Wood County reporter. [volume] (Grand Rapids [i.e. Wisconsin Rapids], Wis.) 1857-1923, 1888-12-27
SLANG OF WALL STREET.
The Vernacu1ar of the Brokers Explained
by a Young Napoleon of Finance.

odd ever buy stocks on margin P"
remarked a young Napoleon of finance
to New York Mail and Express re-
porter. swell, l should smile; but. to
use the language of the street, I have
sold out and quit No more margin
for me; no more stocks. l am dead
tired of being in the Wall street swim,
and am glad to be out of it. Oh, no,
don't mind telling you little about
the slang. Let us take a lending
money-making Cor money losing)
stock-say, Union Pacific. For in
stance, you believe q. P. will advance,
and you call on your broker and buy a
hundred shares, expecting to sell them
when the price is few points higher.
If the price is low it will cost you just
$4,000 to buy the stock outright, and
there are but few fellows, unless their
papas are well fixed, that can do that,
of course, unless it is bought for in
vestment. Your broker, however, only
asks you for deposit of 10 per cent.
of the amount, that is if you are new
hand; but when you are an 'old-timer'
you can have it done for a great deal
less. Well. that's $500, anyhow. This
deposit may be in cash, but you will
arrange to put up securities, railroad
or any other kind, the market value of
which is $500 at least. AS the broker
holds the stock purchased, his security
is sufficient. The stock is then said to
be 'margined' up to $50. If the stock
advances, say to IS, you can sell out
and pocket 5000 in cash, less your
brokers commission. In this opera
ton he is long of the market and is
recognized as 'buIP on stocks. If,
on the other hand, the stock fails to
advance, the broker holds it until the
loss in price is nearly equal to the
margin deposited, when you are mott
fed to put up more margin. A same
state of affairs is likely to occur if the
margin itself has shrunk in market
value. If the brokers' demands are
met the stock is held until the price
advances or until the margin is again
exhausted. If you fail to come to time
and put up more margin, the broker
sells your stock at so, and, of course,
pockets the margin, by which proce-
dure, in the language of the street,
you are wiped out Just as long as
you keep the stocks good will your
broker carry the stock for you, but
no longer. Selling a stock short is
the reverse of going long, Say, for
instance, you believe certain stock is
going to decline in price. You sell 100
shares of Union Pacific at 60 through
your broker. If you sell your own
stock, which you have bought at alower
figure, you are merely realizing and
taking your profits. But sales for the
short account do not necessitate the
actual possession of the stock. The
one hundred shares are borrowed on
the loan crowd at a certain rate of
interest. This borrowed stock is de-
livered to the broker who bought the
one hundred shares at 60. In this
case you need only put up a margin
of about 10 per cent. or something less.
If the price of Union Pacific declines
to 81 your broker has only to lay one
hundred shares in the market and re-
turn them to the party from whom the
stock was borrowed. AS the borrowed
shares were sold for $4,000, and S., 700
were paid for the purchase, his profits
are, of course, $500, less the natural
commissions and the interest on the
borrowed StOckn