Some years ago I came across a book, called “Crump’s Theory of Stock Speculation,” which had gone through several editions in England; and the practical wisdom expressed therein impressed me so forcibly that ever since then I formed the project of publishing an American edition. The reader may be astonished that, as a broker, I desire to give such a book a larger circulation than it possessed heretofore, as the natural conclusion would be that it might injure my business. I feel, however, that i

Our object in writing this book is to endeavour to show to persons who may contemplate trying their hand at Stock Exchange speculation, the improbability of their hopes being realized. Much mischief and trouble would be avoided, and a deal of money saved, if, before entering upon such a dangerous career under the most favorable circumstances as that of a speculator, a study were made of the difficulties such an occupation involves, and also of the chances against the operator, considered as one

The members of the Stock Exchange are of two descriptions, jobbers and brokers. The jobber [9] deals in stocks and shares, either as a buyer or seller, at the market prices. The broker deals with the jobber, and is paid a commission by his principal for transacting the business between the two. A bull is a speculator who buys for the settlement [10] with a view of selling at some future date at a higher price, and gaining by the difference. A bear is a speculator who hopes to gain by the reverse

If a speculator has not closely studied the special causes that influence the Stock markets at regularly recurring intervals, he has not learned the alphabet of his business. We shall endeavour to pass in review some of these. First of all, there is the temper of the public. Many persons have puzzled over the causes which will at one time combine to produce activity among buyers of stocks, and at another dead stagnation; and it is a very interesting study, albeit somewhat difficult of correct an

A man who wins by haphazard speculation, who chances to operate successfully until he has filled his pockets, and retires with his gains from so fascinating an arena, is one in a hundred. Any one who knows anything of Stock Exchange speculation will confirm the statement that, to the ordinary run of men, the game is not worth the candle. There are, however, conditions under which speculation, in a market where ten or fifty thousand pounds can be lost in half-an-hour, may, under given conditions,

The excitement which most men feel in gambling in one shape or another leads to its being practised to a very large extent, in spite of legal prohibition and the vigilance of detectives. Public betting houses have been suppressed, and it seems that betting on horse-racing has diminished; while on the continent, as governments have found themselves able to fill the national exchequer in a legitimate manner, Homburg, Baden-Baden, Ems, and the like, are no longer the chosen resort of rouge-et-noir

Unless a speculator, whether in the Stock markets or any other market, is prepared to lay down all the elaborate machinery, without which, in these times, it is utterly hopeless to attempt to achieve favourable results in any degree, he must inevitably in the long run lose his money. [31] The times are very much changed since the head of a great financial establishment, long since gone to his rest, set sail from the shores of France as soon as he was well assured that Wellington was over-powerin

The bane of nearly all speculators of the soft-grained type—by which we mean men whose will and judgment bends this way and that, like a reed that nods allegiance to any quarter of the world according to the blow of the wind—is, that they are for ever on the itch to do something. There is no getting them to wait for an opportunity. There are two sorts of opportunities, and the distinction between them is important. The speculator feels much more at home in availing himself of one than of the oth

There are perhaps very few speculators of the haphazard type who take the trouble to find out the extent and power of the hidden forces that are arrayed against them in the markets. Every stock, it should be remembered, has either a small or large market to itself. In some stocks it is possible any time of the day to deal at ⅟₁₆ price, [35] while in others there may be a difference of 1, 2, 3, or even 5 per cent. under certain circumstances, between the buying and the selling price. A speculator

It is in the nature of free trade, that whatever mathematical advantage is to be obtained at all is more accessible to the rich speculator than to the poor one. The rich player consequently can make himself the stronger one, and the operator with capital has advantage over the operator without. [38] So far, however, as it is worth while to exercise at all the natural skill in Stock Exchange speculation, which one individual may possess beyond another, there can be no doubt that a less rich, but

We will now suppose a familiar case of a speculator following in the path of so many wise persons who have gone before to their ruin in the process of applying some nostrum, which was to make their fortune in a week. The fortnightly settlements on the Stock Exchange take place about the middle and end of each month. We will suppose a young speculator, full of ideas upon such subjects, and having just sufficient knowledge of the different stocks to make believe that he knows a great deal, gets in

A fool and his money are soon parted, is an old saw, and it is in a high degree applicable to the inexperienced speculator who operates in the markets on a friendly “tip.” [41] It is marvellous to think how many persons daily and hourly are misled by the same snare and delusion. If a man, who starts off in an excited state to instruct his broker in consequence of having received the “tip” to buy a certain stock, pauses for one moment to reflect, he can hardly fail to doubt the disinterestedness

Everything, in these times, is done by machinery, and there is consequently no need for astonishment at finding that machinery is in existence for directing human volition. Such mechanism has for a long time been in working order, although it is scarcely realized by the community as a body. The most accomplished professional speculators make it their business to study the peculiar tendencies of people who have any money over and above what they immediately require for necessities. Firms, with nu

Compared with what there used to be in bygone years there is now next to no speculation in Consols at all. Merchants and bankers once upon a time used to speculate in the Funds [43] as a hedge. But things have changed, and such a method of providing against a mercantile loss, which might be brought about by the same cause that would depress Consols, has gone out of fashion, doubtless owing in some degree to there being other modes of protecting themselves against risks which both merchants and b

Although we have already alluded to this question of “turns,” in referring to the forces, so to speak, in the markets which are arrayed against the speculator, we have thought it advisable, subsequently, to give it a separate chapter. The “turn” is a known quantity about which there is no doubt, and in which there is no element of chance to be reckoned upon according to any doctrine of probabilities, as sometimes favouring one side, and sometimes the other. The “turn” may be described in brief a

The remarks upon speculation in the foregoing chapters may, perhaps, lead the reader to infer that our object has been to enter upon a crusade against all speculators, guerre à mort . Such an impression would not be a correct one, and this chapter is intended, just in conclusion, to show why. Speculation in the sense of buying for cash or on ordinary credit what the purchaser has very good reason for knowing is uncommonly cheap, and what he believes will, ere long, improve in price, does not com

Law Offices of Simon Sterne , 29 William Street, New York , July 24th, 1886. H. W. Rosenbaum, Esq. , 60 Exchange Place, New York, Dear Sir : You ask my opinion as to time contracts known as “puts,” “calls,” and “straddles” or “spreads,” in relation to stocks, bonds, etc. The inquiry is prompted by the apprehension that such contracts may be regarded by the law as of a gambling character, and therefore not enforceable. Contracts partake of the nature of wagers only when there is no intention eith

Besides the usual Options (Puts, Calls and Spreads) with prices fixed at a certain distance from the market price of the Stocks or Bonds, I devote especial attention to the negotiation of Options (Puts, Calls and Straddles), with price fixed at the current market price of the Stocks, etc., which latter class of Options my experience has proven to be the most advantageous and ultimately cheapest. I will also contract Insurances against loss on purchases or short sales of Stocks or Bonds, made thr