Total Countries:	51
Total Pageviews:	3533

A Glimpse of Wall Street and Its Market by H.L Bennet

May 22, 2009

INTRODUCTION-SECURITY INVESTMENTS.

The career of the average American may be described very appropriately as a sitting at the great world game of money making, and, taken all in all, it is the most successful seat at the green round table. Gladstone has been quoted as attributing his success very largely to the diversity of his occupations, and, to illustrate his meaning, told of a perfectly level road leading from London. The horses traveling this road, it was observed, became worn out materially sooner than those whose route lay over more uneven highways ; looking for the reason of this it was concluded that the horses using the level road only worked with certain sets of muscles to the exclusion of the others, resulting in those being overtaxed, while the remainder were but imperfectly exercised; the effect of this being that such animals outlived their days of usefulness before those whose work called all the body into play. The conclusion to be deduced is similar to that from having several irons in the fire, and it is usually to be observed in the cases of successful men, that as they progress in their business, trade or profession, their sphere of interest broadens.

However, a profitable trade or profession is admittedly a very necessary basis to work upon, lacking an independent income, and the direct result thereof, properly managed, is a surplus over ordinary expenditures. The primary obligation attached to a surplus is the judicious investment of it, for after providing for such expenses as its owner sees fit to incur, the only use of money IS its earning power — its value as a substitute for, or adjunct to human endeavor. The most natural employment to which the mercantile man will put his spare profits is in enlarging the business whence they came, but, barring vicissitudes, this will logically result in a surplus for which further use cannot be found in the old field, which is particularly true under certain unavoidable conditions of trade and at regular seasons of the fear. The mercantile man here arrives at a stage — which is reached by the professional man and by him who accumulates money in other ways with less evolution — where new means of employing his surplus must be found and the question of an outside investment arises. An early proposition is the savings bank, which is, under certain circumstances calling for ultra conservatism, a very proper one and suited to small amounts only ; but for the active business man, in touch with the evolutions of trade and finance and imbued with the American spirit of discontent with meagre results, the return of three to four per cent, linked with the necessity of tieing up the principal until an arbitrary date in order to obtain its interest, this means of investment is no more suited than is the horse car of the past when the more modern trolley is at hand.

With the object of making an investment yielding a fair return of interest and combining a strong equity for the principal without requiring devotion of time and close attention to its management, the two mediums which command most frequent consideration are real estate and securities. In making a choice there are always to be considered the circumstances which alter cases, for there are instances to which either one or the other of these forms are particularly adapted, but these being special cases in point they cannot be treated in an abstract consideration. The general class of securities to which reference is now made is that the negotiation of which is conducted upon the Exchanges ; a striking advantage of these as investments over other property in general being the greater readiness with which the former can be converted into cash. Persons having for sale a piece of landed property, for instance, have at best a limited market and one which can command the very material concession in price which a buyer naturally seeks, particularly when the sale is forced or in any way urgent. For obvious reasons it is not always possible to take the time necessary for making an advantageous sale of such property, and upon how short notice he ma}- be required to turn an investment into cash one can never know when making the purchase. On the contrary, for securities having an established market, a sale can always be effected at figures that are practically known beforehand, such a shading in price as ma}- be necessary being rarely over a fraction of one per cent, from the latest recorded quotation, while even in times of panic when landed property may be practically unsalable, security prices, though they will fall, furnish a constant market. Thus the investor in stocks or bonds, should his judgment say “sell,” has what may be termed an opportunity of “saving his bacon ” by turning his securities into cash and waiting for the storm to subside, leaving an opportunity of recovering them at lower figures ; whereas the holder of less salable property must bide his time or incur unreasonable loss despite the fact that he may judge the situation correctly, he being without a market which will furnish the means of acting upon the dictates of his opinion. In other words it is possible to run from a stock panic and avert less when the investor elsewhere must stand and take his punishment.

Loans upon bond and mortgage may be said in a broad sense to hold as debtor an individual only and through his death or such comparatively trivial business disturbances as may render an individual insolvent but would leave the large corporation unscathed, the burden of managing the property in all its detail is liable to fall upon the lender, requiring the expenditure of much valuable time and energy which would otherwise have gone to other uses. This outcome of such an investment is of no uncommon occurrence, for an individual, though his motives and intentions be the highest, is undeniably subject in a greater degree to financial disaster than the large corporation with millions of money at its disposal, its financial and business ends controlled by men occupying their positions by reason of unusual fitness, and its affairs at all times under the close inspection of public scrutiny.

Please Activate the Full Screen Mode for Better Viewing Pleasure (2nd button from the left)

LINK

http://bikibook.com/books/a-glimpse-of-wall-street/

EMBED

[!] Report this post

Processing your request, Please wait....