By way of warning, we may quote an anecdote told by the author of “A Guide to the Inexperienced.” “I heard it,” she says, “from a person who had been almost persuaded by a friend who knew nothing of business to take some shares in a company which promised extremely good interest.
“He went to the office, which was in the City, to make inquiries. The manager tried hard to persuade him to invest, assuring him of the safety of the concern. While C—— was hesitating, a man rushed in and said, in an eager tone—
“‘Pray, sir, have you any more shares on sale? I have an order for fifty more. They are in such great request that I am afraid of their being all sold before I can get enough.’
“His manner and words opened C——’s eyes, who suspected that this was a plan to entrap him to invest, and he quietly walked off. The company failed in a very short time afterwards.”
We have spoken of investments in shares, but shares are often bought, not as a matter of investment, but as a speculation, the buyer purchasing them with the expectation that they will rise higher, and that he will then be able to dispose of them at a profit. This is, as a general rule, little better than gambling, and a wise woman will keep out of it.
Every transaction in the stock market, whether it be in Government stock, or in railway shares, or in any other securities, must be effected through the medium of a broker, who is thus not only an adviser but an indispensable agent in the transaction. Be sure to employ a broker of good standing, and, having found a trustworthy man, be rather guided by his advice than by your own notions as to what purchases are safe and what imprudent.
All documents connected with investments should be carefully preserved, and dividends, when they fall due, should be looked after. It seems unnecessary to say so, but it is a curious fact that, to speak of the public funds alone, a large sum is added every year to the revenue from unclaimed dividends. No stock is reckoned unclaimed till ten years have elapsed without the holder in any way giving token of his or her existence; and yet in 1879 the amount credited to the item of “unclaimed dividends” for the year ending 3rd January, 1880, was no less than £3,411,228!
The principal reason for this, no doubt, is carelessness; but Mr. Walter M. Playford, in his “Hints for Investors,” gives several other reasons which are likely enough. Dividends are often unclaimed through the misconception of people who have sold stock. They think they have sold with it a dividend, or a portion of a dividend, to which they were themselves entitled. Then, executors and administrators are often unable to claim stock, because those they represent have kept their investments secret from their nearest friends. And a good deal of money is not unfrequently lost through the objectionable practice of investing under a false name.
The current prices of all the more important stocks for sale are chronicled day by day in the newspapers. It is a department never omitted in any well-regulated journal, even though it forms the driest-looking column in the paper. It is full of figures and tables of figures, preceded by a few paragraphs, of a very stereotyped aspect, and written in language peculiar to itself.
We read therein that “the market is easier,” or that “it assumed a more lively appearance,” or that “it showed a falling tendency,” or “great depression,” or that “its tone remained very steady all day.” We also read of “prices hardening a little,” of “heavy stocks being inactive,” of “foreign securities being quiet,” and grow familiar with “Wabash Preferred,” “Nickel Plate Common Stock,” “Spanish Externals,” “Egyptian Unifieds,” and many other things hard to be understood by the uninitiated.