,successful             ,stock          
,speculation                     ,by    
,j4 ,j4 ,,butler              ,written  
,april #aibb         ,published         
,december #aibb                         
,published by  ,,national ,,bureau ,,of 
,,financial ,,information        #cie   
,broadway1 ,new ,york ,city             
,this ,book ,is ,not ,copyrighted       
,we believe the principles expounded    
in this book are of immense value    to 
everyone who buys speculative           
securities1 and we do not object to     
anyone reproducing any part of it1      
whether or not we are given credit      
for it4   ,national ,bureau of          
,financial ,information   ,transcriber's
 ,note3      ,minor typographical errors
 have been corrected without note4      
,variant     spellings have been        
retained4 ,bold text has been indicated 
as     bold4     ,,contents             
,,part #a                 ,,introductory
 ,,chapters   ,chapter                  
,page       ,i4 ,,the ,,purpose ,,of    

,,this ,,book                 #g        
,,ii4 ,,what ,,is ,,speculation         
#i     ,,iii4 ,,some ,,terms ,,explained
                    #ac      ,,iv4 ,a   
,,correct ,,basis ,,for ,,speculating   
#ag                          ,,part #b  
,,what ,,and ,,when ,,to ,,buy ,,and    
,,sell        ,v4 ,,what ,,stocks ,,to  
,,buy                      #bc          
,,vi4 ,,what ,,stocks ,,not ,,to ,,buy  
#be     ,,vii4 ,,when ,,to ,,buy        
,,stocks                      #bi       
,,viii4 ,,when ,,not ,,to ,,buy ,,stocks
                  #cc      ,,ix4 ,,when 
,,to ,,sell ,,stocks                    
#ce                          ,,part #c  
,,influences ,,affecting ,,stock        
,,prices        ,x4 ,,movements ,,in    
,,stock ,,prices               #da      
,,xi4 ,,major ,,movements ,,in ,,prices 
#dc     ,,xii4 ,,the ,,money ,,market   
,,and ,,stock ,,prices       #dg        
,,xiii4 ,,minor ,,movements ,,in        
,,prices               #di     ,,xiv4   
,,technical ,,conditions                

#ea      ,,xv4 ,,manipulations          
#ec                          ,,part #d  
,,topics ,,of ,,interest ,,to           
,,speculators      ,,xvi4 ,,marginal    
,,trading                        #fa    
,,xvii4 ,,short ,,selling               
#fe   ,,xviii4 ,,bucket ,,shops         
#fi     ,,xix4 ,,choosing ,a ,,broker   
#ga      ,,xx4 ,,puts ,,and ,,calls     
#gc     ,,xxi4 ,,stop ,,loss ,,orders   
#ge                          ,,part #e  
,,concluding ,,chapters     ,,xxii4     
,,the ,,desire ,,to ,,speculate         
#ha   ,,xxiii4 ,,two ,,kinds ,,of       
,,traders                    #hg        
,,xxiv4 ,,possibilities ,,of ,,profit   
#ia     ,,xxv4 ,,market ,,information   
#ie    ,,xxvi4 ,,successful             
,,speculation                 #ajc      
,,part ,,one  ,,introductory ,,chapters 
,,chapter ,i4  ,,the ,,purpose ,,of     
,,this ,,book   ,this book is written   
for the purpose of giving our clients   
some ideas of the fundamental principles
 that guide us when we select stocks for

 them to buy1 but these principles are  
valuable to every person who trades in  
listed stocks or in any other kind of   
speculative stocks4  ,first of all1 we  
want you to get a clear conception of   
the meaning of the word speculation1    
which is explained in the next chapter4 
,our purpose is to protect you against  
losses as well as to enable you to make 
profits1 and it is very important that  
you understand how to provide for safety
 in your speculating4  ,it is a well    
known fact that there are tremendous    
losses in stock speculation1 but we     
claim that almost all of these losses   
would be avoided if all speculators were
 guided by the principles expounded in  
this book4  ,what and ,when are two very
 important words in stock speculation1  
and we cannot urge upon you too strongly
 to study carefully ,chapters ,v4 to    
,,ix4  ,chapters ,x4 to ,,xv4 tell you  
much about the influences that affect   
the prices of stocks1 a knowledge of    
which should also be a guide to you in  

making your selections4  ,perhaps the   
most important chapter in the entire    
book is ,,xxv41 on ,market ,information4
 ,a careful reading of this chapter     
should convince you that much of the    
prevailing information about the stock  
market is misleading4 ,that fact alone  
accounts for many of the losses in stock
 speculation4  ,it has been our aim to  
state all facts briefly4 ,the entire    
book is not long1 and it will not       
require much of your time to read it    
through carefully4 ,we are sure you will
 get many ideas from it that will help  
you4     ,,chapter ,,ii4  ,,what ,,is   
,,speculation8   ,to speculate is to    
theorize about something that is        
uncertain4 ,we can speculate about      
anything that is uncertain1 but we use  
the word speculation in this book with  
particular reference to the buying and  
selling of stocks and bonds for the     
purpose of making a profit4 ,when people
 buy stocks and bonds for the income    
they get from them and the amount of    

that income is fixed1 they are said to  
invest and not to speculate4 ,in nearly 
all investments there is also an element
 of speculation1 because the market     
price of investments is subject to      
change4 ,investment also conveys the    
idea of holding for some time whatever  
you have purchased1 while speculation   
conveys the idea of selling for a quick 
profit rather than holding for income4  
,to the minds of most people1 the word  
speculation conveys the thought of risk1
 and many people think it means great   
risk4 ,the dictionary gives for one of  
the meanings of speculation1 a risky    
investment for large profit1 but        
speculation need not necessarily be     
risky at all4 ,the author of this book  
once used the expression1 stock         
speculating with safety1 and he was     
severely criticized by a certain        
financial magazine4 ,evidently the      
editor of that magazine thought that    
speculating and safety were             
contradictory terms1 but the expression 

is perfectly correct4 ,stock speculating
 with safety is possible4  ,of course1  
we all know that the word safety is     
seldom used in an absolute sense4 ,we   
frequently read such expressions as3    
,the elevators in modern office         
buildings are run with safety4 ,it is   
possible to cross the ocean with safety4
 ,you can travel from ,new ,york to ,san
 ,francisco in a railroad train with    
safety4 ,and yet accidents do occur and 
people do lose their lives in elevators1
 steamships1 and railroad trains4       
,because serious accidents are          
comparatively rare1 we use the word     
safety4  ,in like manner it is possible 
to purchase stocks sometimes when it is 
almost certain that the purchaser will  
make a profit1 and that is stock        
speculating with safety4 ,when ,liberty 
,bonds were selling in the #hj's1 many  
people bought them for speculation4     
,they were not taking any risk1 except  
the slight risk that the market price   
might go still lower before it would go 

higher1 and that did not involve any    
risk for those who knew they could hold 
them4 ,the fact that the market prices  
of ,liberty ,bonds would advance was    
based upon an economic law that never   
fails4 ,that law is that when interest  
rates go up1 the market prices of bonds 
go down1 and when interest rates go     
down1 the market prices of bonds go up4 
,when ,liberty ,bonds were selling in   
the #hj's1 interest rates were so very  
high1 it was certain that they would    
come down4 ,that the market prices of   
,liberty ,bonds would go up was also    
certain1 but nobody could tell how much 
they would go up in a given time4 ,it   
was that element of uncertainty that    
made them speculative1 and not that     
there was any doubt about the fact that 
the market prices of them would go up4  
,buying ,liberty ,bonds at that time was
 speculating with safety4 ,if you read  
this book with understanding1 you will  
know much about speculating with safety4
     ,,chapter ,,iii4  ,,some ,,terms   

,,explained   ,there are certain terms  
used in connection with stock           
speculation that are very familiar to   
those who come in contact with stock    
brokers1 and yet are not always familiar
 to those who do business by mail4      
,undoubtedly the majority of our readers
 are familiar with these terms1 but we  
give these definitions for the benefit  
of the few who are not familiar with    
them4  ,trader3 ,a person who buys and  
sells stocks is usually referred to as a
 trader4 ,the word probably originated  
when it was customary to trade one stock
 for another and later was used to refer
 to a person who sold one stock and     
bought another4 ,he was a trader2 but   
the person who buys stocks for a profit 
and sells them and takes his profit when
 he gets an opportunity1 may not be a   
trader in the strict sense of the word4 
,however1 for convenience1 we use the   
word trader in this book to refer to any
 one who buys or sells stocks4          
,speculator3 ,this word refers to a     

person who buys stocks for profit1 with 
the expectation of selling at a higher  
price1 without reference to the earnings
 of the stock4 ,he may sell first1 with 
the expectation of buying at a lower    
price1 as explained in ,chapter ,,xvii4 
on ,short ,selling4 ,in many cases where
 we use the word trader1 it would be    
more correct to use the word speculator4
  ,investor3 ,an investor differs from a
 speculator in the fact that he buys    
stocks or bonds with the expectation of 
holding them for some time for the      
income to be derived from them1 without 
reference to their speculative          
possibilities4 ,we believe that         
investors always should give some       
consideration to the speculative        
possibilities of their purchases4 ,it   
frequently is possible to get           
speculative profits without increase of 
risk or loss of income4  ,bull3 ,one who
 believes that the market price of      
stocks will advance is called a bull4   
,of course1 it is possible to be a bull 

in one stock and a bear in another4 ,the
 word is used very frequently with      
reference to the market1 a bull market  
meaning a rising market4  ,bear3 ,the   
opposite of a bull is a bear4 ,it refers
 to a person who believes that the      
market value of stocks will decline1 and
 a bear market is a declining market4   
,lambs3 ,lambs refers to that part of   
the public that knows so little about   
stock speculating that they lose all    
their money sooner or later4 ,the bulls 
and bears get them going and coming4 ,if
 the lambs would read this book         
carefully1 they would discover reasons  
why they lose their money4  ,long and   
,short3 ,those who own stocks are said  
to be long1 and those who owe stocks are
 said to be short4 ,short selling is    
explained in ,chapter ,,xvii4  ,odd     
,lot3 ,stocks on exchanges are sold in  
certain lots4 ,on the ,new ,york ,stock 
,exchange1 #ajj shares is a lot2 and on 
the ,consolidated ,stock ,exchange1 #aj 
shares is a lot4 ,less than these       

amounts is an odd lot4 ,when you sell an
 odd lot you usually get #a_/h less than
 the market price2 and when you buy an  
odd lot1 you usually pay #a_/h more than
 the market price2 that is1 #a_/h of a  
dollar on each share where prices are   
quoted in dollars4  ,point3 ,it is a    
common expression to say that a stock   
went up or down a point1 which means a  
dollar in a stock that is quoted in     
dollars1 but a cent in a stock that is  
quoted in cents1 as many of the stocks  
are on the ,new ,york ,curb4 ,in cotton 
quotations1 a point is #a_/ajj part of a
 cent4 ,for instance1 if cotton is      
quoted at #ah4ab1 it means #ah cents and
 #ab_/ajj of a cent per pound1 and if it
 went up #cj points the quotation would 
be #ah4db4  ,reaction3 ,every person who
 has traded in listed stocks probably is
 familiar with this word4 ,it means to  
act in an opposite direction1 but it is 
used especially to refer to a decline in
 the price of a stock that has been     
going up4  ,rally3 ,rally is the        

opposite of the sense in which reaction 
usually is used4 ,when a stock is going 
down and it turns and goes up1 it is    
called a rally4  ,commitment3 ,this term
 is used referring to a purchase of     
stock4 ,it is more commonly used by     
investment bankers when they contract to
 buy an issue1 but the term sometimes is
 used by traders4  ,floating ,supply3   
,the stock of a company that is in the  
hands of that part of the public who is 
likely to sell1 is referred to as       
floating supply4     ,,chapter ,,iv4  ,a
 ,,correct ,,basis ,,for ,,speculating  
,we maintain that there is only one     
basis upon which successful speculation 
can be carried on continually2 that is1 
never to buy a security unless it is    
selling at a price below that which is  
warranted by assets1 earning power1 and 
prospective future earning power4       
,there are many influences that affect  
the movements of stock prices1 which are
 referred to in subsequent chapters4    
,all of these should be studied and     

understood1 but they should be used as  
secondary factors in relation to the    
value of the stock in which you are     
trading4  ,if the market price of any   
stock is far below its intrinsic value  
and there is no reason why the future   
should bring about a change in this     
value that will decrease it1 then you   
may be certain that important influences
 are working against the market price of
 the stock for the time being4 ,in the  
course of time the market price will go 
up towards the real value4 ,this matter 
will be more fully explained in         
subsequent chapters4  ,you always should
 keep in mind the fact that when you buy
 a stock at a higher price than its     
intrinsic value1 you are taking a risk4 
,the stock may have great future        
possibilities1 but it is risky to buy   
stocks when present assets and earnings 
do not warrant their market prices1 no  
matter how attractive prospective future
 earnings may appear4 ,however1 the     
possibilities of profit sometimes are so

 great that one is justified in taking  
this risk4  ,it is our belief that the  
majority of traders buy stocks because  
they are active in the market and       
somebody said they were a good buy1 even
 though the real values may not be      
nearly as much as the market prices4    
,as an example of this kind of trading1 
we want to call your attention to a news
 item that appeared in a ,new ,york     
paper4 ,it stated that on ,april #ast1  
some brokers in ,detroit1 as an ,april  
,fool joke1 gave out a tip to buy ,a4   
,f4 ,p41 meaning ,april ,fool           
,preferred1 but when asked what it      
meant1 replied ,american ,fire          
,protection4 ,of course1 there was no   
such stock1 but there was active trading
 in it until the joke was discovered4   
,evidently it is not necessary to list a
 stock on the ,detroit ,stock ,exchange 
in order to trade in it4  ,this story   
may or may not be true1 but we believe  
the statement that people trade in      
stocks they do not know anything about  

is true4 ,you should be careful not to  
buy a stock merely because somebody says
 it is a good thing to buy1 unless the  
person making the statement is in the   
business of giving information on       
stocks1 because it may be only a rumor  
with no substantial basis4 ,of course1  
if many people act on the rumor1 there  
will be active trading in the stock1 and
 it is frequently for that purpose that 
such rumors are started4     ,,part     
,,two  ,,what and ,,when ,,to ,,buy and 
,,sell     ,,chapter ,v4  ,,what        
,,stocks ,,to ,,buy   ,in deciding what 
stocks to buy1 it is well to consider   
first the classes of stocks1 and then   
what particular stocks you should buy in
 the classes you select4 ,we would first
 of all divide all stocks into two      
classes1 those listed on the ,new ,york 
,stock ,exchange and those not listed on
 the ,new ,york ,stock ,exchange4 ,as a 
rule1 it is better to buy stocks listed 
on the ,new ,york ,stock ,exchange1     
although there are frequent exceptions  

to this rule4  ,then1 the stocks listed 
on the ,new ,york ,stock ,exchange may  
be divided into classes1 such as        
railroad stocks1 public utility stocks1 
motor stocks1 tire stocks1 oil stocks1  
copper stocks1 gold stocks1 and so      
forth4 ,at certain times certain stocks 
are in a much more favorable condition  
than at other times4 ,in #aiai1 when the
 industrial stocks were selling at a    
very high price1 the public utility     
stocks and gold stocks were selling low1
 because it was impossible to increase  
incomes in proportion to the increase in
 operating costs4 ,but since the        
beginning of #aiba1 the condition of    
these two classes of stocks has been    
improving and the market has reflected  
that improvement4  ,at the time of this 
writing 7early in ,april1 #aibb7 we are 
recommending the stocks of only a very  
few manufacturing companies2 but we are 
recommending a number 7not all7 of the  
railroad and public utility stocks1 and 
a few specially selected stocks among   

the other classes4  ,in every instance1 
when you make a selection1 you should   
consider the company's assets1 present  
earnings1 and prospective future        
earnings1 and then take into            
consideration all the influences that   
affect price movements1 as explained in 
subsequent chapters4     ,,chapter ,,vi4
  ,,what ,,stocks ,,not ,,to ,,buy   ,a 
great deal more can be said about stocks
 you should not buy than about stocks   
you should buy1 because the list is very
 much larger4  ,stocks not listed on the
 ,new ,york ,stock ,exchange1 as a rule1
 should not be bought by a careful      
speculator1 but as stated in the        
previous chapter1 there are exceptions  
to that rule4 ,billions of dollars have 
been lost in the past by buying stocks  
that have become worthless4 ,a few years
 ago a list of defunct securities was   
compiled1 and it took two large volumes 
in which to enumerate them4 ,new ones   
have been added to them every year4     
,therefore1 it is very important that   

you should give careful thought to the  
subject of what stocks not to buy4      
,nearly all promotion stocks 7stocks in 
new companies7 are a failure4 ,an       
extremely small percentage of them are  
very successful1 and the successful ones
 are referred to in the advertising of  
the new ones2 but1 on the basis of      
average1 the chances are you will lose  
your money entirely in promotion stocks4
 ,we believe that most of the promotion 
companies are started in perfectly good 
faith1 although some of them are        
swindles from the beginning2 but no     
matter how honest and well meaning the  
organizers are1 the chances of success  
are against them4 ,therefore1 we say    
that promotion stocks should not be     
bought by the ordinary man who is       
looking for a good speculation1 because 
his chances of making a large profit    
with a minimum risk are very much better
 when he buys stocks listed on the ,new 
,york ,stock ,exchange and uses good    
judgment in doing so4  ,among the listed

 stocks there are many you should not   
buy4 ,first of all1 eliminate them by   
classes4 ,do not buy the classes of     
stocks that are selling too high now4   
,you may say that there are some        
exceptions in all classes4 ,that may or 
may not be so1 but in any event1 you    
have a better chance of profiting by    
confining most of your purchases to the 
classes of stocks that are in the most  
favorable position4  ,as a rule1 when   
stocks are first listed1 they sell much 
higher than they do a short time        
afterwards4 ,of course1 that is not     
always true4 ,it is more likely to be   
true when a stock is listed during a    
very active market1 when prices are more
 easily influenced by publicity4 ,the   
high price of it is usually due to the  
fact that publicity is given to it1 and 
as soon as the effect of this publicity 
wears off1 the market price of the stock
 declines4  ,it is a good rule never to 
buy stocks that brokers urge you to buy4
 ,your own common sense ought to tell   

you that a stock that is advertised     
extensively by brokers is likely to sell
 up in price while the advertising is   
going on and will drop in price just as 
soon as the advertising stops4  ,many   
people notice that and they think they  
can profit by buying when the           
advertising starts and sell out when    
they get a good profit1 but the majority
 of them lose money4 ,the stock may not 
respond to the advertising1 or if it    
does go up1 they may wait too long      
before selling4 ,those who do sell and  
make #bjj or #cjj profit in a very short
 time are almost sure to lose it all in 
an effort to repeat the transaction4    
,many of those who read this know it is 
true from their own experience4  ,you   
should leave such stocks strictly alone4
 ,you may win once or twice1 but you are
 sure to lose if you keep it up4 ,as a  
rule stocks of this kind have very      
little value and the brokers who boost  
them make their own money from the      
losses of their foolish followers4      

,,chapter ,,vii4  ,,when ,,to ,,buy     
,,stocks   ,stocks should be bought when
 they are cheap4 ,by being cheap1 we    
mean that the market price is much less 
than the intrinsic value4 ,in ,chapters 
,x4 to ,,xv4 we talk about influences   
that affect the price movements of      
stocks4 ,by studying these carefully you
 should be able to decide when stocks   
generally are cheap4 ,of course1 not all
 stocks are cheap at the same time1 but 
the majority of listed stocks do go up  
and down at the same time1 as a rule4   
,at the time of this writing 7in the    
early part of ,april1 #aibb7 there are a
 great many stocks listed on the ,new   
,york ,stock ,exchange that are selling 
at prices much less than their intrinsic
 values1 but there are some stocks that 
should not be bought now1 nor at any    
other time4 ,there are some stocks      
listed on the ,new ,york ,stock         
,exchange now that perhaps have no      
intrinsic value and never will have any4
 ,nevertheless we consider that right   

now#a is one of the times for buying    
stocks4 ,there are unusual bargains to  
be had1 although keen discrimination is 
necessary in order to be able to pick   
out the bargains4  ,as a usual thing1 it
 is a good time to buy stocks when      
nearly everybody wants to sell them4    
,when general business conditions are   
bad1 trading on the stock exchanges very
 light1 and everybody you meet appears  
to be pessimistic1 then we advise you to
 look for bargains in stocks4 ,the last 
six months of #aiba was an unusually    
good time for buying stocks4  ,it is    
well known that the large interests     
accumulate stocks at such times4 ,they  
buy only when the stocks are offered at 
a low price and try not to buy enough at
 any one time to give an appearance of  
activity in the market1 but they buy    
continually when the market is very     
dull4 ,it seems to be characteristic of 
human nature to think that business     
conditions are going to continue just as
 they are4 ,when business is bad1 nearly

 everybody thinks business will be bad  
for a long time1 and when business is   
good1 nearly everybody thinks business  
will be good almost indefinitely4 ,as a 
matter of fact1 conditions are always   
changing4 ,it never is possible for     
either extremely good times nor for     
extremely bad times to continue         
indefinitely4  ,you can buy stocks      
cheaper when there is very little demand
 for them1 and you should arrange your  
affairs so as to be prepared to buy at  
such times4   ,,footnotes3  #a ,in our  
advisory ,letter of ,april #be1 #aibb1  
we advised our clients to refrain from  
margin buying for a while1 because the  
market was advancing too rapidly4       
,shortly after that there was a decided 
reaction in the market4     ,,chapter   
,,viii4  ,,when ,,not ,,to ,,buy        
,,stocks   ,there are times when stocks 
should not be bought1 and that is when  
nearly all stocks have advanced beyond  
their real values4 ,it is doubtful if   
there ever is a time when all stocks    

have advanced beyond their real values1 
but when the great majority of stocks   
have so advanced1 there is likely to be 
a general decline in all stock prices4  
,the stocks that are not selling too    
high will decline some in sympathy with 
the others4 ,therefore1 there are times 
when we advise our clients not to buy   
any stocks4  ,some organizations giving 
advice in regard to the buying of       
stocks1 advise their clients to refrain 
entirely from buying for periods of a   
year or longer1 but we think it is      
seldom advisable to refrain entirely    
from buying for any great length of     
time4 ,there usually are some good      
opportunities if you watch carefully for
 them4 ,it is our business to watch for 
these opportunities and tell our clients
 about them4  ,there are also times when
 the technical condition of the market  
is such that we advise our clients to   
refrain from buying for a while4 ,see   
,chapter ,,xiv4     ,,chapter ,,ix4     
,,when ,,to ,,sell ,,stocks   ,you      

should sell stocks when the market price
 is too high4 ,that is a general rule1  
but it is necessary for you to study all
 the influences affecting stock prices  
to be able to decide more accurately    
when you should sell your stocks4 ,we   
give you1 in future chapters1 much more 
information on judging the markets4     
,another general rule1 is to sell stocks
 when nearly everybody is buying them4  
,it is a well known fact that the great 
majority of people buy stocks near the  
top and sell near the bottom4 ,naturally
 when everybody is optimistic1 stocks   
will sell up high1 but sooner or later  
they will come down again1 and when     
everything looks very promising is a    
good time to sell4 ,it is better to lose
 a little of the profit that you might  
have made by holding on longer than not 
to be on the safe side4 ,the man who    
tries to sell at the top nearly always  
loses1 because stocks seldom sell as    
high as it is predicted they will1 or1  
in other words1 the prediction of higher

 prices is advanced more rapidly than   
the prices4  ,we remember reading in    
#aiaf1 when ,u4 ,s4 ,steel sold up      
around #acf a share1 a prediction that  
it was going to sell up to #ajjj a      
share4 ,probably many people who read   
such news items consider them seriously4
 ,of course1 that was a most exaggerated
 prediction1 but during the extreme     
activity of a bull market1 it seems that
 nearly everybody is talking in         
exaggerated terms of optimism4 ,that is 
why most traders seldom ever take their 
profits in a bull market4 ,they wait    
until stock prices start to come down1  
and then they are likely to think there 
will be rallies1 and keep on waiting    
until they lose all their profits4  ,on 
the other hand1 some people make the    
mistake of selling too soon4 ,just      
because your purchase shows a liberal   
profit is no reason why you should sell4
 ,the stock may have been very cheap    
when you bought it4 ,in #aibj1 ,peoples 
,gas sold below #cj4 ,those who bought  

it then were able to double their money 
by the close of #aiba1 and many sold out
 and took their profits4 ,of course1 if 
they invested the proceeds in other     
stocks that were just starting upward1  
they may not have lost anything1 but    
there was no particular reason for      
selling ,peoples ,gas at that time4 ,the
 public utilities generally were coming 
into their own1 and nearly all of them  
were regarded by economic students as   
having unusual opportunities for profit4
  ,then again1 it is not always a       
mistake to sell a stock in order to get 
funds to put into something else that   
seems more promising1 even though the   
stock you sell is likely to go much     
higher4  ,it is very important that you 
should try to sell your stocks at the   
right time4 ,that is the main thing to  
keep in mind and it is better to sell   
too soon than too late4 ,don't be too   
greedy and hold on for a big profit4    
,read ,chapter ,,xxiv4 on the           
,possibilities of ,profit4     ,,part   

,,three   ,,influences ,,affecting      
,,stock ,,prices     ,,chapter ,x4      
,,movements ,,in ,,stock ,,prices   ,it 
is due to the fact that stock prices    
constantly move up or down that         
speculation is possible4 ,sometimes     
certain stocks remain almost at a       
standstill for a long period of time1   
but at least a part of the stocks listed
 on the ,exchanges move either up or    
down4 ,if one always could tell just    
what way they were going to move1 it    
would be comparatively easy to make a   
fortune within a short time4  ,in the   
last twenty years1 a great deal of time 
and money has been spent by statistical 
organizations in checking up statistics 
for the purpose of ascertaining a       
definite basis upon which to predict    
future movements in stock prices4       
,several of these organizations use very
 different statistics upon which to base
 their conclusions1 and yet their       
conclusions are very similar4 ,they have
 proved beyond any question of doubt    

that some of these movements are clearly
 indicated by laws that never fail4  ,we
 do not attempt in this book to explain 
the fundamental statistics upon which   
the predictions of business cycles are  
based1 but in the next five chapters we 
explain some of the influences that     
affect the movements in stock prices4   
,read these chapters very carefully1 for
 your success in stock speculation will 
depend very largely upon your correct   
prediction of these movements4          
,,chapter ,,xi4  ,,major ,,movements    
,,in ,,prices   ,stock prices move up   
and down in cycles4 ,these are the major
 movements in prices1 but there may be  
many minor movements up and down within 
the major movements4 ,these stock price 
movements nearly always precede a change
 in business conditions2 that is1 an    
upward movement in stock prices is an   
indication that business conditions are 
going to improve1 and a downward        
movement in stock prices is an          
indication that business conditions are 

going to get worse4  ,at the present    
writing1 we are in a period of          
improvement4 ,stock prices began to go  
up in ,august1 #aiba4 ,the upward       
movement has been slow1 but gradual4 ,in
 a period of seven months1 forty        
representative stocks show an upward    
movement of about #bj points1 although  
business has not shown much improvement4
 ,a steady upward movement in stock     
prices is a sure sign that business     
conditions are beginning to improve1    
even though that improvement is not     
noticeable4  ,these major stock         
movements are not an exact duplicate of 
any previous ones1 and it is impossible 
to tell how long they will last or just 
what course they will take4 ,certain    
influences could change a period of     
improvement into a period of prosperity 
very quickly4  ,a period of prosperity  
is noted for high prices1 high wages1   
and increasing production in all lines4 
,everybody is optimistic4 ,most people  
spend their money freely1 and that makes

 times better4 ,as prices go up and     
business increases1 more money is       
required in business and interest rates 
go up4 ,as a consequence1 when interest 
rates go up1 bond prices go down4       
,during this period1 speculative stocks 
are selling at their highest prices2 and
 under the influence of this movement1  
many stocks that have no actual value   
sell up at high prices4 ,of course1 wise
 speculators sell all their stocks      
during this period4  ,following a period
 of prosperity comes a period of        
decline4 ,the first sign of it usually  
is a severe break in the stock market4  
,at that time general business is       
running along at top speed and there is 
no sign of a let-up1 but this break in  
the stock market should be a warning4   
,most people think the break is merely a
 temporary reaction--they may refer to  
it as a ,,healthy reaction--and they    
start buying stocks again1 and put the  
market up1 but it does not go up as high
 as it was before the break occurred4   

,when stock prices do not rally beyond  
the prices at which they were before the
 break occurred1 it is a sign that the  
turning point has been reached and that 
the bear market has started1 although   
the majority of people do not realize   
this until a long time afterwards4      
,next comes a period of depression1 when
 we have low prices1 low wages1 hard    
times1 tight money1 and many commercial 
failures4 ,many people who lost all     
their money during the speculation      
period1 become thrifty and economize    
during the period of depression1 and    
start in to save again4 ,nearly         
everybody is pessimistic during this    
period4 ,trading on the ,stock ,exchange
 is irregular and as a rule very light4 
,this is the time to get stock bargains1
 but the general public as a rule       
doesn't take advantage of it4 ,people   
are scared and think prices will go     
still lower4 ,the big interests         
accumulate stocks during this period1   
and sell them during the period of      

prosperity4     ,,chapter ,,xii4  ,,the 
,,money ,,market ,,and ,,stock ,,prices 
,perhaps no other one thing influences  
the movement of stock prices so much1 in
 a large way1 as money conditions4 ,it  
is impossible to have a big bull market 
without plenty of money4 ,during a bull 
market nearly all stocks are bought on  
margin1 which is explained in ,chapter  
,,xvi4 ,this makes it necessary for     
brokers to borrow large sums of money4  
,when money is tight1 it is impossible  
to get enough to carry on a large       
movement in stocks4  ,you will see1     
therefore1 that the ,federal ,reserve   
,bank has it in its power to regulate   
the stock market to some extent4 ,in    
#aiai speculation was carried very much 
further than it should have been1 but   
undoubtedly it would have been much     
worse had the ,federal ,reserve ,bank   
not raised interest rates and urged     
member banks to withdraw money from     
,wall ,street4 ,while there was         
considerable criticism of that action1  

it certainly was a good thing for the   
entire country4  ,in a period of        
depression1 the banks accumulate money1 
and there always is an abundance of     
money at the beginning of a bull market4
 ,during a period of prosperity the     
banks' reserves decrease and their loans
 increase4 ,when you see these reserves 
go down to a very low point1 it is      
usually time for you to sell your       
stocks4     ,,chapter ,,xiii4  ,,minor  
,,movements ,,in ,,prices   ,within the 
major movements of stock prices1 there  
always are several minor movements1     
which are caused by various influences4 
,one of the important causes is the     
technical condition of the market4      
,another cause might be called a        
psychological one4 ,when stocks are     
moving up steadily in a bull market1    
people closely connected with the market
 expect a reaction and watch for it4    
,the newspapers predict it4             
,consequently1 there is sufficient      
let-up in buying to allow the pressure  

of selling by the bears to bring it     
about4 ,however1 the desire to buy      
during reactions is so general1 many    
people rush in to buy and this buying1  
in addition to the covering by the      
shorts1 puts the market up again2 and if
 conditions are favorable for a bull    
market1 prices will go up much higher   
than they were before4  ,in like manner1
 we have rallies in bear markets4 ,of   
course the professional bears sell      
during these rallies1 with the          
expectation of buying later at a cheaper
 price4  ,these minor price changes mean
 more to the majority of traders than   
the major movements4 ,the major         
movements are so slow that people get   
out of patience1 and yet those who are  
guided only by the major movements are  
operating on a much safer basis4 ,we    
believe that a greater amount of money  
can be made1 with a minimum risk1 by    
being guided principally by the major   
movements1 while taking advantage of the
 minor movements in a minor way4        

,however1 stocks do not move uniformly  
and there frequently is an opportunity  
to buy some particular stock at a       
bargain when nearly all stocks are      
selling too high4 ,we try to pick out   
these opportunities for our clients4    
,reports of earnings by various         
companies influence stock prices1 as    
does also the paying of extra dividends 
or the passing up of dividends4 ,a      
peculiar psychological influence is     
noticed when a company declares an extra
 dividend4 ,the price of the stock      
usually goes up1 while as a matter of   
fact the intrinsic value of the stock is
 decreased by the amount of this        
dividend2 and sometimes it is advisable 
to sell a stock shortly after an advance
 in its dividend rate4     ,,chapter    
,,xiv4  ,,technical ,,conditions        
,technical conditions refer to the      
conditions that usually affect the      
supply and demand1 such as short        
interests1 floating supply1 and stop    
loss orders4  ,it is sometimes said that

 supply and demand must be equal or else
 there could not be any sales1 but that 
is not so4 ,there are always some people
 who are willing to sell at some price  
above the market who will not sell at   
the market2 and when the demand for     
stock is greater than the supply1 it    
goes up until it is supplied by some of 
these people who are holding it at a    
higher price4  ,it works the same way   
when the supply is greater than the     
demand4 ,there are always some people   
who will buy at some price below the    
market4 ,therefore1 when the supply is  
greater than the demand prices must go  
down4  ,a stock may have an intrinsic   
value of #ajj a share and yet be selling
 at #ej a share1 and it can never sell  
higher than #ej until all stock that is 
offered at that price is bought4        
,however1 you should keep this in mind3 
if the real value is #ajj a share1      
sooner or later the market price will   
approach that figure4 ,that is why we so
 strongly urge our clients to buy stocks

 that have actual values1 or at least   
prospective values far greater than     
their market prices1 and either to buy  
them outright or margin them very       
heavily1 and then hold them until the   
prices do go up4  ,of course1 when one  
finds that a mistake has been made1 the 
sooner one sells and takes a loss the   
better4     ,,chapter ,,xv4             
,,manipulations   ,stock prices are     
influenced largely by manipulation4     
,years ago when the volume of trading on
 the ,new ,york ,stock ,exchange was    
small compared with what it is today1 it
 was possible to influence the entire   
market by manipulation1 but it would be 
very difficult to do that today4 ,it is 
only certain stocks that are            
manipulated2 but if conditions are      
favorable1 many other stocks may be     
influenced by them4  ,there are         
different kinds of manipulation4 ,one is
 for the insiders of a company to give  
out unfavorable news about their company
 if they want the price of the stock to 

go down1 so that they can buy it in2 or 
to give out very favorable news if they 
want the price to go up1 so that they   
can sell out4 ,this method is not       
practiced now to the extent that it was 
years ago4 ,public opinion is strongly  
opposed to it1 and we believe business  
men are acquiring a higher standard of  
business ethics4 ,methods of this kind  
are legal but they are morally          
reprehensible4  ,another method of      
manipulation is the forming of pools to 
buy in the stock of a company and force 
it up4 ,if the market price of a stock  
is far below its real value1 we believe 
it is justifiable for a pool to force it
 up1 but the ordinary pool is merely a  
scheme to rob the public4  ,there are   
four periods to the operation of such   
pools4 ,first is the period of          
accumulation4 ,a number of large holders
 of stock in a certain company will pool
 their stock1 all agreeing not to sell  
except from the pool1 in which all      
benefit proportionately4 ,then they give

 out bad news about the company4 ,that  
is very easy to do1 because financial   
writers usually accept the news that is 
given to them without much              
investigation1 especially writers on    
daily papers1 because they have not the 
time to investigate4 ,their copy must be
 ready in a few hours after they get the
 information4 ,see ,chapter ,,xxv4 on   
,market ,information for fuller         
explanation of the reason why financial 
news usually is misleading4 ,the        
manipulators of stock prices can have   
financial news made to order4  ,when the
 general public reads this news and sees
 the stock going down1 many of them get 
discouraged and sell4 ,it is just the   
time they should not sell1 but it is a  
well known fact that the majority of    
people do in the stock market just what 
they should not do4 ,the more they sell 
the more the price goes down1 and the   
pool operators accumulate the stock4    
,having secured all the stock they want1
 they give out good news and continue to

 buy the stock until it starts to go up4
 ,the public reads this favorable news1 
and seeing the stock go up1 will go into
 the market and buy1 which puts it up   
higher4 ,all the time financial writers 
are supplying good news about the stock 
and the public buys it4 ,after they have
 sold all of it1 the public may still be
 anxious for more1 and the pool         
operators may go short of the stock4    
,then they will begin giving out bad    
news1 so that they can buy in stock at a
 lower price to cover their short       
interests4  ,after that they have very  
little interest in the market4 ,if it is
 declining too fast1 they may support it
 occasionally by buying some stock and  
giving out some favorable news4 ,that   
will make the market rally and they will
 sell out the newly acquired stock near 
the top of the rally4  ,manipulations of
 this kind appear to be going on nearly 
all the time1 and there does not seem to
 be any limit to the number of suckers  
who fall for them4 ,but then1 one can't 

blame the public when you realize how   
thoroughly unreliable is most of the    
market information given to them4       
,still another kind of manipulation is  
one-man manipulation1 where one man     
controls companies1 which are known as  
one-man companies4 ,usually the         
directors of these companies are friends
 or employees of his1 and in many       
instances he has their resignations in  
his possession1 so that they must do    
whatever he wants them to do4 ,owing to 
the strict rules of the ,new ,york      
,stock ,exchange1 it is rather difficult
 for such manipulations to be carried on
 there4 ,but there have been many of    
them on the ,new ,york ,curb4 ,when the 
,curb was operating on the street and   
was not under very much control1        
manipulations of this kind were very    
frequent4  ,as an example1 suppose a man
 of this kind has a mining company4     
,when he wants the stock to go up1 he   
sends the stockholders a great deal of  
information about the work at the mine1 

and perhaps sends them a telegram when a
 new vein of rich ore is found4 ,the    
stockholders rush in to buy more stock1 
and that puts the price up4 ,then he    
unloads stock on them to the extent that
 they will buy it4  ,in a day or two1   
the stock may drop back to less than one
 half of what it was selling at4 ,if    
this one-man manipulator wants to buy   
any stock1 he will give out a little    
unfavorable news1 and he can get stock  
at his own price4  ,after that the news 
is good or bad according to whether the 
manipulator wants to buy or sell1 but as
 a rule he has an abundance of stock    
that he wants to sell1 and is           
continually giving out good news4  ,a   
few years ago there was a man operating 
in ,new ,york who promoted several      
companies and manipulated them in a     
large way4 ,he is out of business now1  
but the same thing is still done in a   
smaller way4  ,it is our opinion that   
more money is lost by the public in     
manipulated stocks than in promotion    

stocks1 and we read a great deal about  
the enormous losses in them4 ,promotions
 that are failures may be perfectly     
legitimate and conducted in the utmost  
good faith1 but manipulations are nearly
 always for the purpose of swindling the
 public4 ,however1 the lure of them is  
so great many people cannot withstand   
the temptations of them even after they 
have been trimmed several times4        
,,part ,,four  ,,topics ,,of ,,interest 
,,to ,,speculators     ,,chapter ,,xvi4 
,,marginal ,,trading   ,most people who 
trade in stocks buy on margin4 ,the     
ordinary minimum margin is about #bj of 
the purchase price1 because banks       
usually lend about #hj of the market    
value of stocks4  ,if you put up #bj of 
the purchase price of your stocks with  
your broker1 he has to pay the other    
#hj1 but he can do that by borrowing    
that amount from his bank1 and putting  
up the stock as security4 ,in this way  
brokers are able to handle all the      
margin business that comes to them1 as  

long as money can be borrowed4 ,of      
course1 there are some stocks that are  
not accepted by banks as collateral for 
loans1 and you should not expect your   
broker to sell such stocks on margin4   
,in fact1 if he offers to do so1 it     
looks as though he were running a bucket
 shop4 ,see ,chapter ,,xviii4  ,many    
people think that buying stocks on      
margin is gambling and that people      
should not do it for that reason1 but   
buying on margin is done in all lines of
 business1 although it may not be known 
under that name4 ,if you bought stock   
outright1 but borrowed #hj of the       
purchase price from your banker to      
complete your payment for it and put up 
the stock with him as security1 you     
would be buying on margin just the same4
  ,in like manner1 if you bought a home 
and paid #bj with money you had and     
borrowed the other #hj of the purchase  
price1 you would be buying a home on    
margin4 ,the principal difference is    
that when you buy from a broker on      

margin1 one of the conditions of his    
contract is that he has the right to    
sell your stock provided the market     
price drops down to the amount that you 
owe on the stock1 whereas if you borrow 
money on a home1 it is usually for a    
certain specified time and the lender   
cannot sell you out until that time     
expires4 ,however1 in principle1 there  
is very little difference between the   
two transactions4  ,most margin traders 
do not put up sufficient margin4 ,if you
 put up only the minimum margin1 your   
broker has the right to call on you for 
more margin if the price of the stock   
declines at all4 ,unless you are fully  
prepared at all times to put up an      
additional margin when called upon1 you 
should make smaller purchases and put up
 a heavy margin when you buy4 ,the      
amount of margin depends upon the       
transaction1 but we advise from #cj to  
#ej1 and at times we advise not less    
than #ej margin on any purchase4 ,in    
fact there are times when we advise not 

to buy stocks on margin at all4  ,those 
who wish to be entirely free from worry 
should buy stocks when the prices are   
very low1 pay for them in full1 get     
their certificates1 and put them away in
 a safe deposit box4 ,however1 when     
stocks are low the risk in buying on a  
liberal margin is very small1 and the   
possibilities of profit are so much     
greater1 we do not see any objection to 
taking advantage of this method of      
trading4     ,,chapter ,,xvii4  ,,short 
,,selling   ,by short selling1 we mean  
selling a stock that you do not possess1
 with the intention of buying it later4 
,short selling in general business is   
very common1 and we think nothing of it4
 ,manufacturers frequently sell goods   
that are not yet made1 to be delivered  
at some future time4 ,selling stocks    
short is a similar transaction1 except  
that in a majority of cases delivery of 
the stock must be made immediately4     
,however1 your broker can attend to that
 by borrowing the stock4 ,as explained  

in the preceding chapter1 when the      
market is active most of the trading is 
done on margin4 ,your broker buys a     
stock for you1 but as he has to pay for 
it in full1 it is customary for him to  
take it to his bank and borrow money on 
it4 ,a bank usually lends about #hj of  
the market value1 but if some other     
broker wants to borrow this stock1 he   
will lend the full value of it4 ,if that
 particular stock is very scarce and    
hard to get1 the lender of the stock may
 get the use of the money without any   
interest4  ,therefore1 there is an      
advantage to the broker in lending      
stock1 and for that reason it is nearly 
always possible for a broker to arrange 
delivery of stock for you if you wish to
 sell short4 ,when you instruct him     
later on to buy the stock for you1 he   
will do so and deliver it to the broker 
from whom he borrowed it1 who will      
return the money he received for it4    
,when you sell stock short and the price
 goes up1 you will have to pay a higher 

price for it4 ,therefore1 to protect    
himself against the possibility of      
losing1 your broker demands a payment   
from you just the same as you pay margin
 when you buy stock4  ,short selling is 
something that we do not recommend very 
much to our clients4 ,we think it is not
 advisable to do any short selling as   
long as there are good opportunities to 
make money by buying2 but when all      
bargains disappear1 as they do          
sometimes1 you must either sell short or
 else keep out of the market entirely4  
,at such times1 there may be many       
opportunities to make money by short    
selling1 and we do not consider that    
there is any reason why our clients     
should not take advantage of them4  ,of 
course1 great care must be exercised in 
selling stocks short4 ,you might sell a 
stock short because you know the market 
price is #ajj greater than its real     
value1 but it is possible for           
manipulators to force it up a great deal
 higher2 and if you are not able to put 

up sufficient money with your broker to 
protect him1 he will buy at a high price
 and you will lose the money you have   
put up with him4 ,in some instances1    
stocks are cornered and the short       
interests are forced to buy the stocks  
at prices that represent enormous       
losses4  ,it is a common thing to read  
about the short interests in certain    
stocks4 ,all stocks that are sold short 
must be bought sooner or later1 and when
 that buying takes place1 it may affect 
the market very much4 ,therefore1 if it 
is known that there is a big short      
interest in a certain stock1 we should  
expect the stock to sell at a higher    
price2 but sometimes the short interests
 break the market and force the price   
down1 especially when general conditions
 are in their favor4     ,,chapter      
,,xviii4  ,,bucket ,,shops   ,there has 
been so much publicity given to bucket  
shops1 nearly everybody is familiar with
 the term4 ,a broker runs a bucket shop 
when he sells stock to his clients on   

margin and either never buys the stock  
for their accounts1 or else sells it    
immediately after buying it4 ,the bucket
 shop simply gets your money on the     
supposition that you are more likely to 
be wrong than to be right4 ,of course1  
if you take the bucket shop's advice you
 surely are likely to be wrong4 ,bucket 
shops get their clients into the very   
speculative stocks1 where there is      
likely to be a great deal of fluctuation
 in the price of the stocks1 which gives
 them frequent opportunities to sell out
 their clients4  ,when the market is    
going down or when there are many       
movements up and down in the price of   
stocks1 the bucket shops make money     
rapidly1 but occasionally there is a    
long period when the market is working  
against the bucket shops1 and unless    
they have a great deal of money they    
must fail4  ,in ,august1 #aiba1 ,stock  
,exchange stocks started to go up4 ,the 
upward movement was very slow but it was
 continual4 ,up to the time of this     

writing1 there has not been a           
three-point reaction1 except in a few   
stocks1 in all of that time4 ,without a 
fluctuating market1 the bucket shop has 
no chance to clean out its customers4   
,as a consequence1 the bucket shops     
began to fail in the early part of      
#aibb1 and up to the present writing    
7,april1 #aibb7 there have been more    
than fifty of these failures4 ,however1 
it is not likely that all the bucket    
shops will be put out of business4 ,the 
more successful ones are likely to      
weather the storm4  ,many laws have been
 enacted against bucket shops1 and we   
believe some way will be found to get   
rid of them at some future time2 but we 
do not expect that to happen soon1 and  
we warn our readers not to get into     
their hands1 because if they do not get 
your money away from you one way they   
are likely to get it some other way4    
,the man who runs a bucket shop usually 
has no conscience1 and it certainly is  
an unfortunate thing for anyone to get  

mixed up with such a man4     ,,chapter 
,,xix4  ,,choosing ,a ,,broker   ,it is 
very important that you choose a good   
broker4 ,no matter how careful you are1 
it is possible to make a mistake4       
,however1 if you choose a broker who is 
a member of the ,new ,york ,stock       
,exchange1 you have eliminated a very   
large percentage of your chances of     
getting a wrong broker4  ,occasionally a
 member of the ,stock ,exchange fails   
and once in a while one is suspended for
 running a bucket shop or being         
connected with one1 but these instances 
are very rare compared with the number  
of brokers who get into trouble who are 
not members of the ,new ,york ,stock    
,exchange4 ,the rules and regulations of
 the ,stock ,exchange protect you to a  
great extent4  ,when you buy stock on   
margin1 you leave your money in the     
hands of a broker1 and you should know  
that he is responsible4 ,no matter who  
your broker is1 you should get a report 
on him4 ,if you are a subscriber to     

,bradstreet's or ,dun's ,agencies1 get a
 report from them4 ,if you are not a    
subscriber to any mercantile agency1 you
 perhaps have a friend who can get a    
report for you1 or your bank may get one
 for you4 ,banks make a practice of     
getting reports of this kind for their  
clients4 ,when asked to do so1 we send  
our clients the names of brokers who are
 members of the ,new ,york ,stock       
,exchange1 but we prefer not to         
recommend any broker4 ,of course1 we    
cannot guarantee that a broker is all   
right4 ,we simply use our best judgment1
 but1 as we said before1 you eliminate a
 large percentage of your chances of    
going wrong when you trade with a broker
 who is a member of the ,new ,york      
,stock ,exchange4     ,,chapter ,,xx4   
,,puts ,,and ,,calls   ,a put is a      
negotiable contract giving the holder   
the privilege to sell a specified number
 of shares of a certain stock to the    
maker at a fixed price1 within a        
specified time4 ,a call is the exact    

reverse4 ,it is a negotiable contract   
giving the holder the privilege to buy a
 specified number of shares of a certain
 stock from the maker at a fixed price1 
within a specified time4 ,the price     
fixed in a put or call is set away from 
the market price a certain number of    
points1 depending upon the stock and the
 condition of the market4 ,when the     
market is steady and not fluctuating1   
the price fixed is frequently only two  
points away1 but in a more active market
 it is considerably more4  ,for         
instance1 at the present time1 ,u4 ,s4  
,steel is selling at about #ie1 and you 
can buy a call on it at #ig or a put at 
#ic4 ,that is by paying a certain       
amount1 which at present is #acg4ej1 you
 can have the privilege of buying #ajj  
shares of ,u4 ,s4 ,steel at #ig1 within 
thirty days of the date of the purchase 
of your call4 ,if ,steel should go up to
 #aja you could have your broker buy it 
at #ig and sell it at the market1 and   
you would make a profit of four points1 

less the cost of your call and          
commissions4  ,as a method of operating 
in the stock market1 we do not recommend
 the buying of puts and calls4          
,professional speculators may be able to
 use them to advantage sometimes1 but   
for the outsider1 who is not in close   
touch with the market1 there is nothing 
about them to recommend4  ,here is one  
point3 the people who sell puts and     
calls fix the terms4 ,if the market is  
irregular1 they will set the point of   
buying or selling far away from the     
market price4 ,these people are shrewd  
traders and they make the terms in their
 own favor4 ,it is generally said that  
nearly all the buyers of puts and calls 
lose1 and that is our opinion4          
,therefore1 we advise you to leave them 
alone4     ,,chapter ,,xxi4  ,,stop     
,,loss ,,orders   ,a stop-loss is an    
order to your broker to sell you out if 
the market sells down a certain number  
of points4 ,many speculators place stop 
loss orders only two points from the    

market price4 ,the idea is that when the
 market starts to go down it is likely  
to continue going down1 and by taking a 
two-point loss you may save a much      
greater loss4 ,it also can be applied to
 a short sale1 when you give your broker
 instructions to buy in the stock for   
you if it goes up a certain number of   
points4  ,we read so much in the        
financial news about stop-loss orders or
 merely stop orders1 which is the same  
thing1 the average reader is likely to  
get the idea that it is something he    
must use for his own protection1 but it 
is our opinion that it is something that
 should be used very seldom by those who
 trade along the broad lines recommended
 by us4 ,if your purchases were made in 
stocks that were very cheap1 you should 
continue to hold them in case of a      
reaction4 ,if you bought them outright  
or on a substantial margin1 you are not 
in danger1 and you should look upon your
 loss merely as a paper loss4 ,in the   
great majority of cases1 you will be a  

great deal better off to hold on to your
 stocks than you would be if you had a  
stop-loss order4  ,a large number of    
stop-loss orders is a good thing for the
 short interests4 ,let us take ,u4 ,s4  
,steel again1 as an example4 ,suppose it
 is selling at #id and it is believed   
that there are a large number of        
stop-loss orders at #ib4 ,the short     
interests may sell the stock heavily and
 force it down to #ib4 ,then the brokers
 with stop-loss orders would begin to   
sell2 that would force the price down   
still lower1 and the short interests    
could buy in to cover at this lower     
price4  ,therefore1 we believe that     
stop-loss orders are a bad thing and1 as
 a rule1 do not recommend them4  ,there 
is one instance where a stop-loss order 
can be used to advantage1 and that is   
near the top of a bull market4 ,it is   
impossible to tell when the market has  
reached the top4 ,if you sell out too   
soon1 you may lose a profit of several  
points4 ,of course1 it is better to do  

that than to take a chance of a large   
loss4 ,in that case1 you might instruct 
your broker to place a stop-loss order  
at two or more points below the market1 
and keep moving it up as the market     
price moves up4 ,then when the reaction 
does come1 he will sell you out and     
prevent you from losing a large part of 
your profit4 ,that is about the only    
instance where we recommend a stop-loss 
order1 but we do recommend it to our    
clients sometimes1 although seldom4  ,if
 the stock you own is selling at more   
than #ajj we would suggest that you make
 the stop loss order at least three     
points from the market1 but for stocks  
selling below #ajj1 a two-point         
stop-loss order might be used4 ,however1
 the number of points should be decided 
upon in each particular case4 ,in the   
special instructions to our clients1 we 
tell them when we think they can use a  
stop-loss order to advantage4     ,,part
 ,,five  ,,concluding ,,chapters        
,,chapter ,,xxii4  ,,the ,,desire ,,to  

,,speculate   ,it is said that the      
desire to speculate is very strong in   
the ,american people4 ,that is why our  
country has made greater progress than  
any other country in the world1 because 
progress is the result of speculation4  
,we are not referring merely to stock   
speculations1 but to the word in its    
broadest sense4 ,every new undertaking  
is a speculation4  ,an inventor         
speculates on what he is going to       
invent4 ,often such speculations result 
in losses1 because many inventors1 or   
would-be-inventors1 never accomplish    
very much4 ,they spend their money1     
time1 and efforts1 and probably live    
years in poverty1 and then if the       
invention is not profitable1 they are   
heavy losers4 ,many inventors spend the 
best years of their lives in poverty and
 never succeed4 ,we hear a great deal   
about some of those who do succeed1 but 
very little about those who fail--those 
whose speculations were                 
unsuccessful--except when somebody      

accuses them of being crooks because    
they solicited money for the promotion  
of their inventions and did not succeed4
  ,it is the same thing with every new  
business4 ,it is purely a speculation4  
,it is a common saying that #ie of      
commercial undertakings fail4 ,we do not
 know that that statement is correct1   
but there is no question but that the   
number of failures is very great1 which 
shows the great risk in going into a new
 undertaking4 ,it is far greater than   
the risk involved in stock speculating  
when it is done in accordance with the  
advice given in this book4  ,yet1 there 
would be no progress without speculating
 of this kind4 ,if those entering a new 
business would make a careful study of  
the venture before entering it1 and     
would exercise greater care and judgment
 in conducting it1 the number of        
failures would be very much less4 ,the  
same thing is true of stock speculating4
 ,the failures in stock speculating are 
caused mainly by ignorance and          

greediness4 ,many people who would be   
satisfied with a fair return on their   
money in a business enterprise1 think   
they ought to make a #ajj profit in a   
few weeks in stock speculation4  ,there 
is something about stock speculation    
that appeals to the greediness and pure 
gambling instincts of people4 ,in the   
chapter on ,manipulation1 we have told  
you how stock prices are put up and     
down4 ,some outsider accidentally buys  
one of these stocks just before the     
price starts up4 ,in thirty days he has 
made several hundred per cent profit4   
,he does not realize that it was purely 
accidental as far as he was concerned1  
and he tries to do the same thing again1
 and loses all of his profits and       
probably all of his capital as well4  ,a
 stock gambler 7we use the word gambler 
to refer to a man who operates          
ignorantly7 is watching a large number  
of extremely speculative stocks and     
suddenly notices one that takes a big   
jump in price4 ,then he says to himself1

 ,if ,i only had bought that stock on a 
ten-point margin1 ,i would have made    
several hundred per cent profit4 ,he    
picks out another stock that some one   
tells him is going to do equally as     
well4 ,he buys as much of it as he can  
and puts up all the money he has as a   
margin1 but the price doesn't go up4    
,perhaps the price goes down and he     
loses his margin2 but1 it may remain    
almost stationary for a long period1    
sometimes for a year or more1 and during
 all of this time1 this man is worrying 
for fear he will lose his money4 ,if he 
does not lose his money1 it is tied up  
for a long time where he cannot use it  
to take advantage of real opportunities 
that come his way4  ,it does not pay to 
take big risks4 ,that is true in stock  
speculating the same as in any other    
undertaking4 ,most speculators are      
keeping their minds all the time on the 
possibilities of profit and not thinking
 about the possibilities of losing4  ,if
 you want to be successful in stock     

speculating1 there is one thing you must
 learn to do1 and that is never to think
 about the big profits you might have   
made if you had bought such and such a  
stock1 because the probabilities are you
 could not have afforded to take the    
necessary risk in buying that stock4    
,of course1 after it is all over1 it may
 look to you as though the buying of    
that stock was a sure thing1 but the    
buying of such stocks is never a sure   
thing4 ,the risk always exists4 ,there  
is an old saying1 and we believe a very 
true one1 that a man who speculates with
 the idea of getting rich quickly loses 
all his money quickly1 but that the man 
who speculates with the idea of making a
 fair return on his money usually gets  
rich4  ,in our advice to our clients1 we
 seldom recommend highly speculative    
stocks1 because we consider the         
avoidance of loss more important than   
the making of profits4 ,you may object  
to that statement1 because you speculate
 to make profits1 and not for the       

purpose of avoiding losses4             
,nevertheless1 if you are careful in    
keeping your losses down to a minimum1  
your profits are likely to be very      
liberal4 ,any trader who trades for any 
great length of time is likely to make  
large profits sometimes1 and yet the    
majority of them have greater losses    
than profits4 ,it is said that more than
 #hj of all margin traders lose2 but we 
do not consider that an argument against
 trading on margin1 because these losses
 are mostly due to ignorance1           
greediness1 and the taking of too great 
chances4  ,do not suppress your desire  
to speculate4 ,all progress would stop  
if people did not speculate4 ,but do not
 speculate in stocks nor in anything    
else without any knowledge of what you  
are doing1 and try to use as much good  
judgment and care as possible in all of 
your transactions4 ,if you do not know  
what to do1 get advice from someone who 
is supposed to know and who is not      
interested in having you buy or sell4   

,stock speculating with safety is       
possible for those who make the effort  
to be guided by correct principles4     
,,chapter ,,xxiii4  ,,two ,,kinds ,,of  
,,traders   ,there are two kinds of     
stock traders4 ,one kind nearly always  
makes a profit1 and the other wins      
sometimes and loses other times1 but    
eventually loses all if he does not     
change his methods4 ,the first kind buys
 stocks on liberal margin or outright   
and is not worried when the market goes 
against him1 because he has good reasons
 for believing that prices eventually   
will go up4 ,if he does have to take a  
loss occasionally1 it is likely to be   
small compared with his profits4 ,the   
second kind wants to make a big profit  
quickly1 and he buys stocks that he     
thinks are going to make big gains in   
the near future1 but his selections are 
not based upon good judgment4  ,we might
 designate these two traders as the     
careful trader and the reckless trader4 
,the careful trader tries to get good   

advice on the markets and the values of 
stocks4 ,if the advice appears to him to
 be conservative1 he is guided by it2   
but if the reckless trader gets advice  
on stocks1 he is not guided by it if it 
is of a conservative nature4 ,if he does
 take advice1 it is likely to be from   
one of those unreliable market tipsters 
who is very emphatic in his statements  
about what the market is going to do4   
,the reckless trader lets his greed and 
desire for large and quick profits      
influence his judgment4  ,once in a     
while one of these reckless traders     
realizes that he has made a great       
mistake1 and he wants to change his     
attitude4 ,usually he is holding several
 stocks that show a big loss and he does
 not know what to do with them4 ,he     
reasons that they are selling so low now
 they surely will sell higher some time4
 ,perhaps his reasoning is good and     
perhaps it is not4 ,the stocks may have 
no chance of going up for a very long   
time1 if at all1 but even though they   

have a good chance to go up later1 it is
 better for him to sell them now if he  
can put the money derived from the sale 
into something else that has a better   
chance to make a profit4  ,our advice is
 never to hesitate to sell and take a   
loss if you can put the proceeds from   
the sale into something better rather   
than leave it in the stock in which it  
is now4 ,it is not so much a question   
whether or not the stock you are holding
 will go up1 as it is whether or not you
 would buy that particular stock if you 
were just coming into the market to make
 a purchase4 ,of course there is a loss 
of commissions when you sell a stock and
 buy something else1 and for that reason
 we sometimes recommend holding a stock 
when we would not recommend buying it4  
,if you have been a reckless trader in  
the past1 the only thing for you to do  
is to change your methods and try to    
become a careful trader4 ,it is much    
better to go to the extreme in          
carefulness and be satisfied with very  

small profits than to take great risks4 
,,chapter ,,xxiv4  ,,possibilities ,,of 
,,profit   ,what are the possibilities  
of profit in stock speculation8 ,that   
question is frequently asked but it is  
difficult to answer4 ,james ,r4 ,keene  
is quoted as having said3 ,many men come
 to ,wall ,street to get rich2 they     
always go broke4 ,others come to ,wall  
,street to operate intelligently for    
fair returns2 they usually get rich4    
,while it is true that nearly all stock 
traders who try to make unusually large 
profits in a very short time in stock   
trading lose1 yet unusual profits can be
 made if you exercise good judgment and 
have patience4  ,roger ,w4 ,babson1 in  
his book entitled1 ,business            
,barometers1 speaks of the possibilities
 of profit in language that would be    
considered greatly exaggerated if used  
by a promoter1 and yet he is extremely  
conservative in his advice to traders4  
,he advises never to buy on margin1     
never to sell short1 and staying out of 

the market entirely1 neither buying or  
selling1 for a great part of the time4  
,here is a quotation from his book1     
which follows a detailed statement of an
 investment of #b1ejj over a period of  
fifty years3      ,the preceding example
 shows that #b1ejj conservatively       
invested in     a few standard stocks   
about fifty years ago would today amount
 to     over #a1jjj1jjj4 ,these are not 
only strictly investment stocks1 but    
are also stocks which have fluctuated   
comparatively little in price4          
,this1 moreover was possible by giving  
orders to buy or sell only     once in  
every three or four years4      ,if     
other stocks which were not dividend    
payers and which have shown     greater 
fluctuations were purchased1 and        
advantage had been taken of     the     
intermediate fluctuations1 the #b1ejj   
would have amounted to     much larger  
figures4 ,by intermediate movements is  
not meant the     weekly movements which
 the ordinary professional operator     

notes1 but     the broader movements    
extending over many months and possibly 
a year     or more4 ,nevertheless1 these
 broader intermediate movements should  
not be noticed by a conservative        
investor1 as it is possible to          
correctly diagnose only the movements   
extending over longer periods4     ,many
 brokers believe that it is possible to 
discern also these     intermediate     
movements of six or eight months2 and if
 so1 the     following results would    
have been possible4          #e1jjj     
invested in ',st4 ,paul' in #ahgj would 
amount to over #aj1jjj1jjj today4       
#e1jjj invested in ',union ,pacific' in 
#ahgj           would amount to over    
#ae1jjj1jjj today4          #e1jjj      
invested in ',central of ,new ,jersey'  
would amount to over #cj1jjj1jjj today4 
#e1jjj invested in ',northern ,pacific' 
would           amount to over          
#ej1jjj1jjj today4      ,these figures  
are not based on the supposition that   
the investor     was selling at the top 

of every rise or buying at the bottom of
     every decline1 but that the        
transactions were made at average 'high'
     and average 'low' prices based upon
 the study of technical     conditions4 
,if such large profits can be made by   
following ,babson's advice1 of course   
larger profits can be made by buying on 
conservative margin and by selling short
 when all the conditions are in favor of
 it4  ,while there are possibilities of 
making extremely large profits without  
taking great risks1 by those who are    
patient and exercise good judgment1 one 
should be satisfied with a small profit1
 if it is the result of great care1 in  
an effort to eliminate risk4 ,of course1
 you can afford to take a much greater  
risk with a small part of your          
speculative fund than you can with all  
of it4 ,the less money you have with    
which to speculate1 the more careful you
 should be4 ,some people cannot afford  
to speculate at all4 ,they should invest
 their funds in good1 safe investments1 

but this book is written for            
speculators4  ,careful stock speculation
 carried on regularly over a period of  
years1 we believe brings larger returns 
than almost anything else1 and in the   
next chapter we tell you something about
 where to get information to guide you4 
,,chapter ,,xxv4  ,,market ,,information
   ,where do you get your market        
information8 ,perhaps most people get it
 from the daily papers4 ,when you look  
over the financial news of one of the   
leading metropolitan papers and see how 
much there is of it1 you can get some   
idea of the enormous volume of work     
necessary to get this matter ready for  
the press in a few hours4 ,there is no  
time to confirm reports4 ,it is         
necessary that many of the articles be  
written from pure imagination1 based on 
rumors4  ,weekly and monthly periodicals
 can be more accurate in their          
information1 but even they are not      
always dependable4 ,much of the         
financial news published comes from     

agencies that are not reliable4 ,read   
what ,henry ,clews says about them3     
,principally among these caterers are   
the financial news agencies     and the 
morning ,wall ,street news sheet1 both  
specially devoted to     the speculative
 interests that centre at the ,stock    
,exchange4 ,the     object of these     
agencies is a useful one2 but the public
 have a     right to expect that when   
they subscribe for information upon     
which     immense transactions may be   
undertaken1 the utmost caution1 scrutiny
     and fidelity should be exercised in
 the procurement and publication     of 
the news4 ,anything that falls short of 
this is something worse     than bad    
service and bad faith with subscribers2 
it is dishonest and     mischievous4    
,and yet it cannot be denied that much  
of the so-called     news that reaches  
the public through these                
instrumentalities must     come under   
this condemnation4 ,the 'points1' the   
'puffs1' the alarms     and the canards1

 put out expressly to deceive and       
mislead1 find a     wide circulation    
through these mediums1 with an ease     
which admits of     no possible         
justification4 ,how far these lapses are
 due to the haste     inseparable from  
the compilation of news of such a       
character1 how     far to a lack of     
proper sifting and caution1 how far to  
less     culpable reasons ,i do not     
pretend to decide2 but this will be     
admitted by every observer1 that the    
circulation of pseudo news is     the   
frequent cause of incalculable losses4  
,nor is it alone in the     matter of   
circulating false information that these
 news venders are     at fault4 ,the    
habit of retailing 'points' in the      
interest of     cliques1 the            
volunteering of advice as to what people
 should buy and     what they should    
sell1 the strong speculative bias that  
runs through     their editorial        
opinions1 these things appear to most   
people a     revolting abuse of the true

 functions of journalism4  ,of course1  
every trader gets market letters from   
one or more brokers4 ,these are many and
 varied in character4 ,some of them are 
prepared with great care and give       
reliable information1 but you must      
remember that a broker's market letter  
is published for the purpose of getting 
business1 and business is created only  
by the customers' trading4 ,therefore it
 is to the broker's interest to have his
 customers make many trades instead of a
 few trades4 ,in his book ,business     
,barometers1 ,roger ,w4 ,babson         
reproduces a letter written to him by   
the ,manager of the ,customers' ,room of
 a ,stock ,exchange ,house4 ,we consider
 this letter so important to all        
traders1 we are taking the liberty to   
reproduce it here3      ,hearing on     
every hand about the fortunes made in   
,wall ,street1 ,i     decided1 upon     
being graduated from college1 to devote 
myself to     finance4 ,with this end in
 view1 ,i secured a position with a     

first-class ,new ,york ,stock ,exchange 
,house1 finally becoming the            
'handshaker' for the firm2 that is1     
'manager' of the customers'     room4   
,so ,i had an exceptional opportunity to
 size up the stock     business4 ,the   
chief duties of the manager are to meet 
customers when     they visit the       
office1 tell them how the market is     
acting1 the     latest news from the    
news-tickers and the gossip of the      
,street4 ,but     the real duties are to
 get business for the house4 ,once a    
most     peculiar man came to the       
office4 ,he was about forty-five years  
of     age1 dressed in a faded cutaway  
coat1 high-water trousers1 and an       
,east ,side low-crown derby hat4 ,in a  
high squeaky voice he said that     he  
knew our ,milwaukee ,house and would    
like to open an account4 ,of     course1
 we were all smiles1 for here was a new 
'customer4'      ,one day while in      
,boston he called us up on the          
long-distance     telephone to make an  

inquiry about the grain market4 ,one of 
my     assistants1 desiring to get a    
commission out of him1 said ',we hear   
that ,southern ,pacific is going up2 you
 had better get aboard4' ,he     said   
',all right2 buy me a hundred at the    
market4' ,the stock was     bought1 but 
he never saw daylight on his purchase1  
for the market     declined steadily    
afterward and by the time he got back   
from ,boston     it showed a heavy loss4
 ,the man who advised its purchase had  
no     special knowledge about the      
stock1 but simply took a chance1 knowing
     that the market had only two ways  
to go1 and it might go up1 in     which 
case1 besides making twenty-five dollars
 in commissions for     the house1 he   
would be patted on the back for his good
 judgment4 ,if     the market went down1
 as it did1 he would still make         
twenty-five     dollars4      ,i venture
 to say that #ii of the speculations on 
the ,new ,york ,stock     ,exchange are 
based on such so-called 'tips'4 ,the    

manager has got to     get the business 
to keep his position and salary1 and    
this can only     be done by 'touting'  
people into the market4 ,so he draws on 
the     'dope' sheets of the            
professional tipsters and his own       
feelings1 and     gives positive        
information to the bleating lamb that   
the ,standard     ,oil is putting up    
,st4 ,paul1 or that certain influential 
bankers are     'bulling' ,union        
,pacific4 ,the lamb buys the stock1 the 
broker gets     the commission1 and then
 the lamb worries his heart out as he   
sees     his one-thousand-dollar margin 
jumping around in value4 ,now it has    
increased to eleven hundred dollars1    
then declined to nine hundred     and   
fifty dollars1 then nine hundred        
dollars1 eight hundred dollars1     then
 back to eight hundred and fifty dollars
 and then it takes the     'toboggan' to
 three hundred dollars upon which the   
broker calls for     margins1 and sells 
the customer out if they are not        

forthcoming1 the     whole speculation  
being based on the manager's 'feeling'  
that stocks     ought to go up4         
,men of affairs who will not play poker 
at home1 and are shocked at     the     
mention of faro and roulette1 which any 
old-timer will tell you     are easier  
to beat than the stock market1 think    
they are using     business judgment    
when they try to make money on stock    
market     'tips'4 ,anyone with common  
sense can see that a #aj margin has no  
more chance in an active market than a  
brush dam in a ,johnstown     flood4    
,one of the causes for this kind of     
speculating on a margin     is that a   
broker's commission is only #ab-a_/b    
cents per share and it     does not pay 
to do small-lot business4 ,the          
one-thousand-dollar     margin would    
only buy ten shares outright and net the
 broker but     #a4be for buying and    
#a4be for selling1 whereas that same    
amount as     margin on one hundred     
shares yields the broker #ab4ej each way

     besides interest on the balance1   
the net result being that for any       
given amount of money a speculator on   
#aj margin multiplies his     profits by
 ten and his losses by ten over those   
that would occur     were he to buy the 
stock outright and take it home4 ,the   
broker on     his side multiplies his   
commission by ten over what he would    
receive     were he to do an investment 
business4  ,from the above letter you   
get an idea of the attitude of an       
employee of the average broker's office4
 ,he would not be considered loyal to   
his employer if he had a different      
attitude4 ,when an attitude like this   
influences the broker's market letters1 
they are not reliable4  ,you may ask    
whether there is any reliable           
information about the market4 ,yes1     
there is4 ,there are several large      
organizations that make a study of      
fundamental statistics and statistics of
 different companies and give           
information to their subscribers based  

upon this knowledge4 ,we believe that is
 the only kind of information that is   
worth very much to a trader1 except the 
statistical information--the number of  
shares sold and the prices at which they
 are sold--he gets from his daily or    
weekly papers4 ,some of the principal   
organizations of this kind are as       
follows3      ,standard ,statistics     
,company1 ,inc4     ,babson's           
,statistical ,organization4     ,the    
,brookmire ,economic ,service4          
,harvard ,economic ,service4     ,poor's
 ,investment ,service4     ,moody's     
,investors ,service4     ,richard ,d4   
,wyckoff ,analytical ,staff4  ,the above
 are the principal organizations of this
 kind4 ,subscriptions to their service  
cost from #he to #ajjj a year4 ,in      
addition to these there are a few other 
organizations besides our own and       
individuals giving a somewhat similar   
service1 but we know of none that gives 
such a service at as low a price as     
ours4  ,you should not confuse the      

service given by the above organizations
 with that given by many organizations  
and individuals who attempt to tell you 
what the market is going to do from day 
to day4 ,in other words1 they give      
'tips' on the market4 ,there are a      
number who issue daily market letters of
 this kind and charge from #aj to #be a 
month for their service1 but it is a    
line of service that we do not recommend
 at all1 because we consider that you   
would be taking a very great risk if you
 followed advice of that kind4 ,you     
might make enormously large profits     
occasionally1 but you would also have   
frequent losses1 and when the losses did
 come they might be greater than all the
 previous profits4 ,we want you to      
understand that that kind of advice is  
entirely different from what we are     
recommending4     ,,chapter ,,xxvi4     
,,successful ,,speculation   ,success in
 stock speculation depends upon a few   
things that are very simple4  ,if you   
know what to buy1 when to buy1 and when 

to sell1 and will act in accordance with
 that knowledge1 your success is        
assured4 ,you may think it is impossible
 to know these things1 but it is not so 
difficult as it is supposed to be4      
,many people buy stocks at the wrong    
time1 and most of those who do buy them 
at the right time1 buy the wrong stocks4
 ,right now 7early in ,april1 #aibb7 is 
buying time in the stock market1 and it 
is possible that this buying time may   
continue--with some interruptions--for  
another year or two1 or even longer4    
,it is more difficult1 however1 to tell 
you ,,what stocks to buy4 ,first of all1
 we advise you against buying stocks    
that are put up to high prices by       
manipulation4 ,of course1 if you get in 
one of those stocks right and get out   
right1 your profits are very large1 but 
you take a great risk1 and those who win
 once or twice by this method are almost
 sure to lose everything sooner or later
 in an effort to do the same thing      
again4 ,your chances are not much better

 than if you gambled at ,monte ,carlo4  
,the chances in buying manipulated      
stocks are invariably against the       
outsider4  ,there always is so much     
publicity about these very active       
speculative stocks that the public is   
attracted towards them4 ,newspapers and 
brokers' market letters give altogether 
too much space to them4 ,such stocks    
sell far too high1 and when the break   
comes1 it brings ruinous losses to many 
people4  ,on the other hand1 by         
following a conservative course1 you    
really have a chance to make large      
profits with a minimum risk4 ,we are    
giving below sixteen stocks that we     
recommended in our ,advisory ,letter of 
,february #adth1 #aibb1 with the        
approximate prices of them then and the 
approximate prices on ,march #cast4#b   
,in arriving at these prices1 we took   
the closing prices on ,february #acth   
and on ,march #cast1 and omitted the    
fractions4 ,we recommended only sixteen 
stocks on that date1 and you will see   

that every one of them made substantial 
gains4                                  
,approximate     ,approximate           
,price           ,price          ,stock 
,feb4 #ad1 #aibb   ,mar4 #ca1 #aibb     
,profit   ,c4 ,r4 ,i4  ,p4 pfd 7#f7     
#ge              #gi           #d  ,c4  
,r4 ,i4  ,p4 pfd 7#g7                #hh
              #ic           #e  ,new    
,york ,central                     #gf  
#hh          #ab  ,pacific ,gas         
,electric               #fd             
#fh           #d  ,consolidated ,gas    
#ij             #aji          #ai       
,american ,telephone  ,telegraph        
#aah             #aba           #c      
,general ,motors ,deb4 7#f7             
#gj              #gh           #h       
,general ,motors ,deb4 7#g7             
#ha              #ia          #aj  ,u4  
,s4 ,steel                          #hg 
#ie           #h  ,dome ,mines          
#bc              #bf           #c       
,laclede ,gas                           
#ej              #fc          #ac       

,missouri ,pacific ,pfd                 
#dh              #ed           #f  ,c4  
,r4 ,i4  ,p4 ,common                 #cc
              #dj           #g  ,am4    
,smel4  ,refining                 #de   
#ec           #h  ,anaconda             
#dg              #ea           #d  ,erie
 ,common                          #aj   
#aa           #a                        
----            ----         ---  ,total
                              #ajje     
#aabj         #aae  ,let us suppose you 
bought ten shares of each of these      
stocks on ,february #adth4 ,they would  
have cost you #aj1jej4 ,we recommended  
#cj margin on the first ten1 all of     
which were dividend payers2 and #ej     
margin on the last six1 because they    
were more speculative and would have    
been more affected by a reaction in the 
market4 ,to buy ten shares of each on   
that margin basis would have required a 
little less than #c1ejj1 but let us     
suppose you put up #c1ejj4 ,after       
allowing for buying and selling         

commissions and interest on the balance 
of #f1eej1 but crediting you with       
dividends paid1 your profit would be    
about #cb or at the rate of about #bej  
per annum4  ,of course1 we do not claim 
that by following the conservative      
course we advise1 you always will make  
such large profits1 although you might  
do just as well as that if you took     
advantage of some of the opportunities  
so frequently to be found in the market2
 but keen discrimination in what you buy
 always is necessary4 ,however1 let us  
suppose you made annual profits of      
one-fifth the above amount1 or #ej1     
which is easily possible without taking 
the risks that are usually taken in     
stock speculating4 ,if you invested     
#ajjj and made #ej profit per annum1    
reinvesting your profit at the same rate
 each year for twenty years1 you would  
have more than ,,three ,,million        
,,dollars4  ,when there is a possibility
 of making such enormous profits as that
 by following careful methods1 surely   

there is no argument in favor of taking 
the extreme risks that people do take in
 buying the highly speculative stocks1  
the prices of which are put up for the  
purpose of unloading them on the public4
 ,ten of the stocks we selected in the  
above list were dividend payers1 and    
while the other six were not1 they were 
considered worth much more than their   
market prices1 and the list as a whole  
was conceded by conservative people as a
 safe one to buy4  ,very frequently we  
are able to recommend a list of stocks  
that we believe will yield equally large
 profits1 but the stocks you should buy 
are not the ones that are the most      
active nor the ones that are mentioned  
most frequently in the financial news   
and brokers' market letters4 ,the stocks
 that most people buy are usually the   
very stocks that should be left alone4  
,the stocks you should buy are usually  
the ones you hear very little about4    
,there is only one ,,safe way to        
speculate1 and that is to be guided by a

 knowledge of the fundamental conditions
 of each stock and also of the          
industries they represent4 ,there are   
several large organizations giving      
information of this kind1 and those who 
have been guided by the fundamental     
statistics issued by them1 almost       
invariably have made money in stock     
speculating4 ,the value of that kind of 
service has been thoroughly demonstrated
 beyond any question4 ,however1 a       
subscription for the service of most of 
these organizations costs more than the 
average person can afford to pay4       
,usually it is anywhere from #ajj to    
#a1jjj a year4  ,we are giving a service
 for the purpose of guiding our clients 
to successful speculation for a fee of  
only #be a year1 #ae for six months1 or 
#aj for three months4 ,for this fee we  
tell you what stocks to buy1 when to    
buy1 and when to sell4 ,we send you our 
recommendations at least twice a month1 
but send you additional ,advisory       
,letters and lists oftener if conditions

 make it necessary4 ,you also have the  
privilege of unlimited personal         
correspondence regarding your market    
problems4 ,the cost of our ,service is  
very small1 compared with what other    
reliable organizations charge4  ,our    
,service is based on the principles     
expounded in this book4 ,we try to      
select stocks having the greatest       
possibilities of profit with minimum    
risk1 and the sample of our ,service    
given in this chapter is proof of our   
success4    ,,national ,,bureau ,,of    
,,financial          ,,information      
#cie ,broadway1 ,new ,york ,city        
,,footnotes3  #b ,we did not advise the 
sale of these stocks on ,march #cast1   
but the author figured profits to that  
date because this book was written      
shortly after that4 ,if these stocks had
 been bought on or about ,february      
#adth1 on the margin basis suggested by 
us1 and sold six months later1 the      
profit would have been more than #fj1 or
 #abj yearly4