

j udgm ent when th ey tr y to make mon ey on s tock

market ti ps An y on e with common s en s e can s ee
‘ ’
.

that a 1 0% mar gin h as no more chance in an a ctiv e

mark et than a b ru sh dam in a J oh nstow n fl ood One .
 S UCC E S S FU L S TO C K S P E CU L AT I ON 99

of t h e ca u ses for t hi s kind of speculating on a mar

gin i s that a b ro ker s commi ss ion i s onl y 1 2 75 cent s
’ 1

per s h are a nd it do es not p a y to do s mall l ot b u s

-

i ness . Th e one thou s and dollar mar gin would onl y

- -

b u y t en s hares outri ght and n et t h e b roker b ut

for bu yin g and for s ellin g wh ereas that s ame
,

amount a s margin on one hundred shares yi eld s th e

b roker each wa y b es id es inter es t on t h e b a l
ance t h e n et r esult b ein g that for an y given amount
,

of mon ey a sp eculator on 1 0% mar gin mu l ti p li es hi s

p rofits by t en and hi s l o ss es by ten ov er tho se that
would occur were h e to b u y th e s tock outri ght and
take it home Th e b ro ker on hi s s id e multi p li es h i s
.

commi ss ion by ten o ver what h e wou l d receive w ere

h e to do an in ves tment b u s in ess ”
.

From the above letter you get an idea of

the attitude of an employee of the average
’
broker s office He would not be considered
.

loyal to his employer if he had a di ff erent at

t i t ud e When an attitude like this i nfluences
.

the broker s market letters they are not

’
,

r eliable .

You may ask whether th ere is any reliable

information a bout the market Yes there .
,

is There are several large organizations

.

that make a study of fundamental statistics

and statistics of diff erent compa nies and give
information t o their subscribers bas ed upon
this knowledge We believe that i s the onl y
.

kind of information that is worth very m u ch

t o a t rader except the statistical information
,

—
the number of shares sold and the pri ces at
100 S UCC E S S FU L S TO C K S PECU L AT I ON

which they are sold h e gets from hi s dai ly

—

or weekly papers S ome of the p ri nci pal or

.

ga ni za t i ons of this kind are as follows "

S ta nd a r d S ta ti s ti cs C ompa ny, I n c .

B a bs on s S ta ti s ti ca l Or g a ni za ti on
’
.

Th e B r ook mi r e E con omi c S ervi c e .

H a rv a rd E con omi c S ervi ce .

P oor s I n v es tmen t S ervi ce

’
.

M ood y s In v es to r s S ervi ce
’
.

R i c h a r d D Wyc k ofi Ana l y ti ca l S ta ff
.
’
.

The a b ove a re the princi pa l organizatio ns

of thi s kind S u bs cripti ons t o their s e rv i ce
.

cost from $85 t o $1 000 a year In addi tion .

to these there are a few other organiza t ions

besid es our own and individual s givin g a
somewhat S imilar service but we kn ow of ,

none that give s such a service at as low a

price a s our s .

Y ou S hould no t conf use the service given

by the a bove organizations with that given
by many organizat ions and individuals w h o
att empt t o tell y ou what the market is going
to do from day t o da y In other words they
. ,

giv e tips on the market Th ere are a num

‘ ’
.

ber who issue daily market lett ers of this

kind and charge from $1 0 to $25 a month
for their s ervi ce but i t i s a line of s erv1 ce
,

that we do not recommend at al l because we ,

con s ider that you w ould b e taki ng a very

 C H A PTE R XX VI .

S U CC ES SF U L S P E C U L ATIO N
S uccess in stock speculation de pe nd s u pon
a things that are very simple .

know what t o b uy when t o buy , ,

to sell and will act in accordance

,

with that knowledge your success is as sured

, .

You i t is imposs i ble to know thes e

things is not so diff icult as it is s u p
pos ed t o be .

Many pe opl e buy sto cks at the wrong time ,

and most of those who do buy t hem at the

right time buy the wrong stock s Right now
, .

( early in A pri l 1 922) i s b u yi ng t i me in t h e

,
-

stock market and i t is possible t h a t t h i s b u y

,

ing time may continue with some interrup —

tions for another year or two or even

—
,

longer .

It is more diff icult however to tell you , ,

WH AT stocks t o buy Fir s t of all we ad .

,

vise you against b uying st ocks that are p ut

up to hi gh p rice s b y mani pulation O f c ours e
‘
.
,

if you g et in one of t h ose stock s right and

get out right your profits ar e very l arge
, ,

b u t you take a great risk and tho s e w h o wi n ,

l 04 S UCC E S S FU L S TO C K S P E CU LAT I ON

once or twice b y this method are almost sure

to lo s e everything sooner or later in an ef
fort to do the same thing again Your .

chan ces are not much b etter th a n if you

gam b led at Mont e C arlo The chances in .

buying mani pulat ed stoc ks a re invariably

against the outsider .

Th ere always i s so much publicity about

these very active s peculative stocks that t h e
p ubli c is attracted t owards them News .

pape rs and brokers market let t er s give al ’ ‘

together t oo much spac e to them S uch .

s t ocks sell f ar t oo high and when the break ,

comes it brings ruinous losses to many

,

people .

O n the other hand b y following a con "

,

s er
'

v a t i v e course you really have a chan ce to

,

make l arge profits with a mi nimum risk We .

are giving below sixteen stocks that we rec

ommend ed in our Advisory Letter of F eb ru

ary 1 4 th 1 922 with the app roxi mate p rice s

, ,

of them th en and the approximate prices on

Mar ch In arriving at th ese p rices we ,

‘
We did advi s th al f th se stock s n M arch 8 1 st
n ot e e s e o e o .

but t h a uth r figur d p r fits t th a t da t beca u th i book

e o e o o e se s
w asw ri tt n h rt l y a f t r t ha t
e s o I f th s t ck s h ad be n bough t
e e e s o e
about F b ru ry 1 4th n th margi n b a i s uggested by
.

on or e a o e s s
nd sol d si m n ths l a t r t h p rofit w u l d have been more
.

u s. a x o e e o
th an 1 207 y ar l y
.

o r 0 e .
IO6 S UCC E S S FU L S TO C K S P E CU L ATION

f ect ed by a eaction in the market To b uy

r .

ten shares of each on that mar gin b asis

would have required a littl e less than
but let u s suppose you put up A fter
allowing for buying and selling commissions
and interest on the balance of but
crediting you with dividends paid your profit ,

would be about 3 2 % or at the rate of about

25 0% per annu m .

O f course we do not claim that by f ol

,

lo w ing t h e conservativ e course we advise ,

you always wi ll make s uch l arge profits ai" ,

though you might do j ust as well as th at .

if you took advantage of some of the oppor

t uni t i es so frequently to be found in the mar
k et " b ut kee n discri mi nation i n what you
”

buy alw ays is necessary However let us

.
, ,
"
suppose you m ad e annual profits of one fif t h -

t h e above amount or ,
which is ea sily
possibl e without taking t h e risks t hat are ,

usually tak en in st ock speculating If you .

invested $1 000 and made 5 0% profit per a n

num reinvesting your p rofit at the same rate
,
'

each year f or twenty years you would have,

more than THR EE MI LL I O N D O LL A R S

m
.

When th ere is a possibility of aki ng such .

enormous profits as that by f ollowi ng care

 S UCC E S S FU L S TO C K S P E CU L AT I ON
I

107

ful methods surel y there is no argument in

,

favor of taking the extreme risks that people

do take in buying the highly speculativ e
stocks the prices of which are put up for
,

t h e purpos e of unloading th em on the public .

Ten of the stocks we selected in the abov e

list w ere dividend payers and while t h e oth er
,

six were not th ey were considered worth

,

much more than their market prices and ,

t h e list as a whole was conceded by conserv

ative peopl e as a safe one to buy .

Very frequently we are able to recom

mend a list of stocks that we believe will
yield equally large profits b ut the stocks you
,

should buy are not the ones that a re the

most a ctive nor the ones that are mentioned
most f requently in the fin ancial ne w s and
.

brokers market letters

’
The stock s th at
.

most peopl e buy are usually t h e v ery stocks

that should be left alone T he stocks you .

should buy are usually t he ones you hear

v ery little about .

There is only one S A FE way to speculat e ,

and that is to be g uided by a knowledge of

the fundamental conditions of each stock and
’

also of the industries they represent T h ere .

are several large organizations gi v i ng i nf or

108 S UCC E S S FU L S T OC K S P E CU L A T ION

mation of this kind and those who have been

,

guided by the fundamental statistics issued

by them almost invariably have mad e money
,

in stock speculating T h e valu e of that kind

.

of service has b een thoroughly demonstrated

b eyond any question However a s ub s cri p
.
,

tion for the s ervi ce of most of t h ese organi

za t i ons cost s more than the average person

can a ff ord t o pay U suall y i t i s an yw here

.

from $1 00 t o a year .

We are giving a servi ce f or t he purpose of

gu i ding ou r cli ents to success f ul speculation
for a fee of only $25 a year $1 5 f or S ix ,

months or $1 0 f or three months F or t h i s

,
.

fee we tell you what stocks t o b u y when to , _

b u y a nd when to s e ll
,
We send you our
.

recommendati ons at l eas t twi c e a mo nth b ut ,

send you addi tional Adv i sory Lett ers and lists
oftener if conditions make it necessary You .

al so have the privilege of unlimited p ersonal

corres pondence regardi ng y our market prob
lems The cost of our S ervice is very small
. ,

compared wi th what other reliable organi

za t i on s charge .

O ur Servi ce is b ased on the princi p l e s ex

pounded i n thi s b oo k We try t o select
.

s tocks havi ng t he grea te s t po s sibilitie s of