You are playing against odds when you speculate.
The only man who has a sure thing on the Board of Trade or Stock
Exchange or the race track is the man with the "Wienerwurst" privilege.
The successful business man some day wakes up to the fact that his
bills are paid, and that he has surplus money. This surplus money
should be used for investment purposes and not for speculation. Of
course, it is hard to draw the line where investment leaves off and
speculation begins.
When you speculate on margins you are like the fellow holding on a
bear's tail as it runs around a tree--if you lose your hold the bear
will get you.
The man who makes an investment, buying stocks or real estate and
paying cash for them does not have to worry about the market. Prices
may be up or down, but the man who has paid for what he has bought will
sleep well.
You can't beat the speculation game. The only ones who make a success,
and their success is ephemeral, are those who make speculation their
whole occupation. The professional speculator is merely a high grade
gambler, and he always winds up a loser.
Go to the Stock Exchange or the Board of Trade and you will see at
either place a half a dozen old fellows hanging around. They are all
men who have seen better days. A little inquiry and diplomacy on your
part will bring forth the fact that these men were once prominent
figures on 'Change.
When you have more money than you need in your business buy good farm
lands out west, or good timber lands. No man ever bought good farm land
or good timber land at the prevailing market price and lost money
eventually. Of course, at different seasons of the year the price of
land may go down a little temporarily, but the moment a good crop comes
in, the price goes up again.
With good clear farm land you can always go to the nearest bank and
borrow from sixty to seventy-five per cent. of its value.
Real estate is the true basis of wealth, and if you want to play a sure
game, buy land that produces things.
When you buy vacant property in a large city, it is mere speculation.
The land does not bring in any remuneration, and you are simply betting
that the prices will increase.
Every large city has abundant instances of vacant property that is not
worth as much now as it was ten or twenty years ago. Real estate booms
come in cycles. Prices go up and men get the fever and buy vacant
property. The boom explodes, property goes down and you can't get your
money back. The chances are you have bought the property on two or
three years' time, and it certainly is paying for a white elephant when
you are paying for land that is worth less than what it cost you. You
cannot get out, however, because the original payment has already been
made, and your only hope is to save something on your investment.
Notwithstanding the fact that certain business sections and certain
residence sections in any city steadily increase in price, yet the
average real estate in the city increases by very slow percentage. The
same amount of money, put out in mortgages, with the interest added and
compounded, will develop wealth greater than the average vacant
property investment, for where one lot soars up to a high price there
are a hundred that don't increase at all, and the picking out of the
lot that is going to increase in value is as hard as picking out the
horse that is going to win the race. It is because the vacant city
property has only speculative value that the business man should not
touch it.
Buy farm property that you can rent. It will bring you interest on your
money right along, and the tendency of farm land is and always has been
steadily forward.
Mr. Yerkes, of Chicago, was a speculator who made millions in the
street-car system. He was thoroughly familiar with Hydraulics, and he
soaked the stocks as full of water as possible and then unloaded on the
investors who speculated in street-car stocks. These speculators are
now holding the bag. When Mr. Yerkes closed out his holdings in Chicago
he granted an interview, and one truth he uttered in that interview has
ever been remembered by the writer. It is so valuable an expression
coming from such a successful speculator that we are going to give it
to you. It is as follows: "I have never known a business man to
successfully speculate in grains or stocks for two years."
The business man who is watching the ticker or calling up the Stock
Exchange every day, who takes little flyers, is skating on mighty thin
ice.
When you buy farms you are exchanging your money for the most certain
thing in the world, for the basis of all wealth is land, and money
simply represents the things which come out of the land. The things
that grow on the land are exchanged for gold, and the gold is exchanged
for things that come out of the land. The Government exchanges the gold
for pieces of paper called money, which in reality means that you can
exchange these pieces of paper for gold, and you can exchange the gold
for the things that come out of and grow upon the land.
The stock broker may not like this chapter because the more speculation
the more he benefits. He gets a rake-off every time a man buys and
every time a man sells. He plays a sure thing. He is like the man with
the Wienerwurst privilege.
Don't Speculate. Invest.