A much safer plan is to follow the lead of shrewd speculators. In Wall Street you should reverse the advice given to the disciples concerning the Pharisees. Christ said, “Do as they say, but not as they do.” But with speculators the direction should be, “Do as they do, but not as they say.”
The chief form of speculation is in stocks. These stocks may be railroads, mines, wheat, corn, cotton, wool, tobacco, oil, gas, coal, and, in fact, almost any industry where capital has constantly vacillating values. We have room to mention only a very few:
942. City Bonds.—These are generally among the best securities for investment. The element of speculation comes in when they are bought below par in the belief of an early rise. A sharp Yankee bought $100,000 of defaulted bonds of the city of Houston, Texas, forced a settlement at par, and doubled his money.
943. Colonial Trade.—We have the very best authority for the information that the trade in our newly acquired territory, the Philippine Islands, will be worth one billion dollars annually under American development. Here is an immense opportunity for every form of profitable speculation. Cuba, Porto Rico, and Hawaii, also, are inviting fields, and there is no doubt that the next decade will witness the making of many fortunes in those islands, and the foundations of hundreds of others. Now is the time to begin, as those earliest in the field will have the first chance to buy up depreciated stocks and lagging industries.
944. The American Tobacco Company.—One of the most vacillating stocks lately has been that of the American Tobacco Company. In January of the current year—1898—Mr. J. R. Keene purchased 80,000 shares at $90. September 26th, fearing the market was about to decline, he began to sell, and in two days had completely unloaded at figures ranging at $145 to $139. He cleared about $1,500,000 in the two days.
945. Collapsed Railroads.—For a capitalist there are few more promising fields than the buying up of collapsed or run down railroads. Mr. George I. Seney accumulated a large fortune by purchasing at a little more than nominal figures bankrupt or embarrassed roads, and by thorough equipment, and by connection with more prosperous roads, soon put them in a paying condition. If you can get one end of a small road into a large city, or if you can arrange to make it the feeder instead of the rival of a large road, it will be almost certain to yield abundant returns.
946. Wheat Margins.—Fortunes are daily made and lost in wheat. Everybody has heard of the great Leiter deal. Joseph Leiter often made $100,000 in a single day. In ten months he rendered things lively in every great center of the world, and in this period of less than a year he actually made $4,500,000. True, he lost it again, but the fact that one could corner such a fortune in so short a time shows what may be accomplished with courage and capital. The safest rule for small and timid operators is to follow in the wake of these bold speculators, but not too far. It may be laid down almost with the certainty of a logical premise, that, when a man of vast resources and thoroughly familiar with the field enters the market, he is bound to win at first, but bound to lose if he presses things too far, because the tremendous stress produces at last reactionary conditions which no manipulator and no combination of speculators are able to face. It does not matter so much whether you are a bull or a bear, if you can perform the difficult feat of holding yourself in.
CHAPTER XXXI.
WHERE TO INVEST MONEY.
What Shall I Do with My Money?—Enormous Profits in Trust Companies—The Most Costly Bell in the World—The Bell Telephone—Edward Bellamy’s Vision—The Best Paying Stocks—$11 per Day in a Lodging House—How a Young Man Made $10,000—How to Start with Nothing and Be Worth $100,000 when You are 40 Years Old.
The first question is, How to get money? The second, How to invest it? The general distrust of money concerns is seen in the enormous deposits in the savings banks—a disposal of savings which yields the smallest returns—and also in the readiness, not to say rush, to take government bonds when only three per cent. or even less is offered. We give a few of the best paying investments, but the list is by no means exhaustive. The first four are in a section (Brooklyn Borough) of a single city, but there is no reason to doubt that other cities, and other sections of the same city, can make an equally good showing. Indeed, many Western concerns pay much higher dividends.