No more efficient service can be rendered to the investor than that of aiding him to a familiar acquaintance with the conditions which produce the changes in the prices of securities. Through the recognition of the uniformity and calculable nature of causes, with the implied absence of arbitrary and therefore unpredictable elements, the investor, under adverse stress, can rest in assured confidence.

The knowledge of causes or uniformities of action should be the basis of all judgments and acts.

The knowledge of causes (or rather of uniformities of action), is the basis of all reasonable and decisive judgment and acts in every department of inquiry and work. If in natural science we were limited to an apprehension only of the objects which affect our senses we should be able, it is true, to classify them according to the likenesses and differences by which they are connected and separated, but this result would be sterile for our practical needs; we only reach a position of serviceable power when we discover the uniform modes in which (through the operation of the forces which objects possess and which their observed activities embody) they act upon and modify each other - advancing as we do, from the kind of effect thus produced (or qualitative knowledge) to the amount of this effect (or quantitative knowledge which composes science).

"The Truth Shall Make You Free."

Bearing upon every section of human practice, no more illuminative aphorism - unsurpassed in the comprehensiveness of its generalisation of experience, and its predictive insight - was ever uttered than the great proposition, " The truth shall make you free." The history of man - the record of his gradual redemption from slavish and despairing fear, social and scientific - furnishes but an impressive series of illustrations of the spacious wisdom of this statement. The uniformity of action disclosed in Nature reigns also in the sequences of will and act. Specified motives to volition or impulses to action are simply feelings, and under similar circumstances and conditions, the same feelings and views of things with their external expression perpetually recur in constancy of iteration. And upon this persistent relationship between given surroundings and the relevant feelings which they prompt, we base our social conduct. Knowing the manner in which any man is affected under stated conditions, we concurrently know that the repetition of those conditions will be accompanied by the recurrence of that kind of feeling and expression; and hence, in our actions which involve as data the conduct, congruent or antagonistic, of others, we confidently proceed on the basis of those relations which have already been observed.

Knowledge Of The Past Carries Predictive Power

Knowledge of the past thus carries predictive power in the future. The practical lesson for the investor is this: knowing how the prices of securities vary under specified external conditions (such as a war, or vigorous trade, or paralysed industry) he perceives the course to pursue - whether to buy or sell - for these changes are simply the outward embodiment of feelings relating to gain or the avoidance of loss. And these feelings, as I have stated, are competent of recognition and approximate measurement in proportion to the kind and intensity of the external events which incite them; their uniformity of exercise enables us to view the future, with reasonable assurance, as though that future were existent now. I proceed, in the following chapter, to describe some of the prominent causes which exalt or depress the feelings of man, and which find their expression in the form of an advance or decline of values.