Much Money only Obtainable as a Certainty by Hard Work.
If the time a man spends in finding out the mistake he has made in selecting this or that stock haphazard for speculative purposes, were devoted to obtaining some special information about one particular stock which he might have good reason for believing was worth attention, his chances of making money would much improve.[34] This plan is adopted by the more sensible speculators who sufficiently understand the difficulties of the business to recognize the importance of laying down certain principles of action. Money cannot be made for a continuance with any degree of certainty without hard work. When this proposition is demonstrated, which it undoubtedly can be, the whole question of speculation as an occupation, a pastime, or a business, call it what we will, resolves itself into this, that unless a man devotes the same hard work to it that is necessary to earn a fortune in any other calling, plus the possession of an intellect of a special order and considerably above the average, he must be a fool to speculate at all.
An Average Instance of Haphazard Speculation.
In order to bring more forcibly home to the mind of a man who may know nothing of Stock Exchange matters, the wisdom of imprinting upon his understanding the uselessness, in the long run, of playing at what is nothing better than pitch-and-toss, we will just sketch a case in point as an instance:—Supposing a speculator to enter the office of a stock broker. He has, perhaps, some hazy ideas about the future financial condition of Spain, for example. He has noticed the stock has fallen to 19¾, and this seems to be very low for a country which has so far struggled against the corruption of its rulers, and the laziness and apathy of its population as a body, and has managed for a long time, by hook or by crook, to meet the exterior coupons by paying them in other people’s cash. The probabilities certainly must be, he thinks, in favour of their paying another half-year’s interest, if after that the deluge of national insolvency should flood the land. He contents himself with gathering to a focus the intelligence that stands from morning to morning in the telegram columns, and comes to the conclusion that something will turn up to supply the exchequer with another loan to meet the next dividend, and in that case the stock must at once jump up to 22 at least, perhaps to 25, as there would then be six months to turn round in. Now, what we submit is, that to speculate deliberately upon such a system as this, is not far removed from insanity; and yet it will be acknowledged by those conversant with the modus operandi of the haphazard speculator, that his plan of attack is based, for the most part, upon this absurd system of guess work, no serious trouble being taken to estimate the extent of the forces opposed. Some fanatical faith is placed in the doctrine of chances that the fluctuation wished for will occur, and he shuts his eyes and waits. To sit at home and guess at what the present or future financial condition of any country may be, and to risk your money under such conditions, is worse than reckless.
Supposing, on the other hand, the hypothetical speculator, instead of acting upon the impression made on his mind, by superficial influences, were to start for Spain and take the trouble to get behind the stock, so to speak. In one week, if he occupied a position in life sufficiently high to enable him to get trustworthy information, he would be in a position almost certainly to know whether there was a chance of such an event coming off, as for instance, the next coupon being paid. This would be at least a business-like way of setting out on a speculating expedition, a method of proceeding such as is pursued by a syndicate of speculators who propose to purchase a foreign mining property, for example. A man of sense who buys anything, the value of which depends upon a set of circumstances operating at a distant spot, naturally proceeds thither, or satisfies himself through some trusty agent that such circumstances exist, or that they do not. If he be contented to buy twenty thousand Spanish Stock at twenty, on the chances of the power that is, or may be, from one week to another, being able to pay the dividend, because so far they have just managed to do so, he would be deserving of no sympathy if he found himself in a couple of weeks with his stock at 17, and his banker’s balance less by six hundred pounds.
The reason why so much money is lost by this loose mode of proceeding is, because haphazard speculation possesses a peculiar charm for certain loose natures, which are roused into a pleasureful excitement by running risks. They defend the viciousness of their lazy amusement by saying to themselves that the chances must at least be as much for them as against them, inasmuch as there are but two ways for the price to go—up and down. Many a man who has fed and encouraged this itching sensation, which can only be appeased by having passed through the excitement of running a certain risk, finds himself so bound by its spell that in very many cases nothing short of absolute ruin succeeds in quenching his thirst for such excitement.