The Wichita daily eagle. [volume] (Wichita, Kan.) 1890-1906, 1893-08-09
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ty. A man has enjoyed fine health
during ten, twenty. thirty years.
Some day you read his obituary notice
in the paper. Conditions change and
destinies with them The average
System" as system, is hardly to be
considered by any reasonable or pru-
dent man.
Then there is the system of buying
stock when it has gone down to point
which it never reached before. or of sell
ing when it has reached an unprece-
dented height. There are not SO many
weighty objections to this plan, but OPP
portunities to practice it do not often
occur, and even when a stock that has
never fallen below fifty falls to forty.
special causes may be at work that
shall drive it down to twenty, or even
annihilate it; and if it rises to point
never reached before that may be only
a stepping stone to a further rise.
Even this comparatively reasonable
system, to avail of which you may
await the moving of the waters" dur
ing entire years, is not absolutely safe.
In this system also turks what the
mathematicians style the 'indetermin-
ate coefficient."
Some ingenious operators have .
fancy for dealing against insurance by
puts and Calls" as source of profit
and a protection against loss. In al
most any state of the market capital
ist will sell you the privilege of deliv-
ering him few stocks at lower, or
of calling on him for stock at high
er price than the market price of the
day. Taking the A. B. railroad shares
at 80, you may deliver him, that is,
put to him." 100 shares within sixty
days at IS; or you may call on him for
100 shares within sixty days at 95. You
pay your money, one hundred dollars,
two, three hundred, more or less as the
case may be, and you take your choice.
Having bought the put" let us say
you proceed to use it as an insurance
against loss by buying a. hundred
shares in the market at 90.
The stock will either stay at 30 or
rise or fall If it rises you sell
and reap a profit; if it falls, you lose
on your purchase, but you approach a
point where your put may become
profitable. But if you have bought
real stock at 30 and hold onto it, and
the shares fall to SO, and you put the
stock to the capitalists at IS, you GER
tainly make two hundred dollars,
which is probably about what you paid
him for the privilege, and you have
lost lat least on paper seven hundred
dollars on your real purchase. Many
people might inquire where the bene-
fits Of the ''put and call" insurance
come in. I answer, as the Jersey
schoolmaster was won't to answer pu-
pills whose questions sank the plummet
into too deep waters for him to follow
it: This is question of your own
asking"
The capitalist who sells the privi-
1ege presumably has a better forecast
of the market than you have. He sells
his wisdom at profit; you buy the
fruitage of him, and he gets the better
of you at the start. Then the market
is before you with all its chances.
With your put IN your pocket, you
may buy A B ten times over at 90 and
sell it at profit each time; but you
could have done the same without
put; and vice versa. You have how
ever the satisfaction of knowing that
if the stock falls you cannot lose be-
yond certain definite amount pro-
vided you market your purchase, that
is your 100 share lot, at the same time
that you avail OF your put to the CAPT
talist. But you could have limited
your loss just as well and much more
cheaply by ordering your purchase to
be sold at definite point of drop, say
one or two per cent.
The put and call system does not
exempt the operator from any of the
vicissitudes of the market, however
attractive it may be to person to buy
chances of an experienced capitalist
who makes it his business to sell
chances as means OF profit. The
capitalist sets up the goods in his shop
window for his own benefit; and you
need to be exceedingly sagacious or
exceedingly lucky to- beat him on his
own terms.
Shall we then say there is no safety
in Wall street? BY no means. There
is always good property to be had if
You have the means to buy it, and
when in times of money scarcity the
man with money comes into the
market and buys dividend-playiSg Sc
curities Of long standing, and secure
1.%s -hN
obliged to sell to meet necessities. he
is pretty sure to buy what he can sell
at latter day at a liberal profit. And
whether he buys outright for cash or
on full and adequate margin. the
principle is the same; except that as TO
margin purchases the yield of profits
is at greater ratio to the amount in
vested than on purchases outright.
All systems of money making de.
pending on fluctuations of price should
be looked at through the compound
lens of this truth, that wherever there
is a chance OF gain there is also q
chance of loss Loss and gain are only
opposite ends OF the same rope. They
are the same account-head in every
ledger, and are as iuseparably united
as the Siamese twins. This law is in
exorable. absolute and operates all the
time. To attempt to override it by the
aid of systems Of whatever nature is
irrational And the only eulogy to be
bestowed on systems, as applied to
financial hazards, is that some are not
as irrational as others.
EESRT CLEwa