The Nothing New Under The Sun Stock Market Series Part 2
SOME TERMS EXPLAINED
Successful Stock Speculation By J. J. BUTLER
An epic epistle of Stock Market advice from 1922
SOME TERMS EXPLAINED
There are certain terms used in connection with stock trader speculation that are very familiar to those who come in contact with stock brokers, and yet are not always familiar to those who do business by mail. Undoubtedly the majority of our readers are familiar with these terms, but we give these definitions for the benefit of the few who are not familiar with them.
Trader: A person who buys and sells stocks is unremarkably referred to as a trader. The word probably originated when it was customary to trade one stock for another and later was used to refer to a person who sold one stock and bought another. He was a trader; but the person who buys stocks for a profit and sells them and takes his profit when he gets an opportunity, may not be a trader in the strict sense of the word. However, for convenience, we use the word “trader” in this book to refer to any one who buys or sells stocks.
Speculator: This word refers to a person who knows how to buy stocks for profit, with the expectation of selling at a higher price, without reference to the remuneration of the stock. He may sell first, with the expectation of buying at a lower price. In many cases wherever we use the word “trader,” it would be more correct to use the word “speculator.”
Investor: An investor differs from a speculator in the fact that he buys stocks or bonds with the expectation of holding them for some time for the income to be derived from them, without reference to their speculative possibilities. He makes use of stock market information. We believe that investors always should give some consideration to the speculative possibilities of their purchases. It frequently is conceivable to get speculative earnings without increase of risk or loss of income.
Bull: One who believes that the market price of stocks will advance is called a bull. Of course, it is possible to be a bull in one stock and a bear in another. The word is used very frequently with reference to the market, a bull market meaning a rising market.
Bear: The opposite of a bull is a bear. It refers to a person who believes that the market value of stocks will decline, and a bear market is a declining market.
Lambs: “Lambs” refers to that part of the public that knows so little about stock speculating that they lose all their money sooner or later. The bulls and bears get them going and coming. If the lambs would read this book carefully, they would discover reasons why they lose their money.
Long and Short: Those who own stocks are said to be long, and those who owe stocks are said to be short.
Odd Lot: Stocks on exchanges are sold in certain lots. On the New York Stock Exchange, 100 shares is a lot; and on the Consolidated Stock Exchange, 10 shares is a lot. Less than these amounts is an odd lot. When you sell an odd lot you usually get 1⁄8 less than the market price; and when you buy an odd lot, you usually pay 1⁄8 more than the market price; that is, 1⁄8 of a dollar on each share where prices are quoted in dollars.
Point: It is a common expression to say that a stock went up or down a point, which means a dollar in a stock that is quoted in dollars, but a cent in a stock that is quoted in cents, as many of the stocks are on the New York Curb. In cotton quotations, a point is 1⁄100 part of a cent. For instance, if cotton is quoted at 18.12, it means 18 cents and 12⁄100 of a cent per pound, and if it went up 30 points the quotation would be 18.42.
Reaction: Every person who has traded in listed stocks probably is familiar with this word. It means to act in an opposite direction, but it is used especially to refer to a decline in the price of a stock that has been going up.
Rally: “Rally” is the opposite of the sense in which “reaction” usually is used. When a stock is going down and it turns and goes up, it is called a rally.
Commitment: This term is used referring to a purchase of stock. It is more usually used by investment bankers when they contract to buy an issue, but the term sometimes is used by traders.
Floating Supply: The stock of a company that is in the hands of that part of the public who is likely to sell, is referred to as floating supply.
Should You Invest In Cotton Futures In 1922?
These are the results of observations pf W. H. Carswell, vice-president of Chickamauga Trust Company of Chattanooga, a bank which has several millions in loans in Tennessee, Alabama, Mississippi, Georgia and North Carolina. He has recently concluded an automobile trip of Georgia and Alabama.
“The farmers are afraid of the boll weevil, all right, but are setting out to beat it. They are not planting over eight to ten acres to the plot. Thev are not planting closer to woods, or branches where the weevil has a chance to lurk. Thev are preparing their ground better than ever before using heavy fertilizer, and planting their crop early,” the banker said.
“You know. the boll weevil rarely attacks a plant before August 1. lf the cotton has fruited by that time. it will generally come out unscathed. The boll weevil makes its chief inroads in cotton which is poorly planted and cultivated and ‘comes in late. This year the farmers are working hard to get their cotton advanced by August so that it will resist the boll weevil, The land has been highly fertilized and a fine crop should result.”
This year’s crop being is raised very cheaply. Last year was the same, and the better price then enabled many of the planters to clear off a part of their frozen obligations, This year the is estimate is as low as seven cents a pound. One farmer told Mr. Carswell that the crop in his section was being raised “on cord wood and cabbages.”
Memphis banks have estimated that so far all but about 10 percent of farmers’ obligations contracted in 1920, when cotton slumped from 40 to 12 cents. have been cleared, and that if 1922 compares with 1921 all of them will be wiped out. Wholesale grocery houses, which were greatly disappointed in their collections at the beginning of the year and hard pressed to meet their own obligations are clearing up their rural accounts, and collections are progressing well. They are receiving many voluntary checks from country storekeepers and in general are reflecting improved financial conditions i n t h e country.
We often make the mistake that our time is the only time. There was another time when people walked the earth thinking their time was the only time. Read some snips from the New York Tribune from 1922 by people completely submerged in their contemporary stock market goings on and reflect on the above stock market advice from the 1922 article written by JJ Butler who himself was neck deep in the stock market of his time…
Bookkeeping A Business Model For the Ages
The most expensive thing in business is poor bookkeeping. If you are just starting in business and feel that you cannot afford a bookkeeper, and if you understand the proper bookeeping books and know how to balance accounts each month, well and good, so long as you do it correctly and to the penny. If not, the most profitable thing you ran do is either to get a responsible methodical and good book keeper. In the meantime,if you must economize in that direction, else have a first class accountant arrange a good system for you and follow it conscientiously and on time, The rule is that there is place for everything and everything has its place, is quoted for the sales department is especially applicable to the office. lf you cannot tell to the penny how much it costs to run your business, both in expense accounts and for merchandise, you can never know how much real profits you are making or how much loss you are sustaining,
Watch Expenses (Good rules all for the U.S. Government too)
By keeping up on expenses, by taking inventory of merchandise made and unmade, of certain inventory, and by
keeping your stoc as low as is consistent with the season and your particulnr line, by the ability to see with committed bookkeeping exactly how you stand in regard to bills payable and bills receivable, not forgetting bank balances by careful and systematic methods, it matters not how but if you are. you are able to keep your hand on the throttle. If there is anything wrong with running of it you can intelligently remedy the error.
As a woman, and a merchant, then this article should appeal to you. Above all, have a system, but do not make it your entire business attend to the system. Rather, make the system attend to your business.