You read a great deal about the money lost in Wall Street.
_As a matter of fact there isn't any money lost in Wall Street._
_It simply changes hands._
People talk loosely about gamblers and speculators losing all their
money in the end.
If money is lost, somebody has got to win it.
The people who go plunging around in Wall Street making all sorts of
speculations on margin naturally lose their money. They ought to expect
to lose it, and they ought to lose it whether they expect to or not.
They are simply gambling with all the odds against them.
Meanwhile, the wise and shrewd operators follow prudent, business-like
methods and get the money.
The Vanderbilts, Goulds and Morgans of Wall Street are sometimes
described as robbers waiting in their dens to slaughter the poor
innocents who venture within reach. That is all nonsense. _They win
because they know how to play the game, and others who have sense
enough and patience enough to play the game in the same way will win
too._ They absolutely cannot help winning.
The purpose of this book is to inform the reader fully as to the
methods by which money can be taken out of Wall Street--the methods
used by the successful operators of the past twenty years to our
knowledge--the methods which positively must win year in and year out.
We purpose to give the public an opportunity to make a safe and
profitable investment in Wall Street, and have their money handled for
them according to correct and profitable methods.
The men who win in Wall Street are those who invest in stocks--good,
dividend-paying stocks, buying them when they are low, selling them
when they are high.
This is not gambling nor speculation any more than any legitimate
business is gambling or speculation.
In all classes of business we buy at a certain price, and sell at a
higher price.
_We buy under the most advantageous circumstances possible, paying
the least possible price and selling at the highest market price._
This is what we are doing in Wall Street, and as we handle only the
stocks of sound and stable corporations, the security behind our
operations will be the strongest in the world.
The gist of the matter is that the stocks of the leading and most
stable corporations of the country are tossed about in Wall Street from
speculator to speculator, going up and down constantly and varying
enormously in the prices at which they are bought and sold.
These changes in prices are nearly always due to a feverish and excited
market. The stocks themselves do not actually vary in real value. They
are worth a certain sum all the time. They are paying dividends on that
sum and the stocks at their real value are always a good investment.
Yet by the manipulations of the speculators and on account of the
exigencies of these Wall Street marginal gamblers such stocks can be
bought at times at a fraction of their value, and by reason of the same
causes can be sold at other times for far more than they are really
worth.
_The men who make the money in Wall Street are those who know what
stocks are really worth and who buy when prices, go down and sell when
they go up,_ buying and selling the same stocks over and over again,
and making a handsome profit on every transaction. They do not care how
low a stock they hold goes for the reason that the stock belongs to
them, they know what it is actually worth as a dividend payer, and in
the skyrocket performances of the speculators of the Street they take
no interest except as it gives them opportunities to buy and sell. They
do not care how high a stock goes; they have no shortages to cover, but
can simply sit back and sell as much of their holdings as they choose
whenever they see an opportunity to make a big turn.
Such men will turn a block of stock in a given corporation over and
over dozens of times in the course of a year, making so much money on
it that even if the stock should disappear off the face of the earth
altogether, they would still be far ahead on it, simply on account of
the numerous advances and declines.
By owning stocks in a large number of good, sound corporations, they
will average to make a certain sum of money every day in the year. They
spread their invested capital over a wide field in this manner, and the
laws of average make them sure gainers at every stage of their
operations.
_This is, as you will observe, very similar to the principles upon
which the great life insurance companies are managed._
Many of these commenced business starting with but a few thousand
dollars, and they now have assets of millions. They have piled up this
enormous wealth by insuring the lives of human beings.
Every company which has not succeeded has failed because it did not
issue a certain number of policies.
_The secret of success is the large number of risks reducing the
chance to a minimum._
No life insurance company could succeed if it insured but a few lives.
By the law of average, insurance companies can tell just how many of
the people they insure will die each year.
When you make an application for life insurance the first question they
will ask is your age, and by referring to their tables they can tell
you the month and day when you will die. Now, you may not actually die
upon that day, but you do theoretically, and the point is that they
have so many risks that the law of average, always prevailing, in the
end brings everything out just as figured.
The fact that one person lives longer than the date when his life
should end is offset by the fact that another person dies sooner than
expected, and thus the law of average is absolutely maintained.
The postal authorities could not come anywhere near telling how many
letters would be mailed in the City of New York on a certain day, but
they can come with remarkable closeness to the average for a year in
advance, and predict with certainty how many people will write letters
and forget to address them during that time.
_It is by the working out by the law of average as best exemplified
by the insurance business that it is possible to work out a plan by
which Wall Street stocks can be dealt in with absolute safety and
certain profit._
Of course, no man or company could purchase one hundred shares of stock
without the risk of a loss. That is to say, no man should make a
purchase of this kind unless he is in a position to buy again and again
many times over and still hold all that he has previously purchased.
Buying a certain quantity of stock in one corporation is very much like
an insurance company insuring the life of one man. But when you buy
thousands of shares of stock in various corporations, some stocks going
up and some going down, the law of average is an absolute protection
and the statistics of stock fluctuations for the past twenty-five years
show beyond the possibility of doubt that this is true.
The fluctuations in the prices of good, dividend paying stocks are
something remarkable. _Some active stocks show a fluctuation of five
thousand times their value in a year, thus offering a continual
opportunity for money making._
These are the stocks which are constantly speculated upon, the stocks
on which so much money is lost and upon which the cool headed and
careful operators make so much.
The Western Union Telegraph Company's shares have always paid 5%
dividend, and the average market price has been about 90, making the
income about 5-1/2. Now, suppose it is purchased in ten-share blocks on
every one per cent. decline and none sold above the average price, it
will show an income of more than 43% per annum, besides some dividends.
_Suppose the very worst were to happen and there was a 20 point
decline in Western Union, then we would have_
10 shares at 90 $900
10 " " 89 890
10 " " 88 880
10 " " 87 870
10 " " 86 860
10 " " 85 850
10 " " 84 840
10 " " 83 830
10 " " 82 820
10 " " 81 810
10 " " 80 800
10 " " 79 790
10 " " 78 780
10 " " 77 770
10 " " 76 760
10 " " 75 750
10 " " 74 740
10 " " 73 730
10 " " 72 720
10 " " 71 710
10 " " 70 700
-------
Total Investment $16,800
It will be seen that $16,800 will handle a ten-share lot of Western
Union Telegraph through a regular "Black Friday" panic, with a
resulting investment as stated above. It must be borne in mind that the
average prices of these purchases is 80, giving a dividend of 6% on the
investment, but when the market has resumed its normal condition (90),
the profits will be $2,100, exclusive of dividends.
If lots of 100 shares each were purchased, there would be profits of
$21,000 exclusive of dividends.
_The shares of the American Sugar Refining Company fluctuate 4,900
times their par value every year, and our method applied to them will
give a profit of from 200 to 300% per annum, exclusive of
dividends._
While we refer to the possibilities in making investments in Western
Union and American Sugar Company's shares, we include in our operations
a number of different securities, all at the same time.
For instance, when we would purchase one hundred shares of one stock,
we divide it into five or ten different lots and do the same thing in,
say, ten or twenty different stocks all at the same time; therefore,
instead of having on hand a few large lots, we have two or three
hundred small lots, purchased down to the lowest prices, and by
purchasing outright a large quantity in little "lots" at different
prices, the average cost eliminates the risk of loss and insures
certain profits.
According to the results of speculation and manipulation, the twenty
different stocks that we deal in do not usually all go down at the same
time. Some are going up, while others are going down; therefore, we are
receiving profits in one, while making advantageous investments in
another.
_We have been established in Wall Street for a number of years, and
we know about the various stocks on the market, their value and earning
capacity._ We know the stocks which are most sought after by
investors, and the stocks which are used by speculators to make money
out of the public.
We now offer to the public the best plan for a legitimate investment
speculation. We have an authorized issue of $500,000 debenture bonds
due and payable in three years, with interest at 5%, payable
semi-annually, for the purpose of buying and selling stocks and
securities as dealt in upon the stock exchanges of New York.
_In consideration of one-half of the net profits accruing from these
investments we guarantee the bonds and interest at the rate of 5%, and
conduct, manage and direct the business._
We distribute the net proceeds on the first of every month, one-half to
the bondholders and one-half to our company.
These bonds are issued in sums of $25 and upwards, as purchasers may
direct, and are transferable only upon the books of the company.
_The first thing to be sought is absolute safety in investment._
Only sound, dividend paying securities will be bought and only at a
bargain when it is known beyond question that the price is below their
actual earning power. Having purchased and paid for the securities the
bondholders become the owners of them, and they will be placed in our
vaults until such time as they can be sold at a handsome profit.
_No get-rich-quick methods will be used, and no speculation indulged
in._
No large amount of money will ever be tied up in one stock.
The operations will be spread over a large amount of ground, making
small investments in proper securities, thus practically eliminating
all risk of loss. It is more certain than life insurance business.
The chances of loss will be considerably smaller than they would be in
banking, manufacturing or mercantile enterprises.
Purchases will commence when a stock is over-depressed and evidently
selling below its real value.
Purchases will continue so long as the price continues to go down.
These stocks will then be held and we will have every advantage over
the market, instead of the market having the slightest advantage over
us, as it does over ninety-nine out of a hundred speculators.
_When the speculator is forced to sell at a low price we begin to
buy._
When he is forced to buy at a high price we will be ready to sell.
We have the advantage over the market at every stage of the game.
The market cannot force us to do anything because we are in a position
to do precisely as we please.
_This business is strictly cash, buying for cash and selling for
cash, trading in securities of strong, dividend paying corporations and
going steadily forward every business day in the year._
No credit will be extended or asked.
There will be no bad debts.
No money has to be expended for plant, equipment or other costly things
which figure in ordinary lines of business.
_Every cent of money will keep working all the time, and such of it
as is not invested will be drawing interest in a Trust Company._
There will be absolutely nothing to worry about.
When we want to buy other people are unloading. They have been frozen
out and have to sell.
The more freezing out there is, the more panicky things get, the better
it is for us.
There is more money to be made in one panicky day than there is in
weeks of ordinary Wall Street trading.
Then, on the other hand, when everything is looking first-rate and
prosperous, Wall Street is full of people who want to buy. There is
where we are ready for them again.
We bought the stocks when people had to sell them.
Now the people want to buy and we are right on hand with the
goods--bought cheap at the proper time and now glad to sell at a goodly
profit.
This method of ours is nothing new or untried. It has stood the tests
of time and made many a millionaire.
_It is founded upon the firmest possible foundation, and has gone
over squalls, slumps and panics, and in twenty years, to our personal
knowledge, it has never failed to win._
We know of a number of people who have become rich by following this
method. We know of one man who operated for fifteen years. He retired
January 1, 1898, reputed to be worth twenty millions of dollars. He
never lost, paid for what he bought, buying proper securities in small
quantities at a declining market, going right along to the bottom still
buying and then holding on until the market was in its normal condition
and he could pocket his profits and be ready to do it all over again.
You will note that this business absolutely cannot be affected by
financial calamities.
On the contrary, a panic is a blessing.
It may seem to you that if this method of taking money out of Wall
Street is so simple, that you can do it yourself. You certainly could
if you had the capital, knew the stocks and their value thoroughly,
could devote your whole time to it, and, what is more important, had
the firmness and will power to follow the method and not be swerved
from it by the temptation of speculation.
Not one man in a thousand can go into Wall Street and fail to be
influenced by the wild speculation which is going on there, the
apparent opportunities for getting rich in a minute, the tips and
rumors and all that sort of thing. That is precisely why so many people
are wrecked in Wall Street, and the reason why so few succeed is that
they have not the patience and the cool, calm judgment requisite to
play the game in the only way in which it can be beaten.
The Manager of our Corporation will not be allowed to be influenced by
anything except our instructions. He will be under sufficient bond to
follow his instructions, which will be precisely as outlined above. He
will be a buying and selling machine, oblivious to all outside
influence. He must carry out our orders regardless of whatever may
happen, and he is a man who can be depended upon to do it.
_A corporation, being a machine, can succeed by this method for the
reason that it must follow a certain outlined course and cannot, and
dare not, deviate from it by a hair's breadth._
The individual left to himself in Wall Street soon finds himself
figuring, speculating, making forecasts, listening to tipsters, reading
financial newspapers, living with one eye on the ticker, and pretty
soon he has forgotten all about the method he intended to follow, and
is a plain, ordinary Wall Street gambler--and the shrewd and cautious
wise heads of the Street soon get his money.
The marginal operator is always at the mercy of the market instead of
having the market at his mercy.
The wonder is not that so many of them lose so much money, but that any
of them win at all.
It is only a question of time until they are wiped out. The odds
against them are altogether too great, and while they may weather a few
slight squalls and run along smoothly for a time, sooner or later
disaster comes, generally unexpected and overwhelming.
What is the use of trying to make money in Wall Street by marginal
speculation when the odds against you are so great?
If you want to undertake to make money, why not make your attempt a
scientific one? Why not place the money you wish to invest where it
will be handled in a manner by which, as shown by the statistics of
twenty years, cannot fail to win.
It is no more speculation than it is for a banker to loan money to his
friends and associate business men.
_In fact, it is not so speculative for the reason that we make
investments in the stocks of companies of standing--stocks which are
just as good as gold, and represent vast enterprises, enormous
properties and great earning power._
It may be asked, what will occur at the end of a year's business if
some of the stocks are selling below the price at which they were
bought. The answer is that they are kept in our vaults because they are
safe, sound, dividend-paying stocks, but the dealings in the securities
will show a handsome profit, more than enough to pay for the shares on
hand because the numerous little purchases and the accompanying
reactions in these very stocks have already resulted in a large number
of profits.
Generally speaking, there will be no stocks carried a whole year
because we will never buy except under forced conditions, and the
reactions are generally very prompt, so we will be able to sell out
quickly at higher prices.
_It matters not how much you may know about Wall Street and financial
methods and matters in general, you cannot figure out a way in which we
can fail to succeed._
Suppose the worst kind of a panic comes, the worst possible period of
financial depression; suppose, we have stocks on hand which are going
lower and lower; suppose, we buy until our buying capacity is
exhausted, and still stocks go down and down; in what way can we be
injured? We do not owe anybody anything, and whatever money we have
made is in the pockets of our bondholders. Nobody has extended any
credit to us, and nobody can hold a club over us. We have no running
expenses that amount to anything--no big rents to pay, no insurance, or
anything else of that sort. There is no pay-roll to meet, no big stocks
of goods to worry about--simply nothing that can squeeze us a penny's
worth. All that we have to do is to wait, and waiting under these
conditions is the easiest thing in the world.
_The stocks we own are all those in corporations, concerning whose
solidity and assets there cannot be the slightest shade of doubt._
These stocks all have a certain value, as shown by the earning power of
the corporations behind them. Sooner or later, they have simply got to
go back to their normal, actual, tangible value. So we simply wait
until they go back there, and that is generally a question of a very
short time. Short or long, however, the time must come, and when it
does come, we are in line to reap the richest kind of a harvest.
There is absolutely no loop-hole in this proposition. There is
absolutely less risk of loss than in any business or other enterprise
you can mention.
It is a business carried on with good, hard cash, and with every
possible advantage in our favor.
_The holder of even one bond of $25 stands upon the same footing as
the owner of a large block, receiving regularly the pro rata earnings
represented by his share._
The officers and directors are well known men of business, thoroughly
familiar with Wall Street and its methods, most of them having been for
many years actually engaged in some business requiring expert financial
knowledge.
The bondholders can be assured that their money will be invested and
handled as set forth in this prospectus, first, because the officers
and directors cannot have any motive for doing otherwise, inasmuch as
they know that the method herein outlined is the only one which can win
in Wall Street. They are also protected in every possible way, and
every desired assurance will be given in this respect.
_The books and records of this Company, open to bondholders, will
show at all times precisely what investments have been made, how money
has been made upon them, what stock are owned by the Bondholders, and
so on._
These records can be compared with and verified by the financial
records of the New York Stock Exchange, as published through the
regular channels, so that the bondholder can at all times assure
himself that we have done just what we claim to have done, and that he
has secured his just and equitable share of the profits of the
operation.
_WALL STREET DICTIONARY_
We give below a few definitions of some of the more important words
used in the financial operations of Wall Street.
The Street itself has been the center of finance of this country for
nearly a hundred years, when the New York Stock Exchange was
established.
Here are offices of the greatest and wealthiest financiers the world
has ever known.
It is the greatest speculative center in this or any other country.
Here are found the men who create and handle railroads and the largest
industrial enterprises in the world.
In the Exchange millions of dollars' worth of stocks and bonds are
bought and sold every day.
Here are found hundreds of banks, trust and safe deposit institutions,
private bankers and capitalists, a money center which controls
seven-tenths of all the money in America.
In Wall Street you may buy or sell one or more shares of the stock of
any great railway or industrial company in the country.
Here is where all important enterprises are financed, and where the
public sends enormous sums of money to be invested for speculative
gain.