The New York herald., 1922-02-18

on lndt sort or DuncOmDe and send
their money away on the strength
of it,
Pick Your own BucI<eteer.
If you really are interested in one
of these form letters, which any morn
ing's mail may bring TO flatter you out
of your money, the best thing TO do is
to weigh every line carefully and
watch for "jokers' in phraseology. If
1t sounds little too anxious or So
licitous throw it away. If it sounds
all right. throw it away, anyway, and
go out and hunt your own bucket shop,
II you've got to have one. In that
manner you might at least have the
satisfaction of singing yourself in
stead of being duped by a person you
never knew from Adams house cat
Any quick profit" letter is to be
lodged like a brick always. 1t is not
hard to work up considerable sym
pathy for the person undertaking TO
make a legitimate investment in stocks
who is robbed in the process. But the
man who rushes out to grab a quick
profit" on some fictitious yarn about
coming rise in the market price of
some stock is undertaking to get some
thing for nothing on the face of his
transaction. Tears over such a pre-
dicament fall rather slowly
Many Of the letters to TIE NEW
YORK HERALD, however, are from per-
sons who already have placed their
money with brokers of whom they are
suspicious. Such investors already
are beyond the point where heed to the
foregoing points would be of any use
Even after the negotiations between
customer and broker have proceeded
to the point of an actual transaction
there are several aspects of the situa-
tion which may we'll be taken into con-
sideration.
One of the favorite tricks OF the
bucketeer is to offer to do business on
smaller margin than his legitimate
competitors. The bucket shop opera
tor knows that that is a strong temp
taton to any uninitiated prospect 1t
looks like a special concession and a
real saving in outlay for the invest
ment.
When that offer is made the pros
pective customer should put on the
brakes good and hard Any stock has
the same value at any given time,
whether it be sold by one brokerage
or another. That face value has only
so much borrowing power. Whenever
an offer is made to reduce the margin
to a point which patiently makes in
roads on the borrowing value of the
security, it is cinch that somebody is
going to lose money in the deal. II is
also a cinch that it is not going to be
the broker, for no broker could stay in
business on any such basis as that.
Bear in mind that the ordinary
bucketing transaction is such because
il does not involve bonafide purchase
and holding of the stock. The result
of that situation is that the broker
has obtained no security upon which
tc negotiate the loan for you. 1t fol-
lows that he cannot negotiate such q
loan. That ought to make X fairly
clear that he is not interested in
whether the margin meets the differ
ence between face value and borrow
ing power.
In those circumstances, it is fairly
safe bet that your "broker" is getting
ready to pocket your investment in
toto and wipe you out at the first op-
portunity.
The same line OF reasoning applies
to charging rates of interest below the
current rate. The bucketeer can
afford to charge you a lower rate of
interest because he has negotiated no
real loan on which you pay interest.
Therefore you are not paying interest,
but making a donation for the general
prosperity of the members of the firm. ]