The bane of nearly all speculators of the soft-grained type—by which we mean men whose will and judgment bends this way and that, like a reed that nods allegiance to any quarter of the world according to the blow of the wind—is, that they are for ever on the itch to do something. There is no getting them to wait for an opportunity. There are two sorts of opportunities, and the distinction between them is important. The speculator feels much more at home in availing himself of one than of the other. The man who can wait for extremes is the one who will have the best chance of making extreme profits, provided he can be fairly sure of a good grasp of the duration of passing influences. One kind of opportunity is after a sharp fall in prices. As we have before remarked, most speculators feel more at ease in operating for the rise, and consequently know best what they are about after a fall in prices, and they make themselves bulls. The other kind is after a well sustained rise. But it has been generally observed that speculators sell bears of stock with more timidity than they buy bulls. One reason, no doubt, beyond that referred to is, that they have a feeling in their own minds that in selling for the fall they are going against the current, which on the surface seems to be a rash proceeding. But in being able to combat this feeling lies one of the main elements of success. It is out of the public that successful speculators make their money, and consequently there must be the greater chance of losing by following the lead of the public. Of the two opportunities therefore of which a speculator can avail himself with the most advantage, that of looking on at a rise and opening a bear account at the new prices is, under ordinary circumstances, the most worth his attention, as the reaction is generally more rapid after a sharp rise than after a fall, owing to there being more new interests engaged in causing it. A rapid rise is promoted largely by speculators whose operations for purposes of enticing the public to buy, may be compared to the exertions of a horse in a great race that is entered to make the running for the favourite. Those speculators are more anxious, as a rule, to realize their profits as bulls, off high figures, than they are to close bear accounts; for, when a panic has driven prices down, some time will elapse before confidence revives, and in the meantime it may be renewed.

A person who cannot withstand the itching desire to have an interest in something or other, is almost sure to be a man of that soft texture of character that yields to influences that are unworthy of serious attention, and he will consequently be led into error and loss probably oftener than not, and his operations will end in failure. It must be obvious to every reflecting mind, that so dangerous a game as Stock Exchange speculation, or speculation which partakes of the same nature, in another commodity, entered into, if it be only partly to satisfy a craving for some sort of excitement, is a very unwholesome pastime.[33]

Of all occupations Stock Exchange Speculation is the last to be thought of as an amusement for the man who wishes for some light kind of business that can be done with an off-hand air, and without any of the drudgery that is the real power in money-making. And yet there is no doubt that a large proportion who feed the ever copiously flowing stream of profits that the members of the Stock Exchange are diligently gathering from day to day, are persons who, having nothing better to do, are drawn by an insatiable desire for some occupation into the ranks of the haphazard speculators. Once fairly entangled in the meshes of loss, the struggles to recover it are usually attended by worse disasters.

It may also be shown that a desire to satisfy a craving for a class of excitement which partakes somewhat of the nature of sober business, in its earlier stages at least, allows admission to the mind of an element which makes havoc with the judgment, and consequently forms an ingredient in the nature of a speculator, which is almost sure to bring him sooner or later to grief. Before a man enters upon the business of speculation, he ought, if he is to have a fair chance, to clear his reasoning powers from any such unwholesome encumbrances as even the faintest desire for excitement. Every step a speculator takes should be, as far as possible, as deliberate as if he knew perfectly well that the slightest miscalculation would certainly involve him in loss.

In engaging in speculative commitments, the great difficulty that presents itself is not so much what to buy or sell, as what not to buy or sell. When to do something, and when to do nothing. Here lies a problem, the solution of which costs such a number of speculators their money and their peace of mind afterwards, to say nothing of the chronic dyspepsia that afflicts them until they are forced to quit the field.

If the time a man spends in finding out the mistake he has made in selecting this or that stock haphazard for speculative purposes, were devoted to obtaining some special information about one particular stock which he might have good reason for believing was worth attention, his chances of making money would much improve.[34] This plan is adopted by the more sensible speculators who sufficiently understand the difficulties of the business to recognize the importance of laying down certain principles of action. Money cannot be made for a continuance with any degree of certainty without hard work. When this proposition is demonstrated, which it undoubtedly can be, the whole question of speculation as an occupation, a pastime, or a business, call it what we will, resolves itself into this, that unless a man devotes the same hard work to it that is necessary to earn a fortune in any other calling, plus the possession of an intellect of a special order and considerably above the average, he must be a fool to speculate at all.

In order to bring more forcibly home to the mind of a man who may know nothing of Stock Exchange matters, the wisdom of imprinting upon his understanding the uselessness, in the long run, of playing at what is nothing better than pitch-and-toss, we will just sketch a case in point as an instance:—Supposing a speculator to enter the office of a stock broker. He has, perhaps, some hazy ideas about the future financial condition of Spain, for example. He has noticed the stock has fallen to 19¾, and this seems to be very low for a country which has so far struggled against the corruption of its rulers, and the laziness and apathy of its population as a body, and has managed for a long time, by hook or by crook, to meet the exterior coupons by paying them in other people’s cash. The probabilities certainly must be, he thinks, in favour of their paying another half-year’s interest, if after that the deluge of national insolvency should flood the land. He contents himself with gathering to a focus the intelligence that stands from morning to morning in the telegram columns, and comes to the conclusion that something will turn up to supply the exchequer with another loan to meet the next dividend, and in that case the stock must at once jump up to 22 at least, perhaps to 25, as there would then be six months to turn round in. Now, what we submit is, that to speculate deliberately upon such a system as this, is not far removed from insanity; and yet it will be acknowledged by those conversant with the modus operandi of the haphazard speculator, that his plan of attack is based, for the most part, upon this absurd system of guess work, no serious trouble being taken to estimate the extent of the forces opposed. Some fanatical faith is placed in the doctrine of chances that the fluctuation wished for will occur, and he shuts his eyes and waits. To sit at home and guess at what the present or future financial condition of any country may be, and to risk your money under such conditions, is worse than reckless.

Supposing, on the other hand, the hypothetical speculator, instead of acting upon the impression made on his mind, by superficial influences, were to start for Spain and take the trouble to get behind the stock, so to speak. In one week, if he occupied a position in life sufficiently high to enable him to get trustworthy information, he would be in a position almost certainly to know whether there was a chance of such an event coming off, as for instance, the next coupon being paid. This would be at least a business-like way of setting out on a speculating expedition, a method of proceeding such as is pursued by a syndicate of speculators who propose to purchase a foreign mining property, for example. A man of sense who buys anything, the value of which depends upon a set of circumstances operating at a distant spot, naturally proceeds thither, or satisfies himself through some trusty agent that such circumstances exist, or that they do not. If he be contented to buy twenty thousand Spanish Stock at twenty, on the chances of the power that is, or may be, from one week to another, being able to pay the dividend, because so far they have just managed to do so, he would be deserving of no sympathy if he found himself in a couple of weeks with his stock at 17, and his banker’s balance less by six hundred pounds.

The reason why so much money is lost by this loose mode of proceeding is, because haphazard speculation possesses a peculiar charm for certain loose natures, which are roused into a pleasureful excitement by running risks. They defend the viciousness of their lazy amusement by saying to themselves that the chances must at least be as much for them as against them, inasmuch as there are but two ways for the price to go—up and down. Many a man who has fed and encouraged this itching sensation, which can only be appeased by having passed through the excitement of running a certain risk, finds himself so bound by its spell that in very many cases nothing short of absolute ruin succeeds in quenching his thirst for such excitement.