[1] At Monte Carlo the roulette wheels have only one cipher, but at the
end of each turn of the wheel the person (or persons) playing on the
winning number usually contributes a disk (or one thirty-fifth of the
amount won) to the croupier’s “box,” which amounts to about the same
thing as having two ciphers, without this customary gratuity. It is
said that one-half of the amount of these voluntary contributions goes
to the corporation, and the other half pays for the entire upkeep of
the establishment, including the salaries of the croupiers and other
attaches. The same disks are used by all players, and a winner who
persistently ignores the “box” is not apt to be favored by the croupier
when another player claims his winning bet, as often happens.
FRENZIED SPECULATION IS THE RANKEST FORM OF GAMBLING; IT IS A PERILOUS
INDULGENCE
An enormous percentage of stock market speculators become victims of
over-confidence after a series of successful trades. Their buoyant
spirits increase with every new success, until at length they throw
discretion to the winds, extend their risks far beyond the margin of
safety, and at the infallible turn of the market they find themselves
in difficulty, like foolish fishes that get stranded on the beach at
high tide. It is a fact, as inexplicable as it is true, that men with
a fair amount of gray matter in their heads, who would flout the idea
of paying $50 a share for a particular stock, will later borrow money
from a broker at from six to eight per cent. to buy the same stock all
the way up from $100 to $150 a share on the slenderest permissible
margin; and, instead of proportioning the margin of safety to the
increased carrying risk they narrow it by continuing to buy as the
prices advance. Also there are many who after selling their stocks
at a handsome profit will buy them back at twenty, fifty, eighty, or
a hundred points higher, and with much less timidity than they felt
when they first bought them at low figures. Prosperity in the stock
market seems to encourage optimism, rashness and impatience in about
the same degree that adversity discourages enterprise and aspiration.
But there is far greater danger in excessive optimism than in excessive
pessimism, for the reason that optimists are inclined to back their
hopeful views by indiscriminate purchases of stocks at high prices,
while pessimists are seldom disposed to back their views at all. The
risks incurred in buying stocks on a “thin” margin are so manifest that
it seems almost as platitudinous to mention them as it would be to
remark that children endanger their lives when they congregate on thin
ice.