Evening star., 1926-10-04
MEN AND MONEY
By NJ. S. Rukeyser
Copyright. 1920


weight championship hattie empha
sizes the utterly misleading character
of Wall Street betting odds. Although
the odds were three to one against
him, Gene Tunney won the fight. The
event was characterized as a reversal
but a search of the record shows that
In nine previous instances where the
championship title changed hands
five in the heavyweight and four In
the lightweight class-the odds were
wrong in every instance but one
Moreover. in the 10 most importa mt
events prior to the Tunney- Dempsey
fight in the squared ring since 1897
the odds correctly forecast the event
bad record of performance except in
cases where the result was virtually
obvious.
Wall street also quotes odds on
base ball championships and political
| events. In the case of world series
for base ball championships. the late
| odds foretold the outcome truthfully
only times out of 10. Good ad
vice would be: Don't gamble, but, If
! You do, use your own judgment,
rather than blindly following the
quoted odds.
Odds Far From InfallibIe.
Quoting betting odds constitutes an
activity outside the legitimate func-
| tiOns of financial districts. How ac-
curate are these odds as a forecast
| of future political events? My inquiry
| into the records indicate that such
| odds are far from infallible. The
future remains obstinately unknow
able. The citizen with a thirst for
| knowledge, though he has read the
| Wall Street odGS, must Still wait for
| the event to be certain of the out
come. Political odds, however. seem
| to be more dependable than sporting
| odds. If the bettorS knew nothing
about prospects and merely guessed,
| mathematical laws of chance ought
to make them right half the time.
| The value of their forecasts therefore
must be judged by their achievements
in excess of a so per cent record for
accuracy.
The Wall Street betting odds on
elections had better than a guessing
record. but on world series and prize
| fights blind guesses would have been
more accurate on the average
In the last 10 elections the late odds
correctly forecast the event times
out of 10. The odds were wrong in
1916 when the late President Wilson
beat Charles f. Hughes in an exceed
ingly close contest. which was in doubt
for several days, and again in 1918.
when Gov. Al Smith Nefeated former
Coy. Charles +. Whitman in New
York.
Pretty much the same reasoning ap-
plies to the field of legitimate specu-
lation. AT bottom speculation as now
carried on is an individual. not a so
cial art. To succeed in this engaging
fluid activity-and only the excep-
tionally qualified minority consistently
SucceedS-the operator must rely pri-
marily on his own judgment. his own
reading of the financial signposts and
his own capacity to think quickly and
to act instantaneously.
DOpesters Are Unreliable.
The idea that the road to easy for.
tune lies in slavishly following the
dopesters is fallacious. Foreca sters.
statisticians and writer's of brokerage
market letters may contribute useful
clues, hints and diagnoses, but the
trader who acts upon them without
| transforming such data In the chem
istry of his own mentality to conform
to his own peculiar requirements is
in fair way to part with his money.
The principal banks and investment
houses in every large city are per-
petually creating a vast body of
is frequently of real educational value
and practical utility.
Business foreca sting. still in an ex-
perimental state, has not attained the
dignity of a precise science. Business
forecasts are accurate in the same
sense that the weather forecast is.
1t all depends upon how much allow
ance is made for the element of time
When the Weather Bureau predicts S
fair weather, it is always right, al
though it is sometimes necessary to
wait four days TO a week for the
prophecy to come true. Predictions
of fair business weather are equally
likely to be realized If one is sufficient
ly patient. But for practical purposes
a forecast is valuable in proportion as
it is right in relation to the element
of time
Hurricane Not Discounted.
Glib promoters who a year ago were
freely predicting what the future of
Miami and its environs in Florida
would be made no allowance for the
deva stating hurricane. Floods, earth
quakeS. famines. war, peStilenceS and
other unpredictable events recur to
remind each generation of the falli-
bility Of its prejudgment of the future.
At best, even If made on the basis Of
a more scientific technique than any
that has yet been devised, business
forecasts can be no more than tenta.
tive and approximate statements Of
what events are likely to flow from
certain causes or premises. The naive
persons who think that by subscrib-
ing $l0Q a, year to a statistical service
| they can eliminate every element of
risk and uncertainty from the future
are gullible. indeed. Well conducted
statistical services which have made
expert examination of the factors af-
fectinG trade and finance can at best
give background and systematic in
dications of what is likely to occur,
provided expected influences operate
and are not offset by accidental fac
tors which have not been anticipated.
In practice. most successful bust :
| ness men schedule their expenditures
and sales prospects a year ahead,
but they modify their programs in
the light of changing conditions. AL
| though the future may be unknow-
able. all business plans are based on
| expectations concerning future pros
poets.