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Investment And Speculation By Louis Guenther



Investment and speculation are closely associated with each other and with the well-being of trade. They are the propelling forces governing the money market, which in turn is the vital life-blood of business. Every head of a corporation, every business man who holds a responsible position and upon whose judgment the success of an enterprise largely depends, should provide himself with a general knowledge of the problem of investment and speculation.

TitleInvestment And Speculation
AuthorLouis Guenther
PublisherLa Salle Extension University Chicago
Year1916
Copyright1916, La Salle Extension University Chicago
AmazonInvestment And Speculation
-Chapter I. Nature Of Investment And Speculation
Investment and speculation are closely associated with each other and with the well-being of trade. They are the propelling forces governing the money market, which in turn is the vital life-blood of ...
-Nature Of Investment And Speculation. Continued
Illustrated By Mortgages A mortgage upon a building or a parcel of land may be at the time a very desirable investment,but an upheaval of nature's forces may occur on the spot where the pledged land ...
-Chapter II. The Intelligent Employment Of Capital. Ascertainable Risks
Under the circumstances it is best to eliminate from consideration all hazards to investments caused by the caprices of unforeseen forces and conditions which human judgment and foresight are powerles...
-The Intelligent Employment Of Capital. Ascertainable Risks. Continued
Degree Of Safety It is simply impossible to estimate accurately what the per cent of losses has been on investments which have proved disastrous. Nevertheless it may be taken for granted that when la...
-Chapter III. Farm Loans And Mortgages. Loans On Farm Lands
Loans on farm lands were no doubt the earliest form of investment, since the first and principal occupation of civilization was agriculture. Originally such loans were made in a most primitive way. Wh...
-Farm Loans And Mortgages. Loans On Farm Lands. Continued
Rate Of Interest For example, the legal rate of interest which may be charged by lenders of money in Illinois is 6 per cent, but in Georgia it is 8 per cent, while in some of the far western states a...
-Chapter IV. City Real Estate. City Real Estate Values
It is by no means as simple a matter to select investments in real estate in large cities as in farm lands. When once a thorough knowledge of the fertility of agricultural land and its nearness to a m...
-City Real Estate. City Real Estate Values. Part 2
Maximum Loans As for the borrowing capacity of real estate, this is determined largely by its location. It is greater, the nearer the land is to the center of business and to transportation facilitie...
-City Real Estate. City Real Estate Values. Part 3
It is well for the purchasers of the securities of the numerous real estate concerns to insist upon a complete statement, not only of their financial condition, but of the location of their properties...
-Chapter V. Land And Real Estate Booms. Value Of Booms
We ought not to be too hasty in deprecating, as we are often inclined to do, the periodical outbursts of speculation in land in this country. This is a healthful symptom of a growing nation's strong v...
-Land And Real Estate Booms. Value Of Booms. Part 2
Dangers In Land Speculation So far we have considered only broadly the beneficial effects of speculation. For guidance to the individual who may regard with favor the speculative opportunities in the...
-Land And Real Estate Booms. Value Of Booms. Part 3
Suburban Real Estate Suburban real estate is and always will be a popular outlet for the speculative inclinations of a community, because there considerable money has been made by those who were eith...
-Chapter VI. The Multiplicity And Complexity Of Bonds. Classification Of Bonds
It is possible to form a clear conception of the many different types of securities marked as bonds on the shelves of investment dealers only when they are grouped one after the other in their order o...
-The Multiplicity And Complexity Of Bonds. Classification Of Bonds. Continued
Coupon And Registered Bonds Attached to the bonds are small coupons. If the interest on a twenty-year bond is made payable semiannually on tie first days of January and July and is at the rate of 5 p...
-Chapter VII. Government, State, And Municipal Bonds. United States Bonds
Bonds issued by governments, states, and municipalities form a distinct class. The vast majority of these securities have no other pledge behind them than the credit of the nation or the community iss...
-Government, State, And Municipal Bonds. United States Bonds. Part 2
Security Behind Government Bonds The interest that government obligations call for is usually provided by the proceeds from taxation, external or internal. Some countries place a tax on certain widel...
-Government, State, And Municipal Bonds. United States Bonds. Part 3
Municipal Bonds Counties, large cities, and small municipalities borrow money on much the same lines of financing as are followed by the states and the general government. Here and there various rest...
-Chapter VIII. Railroad Bonds. Reasons For Variety
In the issuance of bonds, our railroads have been very prolific. They are possessed of an insatiable appetite for continuous supplies of new capital, sometimes for the logical purpose of providing for...
-Railroad Bonds. Reasons For Variety. Continued
Bonds are issued in certain denominations against the mortgage. The denominations are usually $500, $1,000 or $5,000. However, there is nothing to prevent their being $10,000 or $20,000, or on the oth...
-Railroad Bonds. Reasons For Variety. Part 2
Consolidated And Refunding Bonds The consolidated bond is a bond wherein are merged a number of bonds previously issued. A railroad may have created in former years a series of bonds directly secured...
-Railroad Bonds. Reasons For Variety. Part 3
Terminal Bonds The terminal bond is usually secured by the main station property owned by a road. This property, consisting of valuable real estate, is at least nowadays kept distinct from all other ...
-Chapter IX. Public Service Corporation Bonds. Growth Of Public Service Corporations
There is a class of corporations owing their existence to special privileges granted by communities to furnish a service to the people, providing greater comforts and making inter-communication more c...
-Public Service Corporation Bonds. Growth Of Public Service Corporations. Part 2
Financial Importance That huge amounts of capital have gone into these projects occasions no surprise, nor is it strange that the public has shown such favor towards public service corporation securi...
-Public Service Corporation Bonds. Growth Of Public Service Corporations. Part 3
Nature Of Regulation The states also have realized the wisdom of cultivating capital rather than discouraging it from entering upon projects designed to serve the public convenience. Public service c...
-Chapter X. Miscellaneous Bonds And Securities
There still remain other means by aid of which corporations manage to borrow money, but they do not involve the necessity of pledging any tangible assets, as is the case with the different bonds descr...
-Miscellaneous Bonds And Securities. Part 2
Debenture Bonds Not infrequently a strong corporation employs its credit as the sole security for an issue of bonds. At other times, in addition to pledging its credit, other collateral may be added....
-Miscellaneous Bonds And Securities. Part 3
Trust Receipts These are receipts issued by a trust company in return for securities placed with them as custodians. These receipts, like bonds, are issued in a negotiable form so that dealings in th...
-Chapter XI. Irrigation Bonds. History Of Irrigation Bonds
It is the history of every virile and progressive nation that in time all its land capable of subjugation to the plow becomes occupied. We are in such a period now. Our principal reservations, consist...
-Irrigation Bonds. History Of Irrigation Bonds. Continued
Carey Act Bonds Our Government recognized the danger likely to arise from the reckless exploitation of irrigation schemes and, as a measure of protection for the farmer and investor alike, some years...
-Chapter XII. Mining And Timber Bonds. Mining Enterprises
Beyond all doubt there is no type of bonds more speculative than those issued against undeveloped ventures, whatever their nature, be it coal, silver, marble, lead, zinc, gold, or copper properties. F...
-Chapter XIII. Guaranteed Stocks
Large corporations sometimes find it more convenient, in securing control of smaller corporations whose strategical position or favorable earnings will benefit them, to guarantee the interest on their...
-Guaranteed Stocks. Part 2
Guarantor: Maine Central R. R. Co. Fitchburg R. R. Co., 5% Pfd. Stock. Guarantor: Boston & Maine R. R. Co. Forty-second St. & Grand St. Ferry R. R. Co., 18% Stock. Guarantor: New York Railways Co. F...
-Guaranteed Stocks. Part 3
Guarantor: Pennsylvania R. R. Co. Philadelphia, Germantown & Norristown R. R. Co., 12% Stock. Guarantor: Philadelphia & Reading Ry. Co. Pittsburgh, Bessemer & Lake Erie R. R. Co., 6% Pfd. Stock. Pitt...
-Chapter XIV. Amortization And Sinking Funds
Amortization means the reduction of debt. A corporation issuing bonds may prefer to provide for their payment at maturity through a sinking fund, for the account of which a stated sum is set aside eac...
-Chapter XV. Bonds For Women And Estates
Investments for women and estates ought to have all the speculative elements eliminated as far as human foresight can guard against them. Women and children belong to a class of investors who can leas...
-Chapter XVI. The Valuation Of Bonds. Introduction
The method of valuing a bond does not differ essentially from that of valuing any other thing which possesses worth. It is simply a question of knowing and applying the right principles. A real estate...
-The Valuation Of Bonds. Introduction. Continued
Rate Op Interest The rate of interest which a bond bears is one of the important factors in determining the price at which the bond will sell. Other things being equal, a bond bearing 5 per cent inte...
-Chapter XVII. The Character Of An Enterprise. Predatory Finance
Over one hundred million dollars annually are engulfed in the whirlpool of predatory finance. This is the amount one conservative estimate places as the tribute paid each year by credulous investors t...
-The Character Of An Enterprise. Predatory Finance. Continued
Present Condition Of The Enterprise An examination in this respect can be divided into three classifications: first, of the property; second, of operation; and third, of the finances. The Property ...
-Chapter XVIII. The Science Of Speculation. Economic Basis Of Speculation
The German economist, Cohn, has given us one of the most accurate and satisfactory definitions of speculation. He defined it as the struggle of well-equipped intelligence with the blind power of chan...
-The Science Of Speculation. Economic Basis Of Speculation. Part 2
Were it not for the rich diamond mines at Kimberly and the gold mines of Johannesburg in South Africa, there never would have been such a historical event as the Boer War. It was not an insult to Engl...
-The Science Of Speculation. Economic Basis Of Speculation. Part 3
Speculation In History By no means, either, is speculation in any sense a modern force. It is as old as the human race. Only when the human race no longer exists will speculation become extinct. Our...
-The Science Of Speculation. Economic Basis Of Speculation. Part 4
Panics Previous to the sharp panic of 1907, the consensus of opinion among our great millionaires who accumulated their vast wealth as a result of the unusual period of prosperity which set in with t...
-The Science Of Speculation. Economic Basis Of Speculation. Part 5
Another similar case of the unexpected, but this time not from the death of a great financial captain, was the memorable flurry in Northern Pacific stock as a result of the titanic struggle for contro...
-Chapter XIX. Efforts To Prevent Speculation. Nature Of These Efforts
There breaks forth periodically from prudish but well-meaning people a protest against all forms of speculation in stocks ox commodities. Appeals are made regularly to the legislative arm of the Gover...
-Efforts To Prevent Speculation. Nature Of These Efforts. Part 2
A tailor cannot tell when he is laying in a stock of woolens whether they will meet the public taste. He depends entirely upon his judgment when placing his orders, which he does months before the sea...
-Efforts To Prevent Speculation. Nature Of These Efforts. Part 3
Evils In Speculation The evil in speculation is not in speculation itself. Where it arises most is through ignorance of conditions. Unscrupulous brokers and mercenary tipsters are to a large degree...
-Chapter XX. The Mystery Of A Balance Sheet. Security-Holdebs Rights To Statements
Corporations whose securities are largely in the hands of the public ought to furnish their shareholders a statement of their financial condition at least once a year. Accompanying this annual report ...
-The Mystery Of A Balance Sheet. Security-Holdebs Rights To Statements. Part 2
In this instance it happened that these stocks and bonds were all in defunct concerns taken over by this concern and had little, if any, value. As for the land stations and real estate and boat sta...
-The Mystery Of A Balance Sheet. Security-Holdebs Rights To Statements. Part 3
A Model Balance Sheet What I should regard as an illuminating financial statement conservatively prepared is the following, recently submitted to its shareholders by one of the smaller electrical man...
-Chapter XXI. The Nature Of Exchanges. Origin Of The New York Stock Exchange
More than a hundred years ago a small group of men sat in a building located in what is now the heart of New York's financial district and organized an exchange. Their object was the common one of mee...
-The Nature Of Exchanges. Origin Of The New York Stock Exchange. Part 2
Commissions To Brokers By the rules of the exchange a member is not permit-ted to charge his client more than per cent of the par value of the stock as his commission, nor can a member charge less ex...
-The Nature Of Exchanges. Origin Of The New York Stock Exchange. Part 3
Viewing our exchanges, therefore, in their proper light, we must appreciate their importance. Were it not for their ability to make capital mobile, there would exist a great disparity in prices. It st...
-Chapter XXII. Methods Of Trading In Securities. Transactions On The Exchange
All transactions on the New York Stock Exchange itself are for cash. There is no margin-trading. The broker must pay for his purchases in full. Members must settle all differences between them for the...
-Methods Of Trading In Securities. Transactions On The Exchange. Part 2
Call Loans Although not stated, it is usually understood, unless agreed otherwise, that all loans on stocks are call loans, made at the prevailing rate of interest on such loans throughout the period...
-Methods Of Trading In Securities. Transactions On The Exchange. Part 3
Methods Of Quoting Prices On the stock exchanges, the dollar mark is the sign of values and it is divisible into fractions of eighths. Each % stands for 12% cents of the dollar. To illustrate more cl...
-Chapter XXIII. Stock-Market Terms And Phrases. Bulls And Bears
The followers of the exchanges are divided into two camps. We know them as bulls and bears. The bulls on the stock exchanges are the optimists, the men who are prepared to back their judgment of t...
-Stock-Market Terms And Phrases. Bulls And Bears. Part 2
Accrued Interest And Dividends Ex dividend means that on the given day when a corporation's books close for the payment of the dividend to all stockholders of record, the stock is quoted with the d...
-Stock-Market Terms And Phrases. Bulls And Bears. Part 3
Spread And Straddle A spread is a privilege to combine a put and a call contract. The holder of a spread has paid for a privilege for a certain time either to deliver a stock at a stipulated ...
-Chapter XXIV. Operations On Other Exchanges. Produce Exchanges
We have already noted that exchanges are associations of traders, leagued together for mutual protection by rules of their own making. They organize their own market and have jurisdiction over the mem...
-Operations On Other Exchanges. Produce Exchanges. Part 2
Crop Production It seems to be the fate of large agricultural nations that their exports of agricultural products grow smaller as their population increases. It was not so many years ago, it will be ...
-Operations On Other Exchanges. Produce Exchanges. Part 3
Cotton And Speculation In the production of cotton this country largely retains its monopoly. Our strongest competitors are Egypt, India, and China. Our cotton crop runs between 12,000,-000 and 17,00...
-Operations On Other Exchanges. Produce Exchanges. Part 4
Curb Markets With a brief mention of the New York and Boston curb markets, I shall have finished with the principal exchanges in the country. The New York Curb is a semi-organized stock market held i...
-Operations On Other Exchanges. Produce Exchanges. Part 5
Listed stocks are decidedly at a disadvantage with nervous security holders, for any extreme fluctuations in their prices might prompt them on the spur of the moment and without thinking, to sell when...
-Chapter XXV. Panics. Kinds Of Panics
There are two kinds of panics - the commercial or business panic, and the stock-market panic. A commercial panic affects the country as if it were stricken with paralysis. In most cases it is induced ...
-Panics. Kinds Of Panics. Continued
Stock-Market Panics Stock-market panics can, however, take place without disturbing the country's prosperity. Their bad effects can be localized. Such flurries of fright are largely caused by the att...
-Chapter XXVI. Pools And Manipulation. Examples Of Manipulation
A great deal of the speculation on the New York Stock Exchange is artificial. By this I mean that it fails to reflect the actual transaction in securities by the trading public. Such artificial specul...
-Pools And Manipulation. Examples Of Manipulation. Part 2
Evils Of Pools Pools are largely responsible for the manipulation in stocks, about which so much is written and which is so frequently mentioned in the financial reviews in the daily press. The weigh...
-Pools And Manipulation. Examples Of Manipulation. Part 3
It is a remarkable phase of human nature that prompts individuals to back with their money the claims of perfect strangers, for when it comes to buying even a pair of socks they will inspect them clos...
-Chapter XXVII. The Promoter's Place In Finance. The Promoter's Method Of Working
He who proves himself a successful and capable promoter is a very useful individual. As the difficult task falls to him of bringing capital and opportunity together for their mutual exploitation, no o...
-The Promoter's Place In Finance. The Promoter's Method Of Working. Continued
Wild-Cat Promotion Schemes Every so often it seems to be our misfortune to run into a boom of some kind or other when the popular fancy for investments turns in one particular direction, and then the...
-Chapter XXVIII. The Get-Rich-Quick Lube. Extent Of The Lure
Until recent years, the Get-Rich-Quick Game had attracted little attention. Meanwhile, as an evil in the domain of finance, it grew slowly but steadily until it reached proportions where it actually b...
-The Get-Rich-Quick Lube. Extent Of The Lure. Part 2
Another scheme adopted by get-rich-quick operators is to announce an advance in the price of the stock and urge that it be bought for the profit which can be made from the increase in its market value...
-The Get-Rich-Quick Lube. Extent Of The Lure. Part 3
Governmental Control As already related in previous sections, the Govern-ment has been carrying on a vigorous campaign to rid the country of fraudulent financial schemes, including the innumerable ge...
-Chapter XXIX. Business Barometers. Their Function
After learning how to judge the value of every form of investment, a man may still be unsuccessful in the investment of money unless he acquires also a firm grasp upon the general principles which con...
-Business Barometers. Their Function. Part 2
Foreign Trade Foreign trade has an important bearing on prosperity and consequently on security prices. The margin of our foreign trade toward or away from a favorable balance of trade is a matter of...
-Business Barometers. Their Function. Part 3
Building And Real Estate Building and real estate activities are a fairly good index of the business conditions of a locality and of the country as a whole. Increased building operations in a city, w...









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previous page: Enduring Investments | By Roger W. Babson
  
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next page: Stock Exchange Securities And How To Select Them | By Niel Ballingal Gunn