The morning news. [volume] (Savannah, Ga.) 1887-1900, 1893-07-30

I'VE poiulS again guy 4OO more. Keep on
doing this; and the very first time that q
rise OF i've per cent. occurs you can sell
out the entire mass of purchase at a pro-
fit
This is beautiful scheme. Said the
British blacksmith, 81 will shoe your
horse cheaply. There will be twenty
four nails in the four hoofs. For the first
nail one penny, for the second two pennies
for the third four, and so on" ''Why
certainly said the rider and had his .
horse shod while he waited. But when
the job was done, if the whole of England,
farms, factories, jewels, products and
even manageable females on the island,
had been sold to good advantage, the total
wouldn't have paid the farriers bill
And if the followers of the beautiful
system just sketched starts in with a
hundred shares at 80 and follows the
market down to 20, he is out two hun
dred dollars besides commissions and
interest, and there are breakers ahead,
since there might be further drop of
five per cent. calling for triae of two
hundred and eight Thousand more. If
you don't happen to have these large
sums in convenient cash, your brokers
will help you to carry the load; but they
place their shoulder very properly under
the safe end of the log. If the market
happens to be on a long downward
SIduo InlS SySJen Is 1Ounu 10 DC De-
yond the reach of any but the
wealthiest operators; and it has been
known to land them in frightful pitfalls.
Take for instance purchase of Reading
in early 1898 on this basis at 55; only a
little timid shrinking, blushing pansy of
100 shares; where would you be in March?
Eight purchases bring you down to 20,
and on that safe and cheap basis you are
only out $63, $50; and on that basis rally
- R1yf hui, I,.1o
But in order to avail of such scheme as
this one must not only have capital. but
vast patience, dauntless courage, and
such a knowledge of real values that he
will never buy into a stock which does
not possess, in addition to absolute worth,
an equally positive recuperatiye power af-
ter disaster.
The sums which 1 have mentioned
would appear extremely small to large
operator, or even an average operator A
person who opens deal with 100 shares
purchase is of very slender Importance in
Wall street. A fair sized order is for
1000 shares. Then the Reading deal Just
sketched would result in an investment
of about S640.000. Such a transaction
would, doubtless, be far beyond ordinary
means, and the courage of a majority of
those who read these lines; but it points
out to them quite clearly what they might
expect, if they swim out into the current
with anything like the plunges that are
made by the larger fish The hundred
share operator is really the minnow who
frequents the shadows, aud yet, we see
that even he might be called on to swim
in rather deep water If he attempts to
swim on system
Another neat system is known as the
pyramid and is about as follows: You
buy hundred shares at 80, and deposit
five hundred dollars margin. The stock
goes to 95. You have now five hundred
dollars paper profit. Do you take it in
cash2 No, but you buy another hundred
at IS, depositing five hundred dollars more
with orders to your broker to sell the two
hundred shares at the first drop of one
per cent If the stock drops to "a you sell
out, and take profit of four hundred dol
lars less commission and interests. But
let us follow up the pyramid The
stock rises to one hundred, you have
fifteen hundred dollars paper profit. You
then buy another hundred shares; still
under the same order to sell if drop of
one per cent occurs, 1t rises to 105 and
you have three thousand dollars profit on
your three purchases. Your pyramid
now becomes truncated by drop of one
per cent, and you retire with net cash
profit of twenty-seven hundred dollars,
less interest and commissions.
system if it works. But it doesn't always
work. For instance, stocks do not al
ways rise when you buy them. Thus at
the outset, your pyramid may be a hole
in the ground, and not a pyramid at all
But if it rises shapely and strong up to
and beyond the first tier of masonry
where you have paper profit of $780,
and you buy another hundred thus laying
the second tier, and a drop comes, this
hn ein urlo
Stocks sometimes drop five per cent be-
fore broker-even of the most active
type--can market them. Then the pyra-
mid suffers a shock like that given by an
earthquake. Having risen 'like an ex-
halation," it disappears as quickly as
Aladdin's palace when carried off by the
genii of the lamp.
AS a matter of fact pyramids some
times succeed and sometimes they don't.
But it is the nature and essence of q sys-
TEN, without which a so-called system is
not system at all, that it shall always
succeed, at least almost always We buy
friction matches on the certainty that
they will ignite when rubbed; lOcomo-
tive on the certainty that they will move
along when fired up. But if a pyramid
can sometimes be built and sometimes not,
the chances being more negative than
positive, 1t is certainly a forbidding and
ulliJg dOblNC lLlNCS blAAClIb nav d ny Idlu1u
should be worth anything demands the
condition precedent that stock should
steadily rise a certain number of points,
say fifteen, and although this happens
now and then, still where a system de-
ponds upon factors that only work occa-
sionally, it is not worth being called q
system.
Another system is that of averages.
Nearly every stock that is dealt in on the
stock exchange has a history running
through series of years, made up of
daily sales, and the average price of any
stock is therefore a matter of exact cal
culatiOn, that is, its past average price.
The follower of the average system"
takes as the basis of his operations the
supposition that the average that is to be
will correspond with that which has
been, which might be a fair supposition
in regard to temperatures in any given
latitude in a settled country, but which
is evidently unsound when applied to the
values of a property as TO which the con-
ditions are all the while changing The
railway A B connects two important
towns A and B. 1t is a direct line, hon
estly capitalized, and does a profitable
business without competition. 1t has
paid dividends from the start, and its
market price has positive average.
Now let us suppose that the directors
of this road proceed to extend it at one
or both ends in search of problematical
business. and attach lateral feeders or
euclxars IN the main line: and that these