Evening star. [volume] (Washington, D.C.) 1854-1972, 1905-05-28


That the public always loses money in
Wall street is one of the legendary axioms
q statement widely credited that 1t Is
an old favorite of the professional joke
manufacturers, like the terrible mother-in-
law. 1t has ramifications, as 1t were, such
as the belief that what the lamb loses, his
broker gains. the latter's profit being In
exact proportion to the formers loss. Of
late. due perhaps to the epidemic of fren-
eied financial writing, an outsider might
we'll grow to believe that 1t is not the
broker who profits by the publics ignor-
ance. but the world-famous captains Of
finance, all Of whom are pictured as beasts
of prey. actuated by the same motives. pur-
suing the same end gorging themselves
gOldenly with the hard-earned dollars of
virtuous. but over-credulous public. A
moments reflection would show all this to
be absurdly one-sded as most general
titles apt to be. AS a matter of fact 1t
Is not so much that the public loses enor-
mously, but that 1t fails to make as much
as il ought to. 1t is an elastic phrase, that
''public" and it would be interesting to
compile statistics showing the proportion
of winnings TO losses. If only it were pos
sible TO compile such figures 1t cannot be
denied that the public, or that part of it
which speculates in stocks, loses more fire.
Quently than it gains. That many people
who fail under the category of public
make oftener than not. is also to be gain
said. else so many others would not be try
Ing to do likewise For one gambler who
goes to Monte Carlo firmly believing that
he is going to break the bank, there are
o hundred who realize that the chances are
pYerw helmingly against them. And or
though they know the house will win often
er than not. But If the public" recog-
nizes the futility of trying to beat avowed
games of chance it does not recognize such
futility in the Wall street game because as
matter of fact stock speculation
is not haphazard affair nor exclusively a
eport in which the skill begotten of ex-
perience and long practice can alone take
the trick. 1t requires no great eXper, ence
nor marvellous adroitness to heat" the
stock market. All that is needed is some
money and some brains And because one
of the evidences of the possession of brains
Is the possession of patience. perhaps what
Is most lacking in the majority of the
stock-speculating public is patience. The
Street is full of men who have made for
tunes out of the stock market, men who
are neither brokers nor captains of finance,
but men who without exception have been
successful because they have had patience.
In thus emphasizing the value of patience
the conclusion is obvious that the average
Spectator is not a philosophic gambler.
The public Is composed of average specula-
tors 1t Is well therefore in considering
the public" and the reason why it so
often loses money in Wall street to elimi-
nate the big men," who also lose money
and a great deal of it, oftener than people
inag CINE or Mr.. Lawson would have his
readers believe, and to exclude similarly
brokers, professional traders and nves-
tors. The public which remains is largely
composed therefore of the victims of the
game, the lambs or suckers" or. as the
late Frank Norris used to say the great
American d fool. Ii includes all sorts
of men regularly engaged in all sorts of
business+merChants, manufacturers, pro-
fessional men, young and old, of all relig-
ions and of no religion at all They are
much alike in that the contributing causes
of their infrequent winnings are the same.
They are actuated by one motive-to make
money and to make 1t easily and quickly.
If before buying a stock you should ask
one of them If profit of, say, 80 per cent
on the capital invested in three months
would satisfy them they all would prob
ably answer yes. But if, as it often hap
pens the profit came within week, not
more than one in ten would corral 1t. 1t
Is one OF the effects which the poison OF
gambling has on the average mind. II
warps the Judgment. A man puts up $1,000
and buys one lUDuTeu SHARES u SlDth anu
the stock goes up two and half points in
q couple of days. 1t looks as If it ought
to rise more. The average man does not
sell out. There is p per cent in two days.
or at the rate of 40 per cent business esS
week If continued it would mean 1900
Der cent year. But none of them wants
TO wait a year. All Of them realize that
10 expect 21a point rise day for whole
year is idiocy. But they also think 1t IS
idiocy to take a profit whereby the capital
has been Increased at the rate of l212 per
cent a day because the market looks as II
this good fortune had only begun. 1t makes
them "overstay' their market
Primarily. of course, what holds good Of
failure in every line of business is true of
stock speculations. Perhaps % per cent of
the new commercial enterprises in this coun-
try fail and of such failure % per cent are
due to insufficient capital and not to in
sufficient brains. 1 have asked every big
generator in this country what he thought
was the reason why outsiders failed to
make money in Wall street, and every one
was of the same mind-over-speculatlon
The public buys more than its capital war
rants The average lamb will buy as much
stock with his money his broker Will
allow him. HE does not ask himself II
the margin is enough to protect MN IN
case Of an unexpected catastrophe. w hat
he really has asked, though he may be
unaware of it, is whether the margin Will
protect the broker. There is nothing wrong
or immoral or unwise about specializing on
a margin II is doing business partly on
borrowed money, and that Is so business
iiLc mat every business man does ii every
lay But the smaller the margin of SAFETY
tn greater the risk, of course. This, how
ever. is not reflection that man bent
on making money in the twlnkilnS OF an
eve is apt to make TO himself with any de-
gree of calmness.
X
In speaking of the stock gambling public
as buying stocks one speaks of the usual
operation The average man would rather
buy than sell for the same reason that the
average man Is right-handed. A life times
habit is behind il. The merchant and the
manufacturer make their money buying
goods and selling them for more than they