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 of the communication. Take an example:—In the first place a man who gives a “tip” to another to buy some of a certain stock, must have some motive for so doing. No human being wanders about with, what he makes out to be, valuable information to distribute gratis among his friends. One might as well expect the girls who sell oranges, combs, umbrella-rings, and collar-studs, in Lombard Street, to give them away for nothing, as expect to obtain disinterested and genuine “tips” from some wandering philanthropist. Such a person was never heard of, and never will be. If a man gives the “tip” to buy a certain stock it is because he wants to “unload” at other people’s expense,[42] and that is not what is generally understood by philanthropy. The system of sending round the “tip” to buy or sell, has become very general in all markets, and it is certain that a vast deal of mischief is done by it. The common practice is for a number of persons to band together, and put the price of a certain article or stock up by buying a large quantity and making it scarce. When the higher price has been maintained for some little time, so that it meets the public eye in price currents, the process of putting the public in is commenced. When this benevolent operation has been sufficiently worked, and the “tip” has been administered to a number of poor dupes, the price is let down. Those who have advised their friend to buy, begin to sell and deliberately rob them, in return for the misplaced confidence.
The Qualified “Tip.”
There is a distinction between the qualified and the unqualified “tip.” One man is a shade more honest than another, and does not exactly wish to charge his conscience with having deceived a friend with regard to a certain event. He merely suggests on general grounds that such a stock is going up. If he can get the person to whom the suggestion is made to act on such general advice, he achieves his purpose without exposing himself to be saddled with direct responsibility in case the result should be unfavourable. There are numbers of such persons who daily administer “tips,” not only to their friends, but to strangers who will not trouble themselves to go farther to obtain any confirmation. Such an important communication coming from credited quarters, is of course looked upon as a valuable secret to be acted on silently and immediately.
The Unqualified “Tip.”
The unqualified “tip” comes from the individual who intends from the first to drive his horse full of armed men into the town, vi et armis, without too much parleying at the gates. He assumes an optimism of manner, and displays such a degree of confidence as shall override any rising objection, gets a promise to act on his advice, and passes on before the person to be made a tool of has time, or can summon courage, absolutely to refuse.
“Tips” Worked by Syndicates.
Then there are “tips,” worked by syndicates, which is a more elaborate affair. The extent of the increased area over which it is intended to operate depends upon the magnitude of the amount to be unloaded, the quality of the security, and the necessity for reaching a certain class of individuals. A vast deal of the rubbish that is shot away from the great financing centres is carefully and eagerly laid hold off by clergymen, and teachers male and female. As a rule, these good people seldom pause to reflect that what is so studiously brought under their notice in their rural retreats, is almost sure to lack a market anywhere else. Is it at all likely that so much trouble would be taken to recommend investments to people, by means of prospectuses delivered by the postman, if the statements contained in such prospectuses were really as true as they profess to be? In large cities there are innumerable agents for all country districts always on the look out for sound remunerative investments, and there is no need to recommend them to people’s attention by thrusting them upon them at their own houses. Such a process of advertising is obviously to net the unwary, who are ignorant of what constitutes good security. The “tip” of a syndicate is passed on, so to speak, for a consideration, in proportion to the amount bought by the clients of the persons employed.
This branch of the subject can be almost indefinitely elaborated, but it may be concluded by one remark, which contains the pith of the whole thing, as applicable to speculation. Speculation as practised by the multitude is no better, in any market, than pitch and toss, and it is only by the aid of experience and more native skill, that some in the long run will lose less than others. One golden rule with reference to “tips,” no matter from whom they proceed, or by what alleged incontrovertible facts they are supported, is this: when you are told to buy go and sell.