This application of the rule is necessarily somewhat rough, for the several quantities (prices) included in the survey, and used for the formation of the guiding average, should first be obviously "weighted," that is to say, each price of sale and purchase should be multiplied by the amount of stock thus dealt with, in order to assign due influence, to their respective effects upon the average, deduced. But such a proceeding would, in practice, be prohibitive of adoption. Another plan would be (though congruent in principle) to exhibit the series of successive monthly or quarterly values over the ten or eleven years (or the adequate period selected), and to draw a line through the several figures. A rough curve would thus be produced, with many and curious twists and variations of outline, but in general, and broadly, it would be perceived that there is a point where the curve begins distinctly to ascend continuously (notwithstanding small intermediate irregularities in the progress), which indicates the spot at which a sale should be considered, and a point also whence it commences to descend definitely (with minor interposed breaks), which shows the time when a purchase should be contemplated. The foundation of the rule is sound enough; proceeding, as it does, upon the principle on which the predictive power of science, and the conduct of transactions which rest upon the uniformity of human motives and action are based - that the future will reproduce the past, at least in its main and essential features.

1 A cycle (or circle) simply means that, however fluctuant be the occurrences of events, the course of commerce, of trade, of prosperity and adversity, of high and low prices exhibits a fairly regular order, and that this order tends to assume the recurrent and symmetric shape of a circle. So that the series of experiences, starting at any point on the circumference of the circle, proceeds successively through definite phases, as it travels, until it reaches the point of origin again in the same phase as that in which it began, when a corresponding career recommences, and so on da capo. This general uniformity of experience in financial and other facts is the expression of the uniform and recurrent modes of men's hopes and fears which persist through the ages, and, examined more closely, is simply the repetition in this special region of the inherent tendency to Rhythm in Nature. Assume that we begin our observation of the financial course at the point in the cycle where prosperity and high prices exist, we shall (however frequently we follow the circle's rotation) pass through the same stages of related vicissitudes until the revolution brings us back again to the condition of prosperity, as a goal from which we proceeded as a starting-point. And so similarly for other times of departure.

As is the fate of all wide generalisations - a fate proportioned to their largeness and importance of scope - it is the concrete application that bewilders. The practical modes of decipherment and expression which have been expounded involve considerable care and labour, but once the scheme has been attempted subsequent addition of records is easy. And all things worth doing are worthy of the trouble and thought they involve. The exposition of the general subject would have been defective without a reference to this radical rule: but for the ordinary investor a few particular observations apply -

Rules For Ordinary Investors

1. Never sell for speculative purposes, but only when it is necessary.

2. If the latter event occur, notice from the papers if the price is day by day tending to rise, and, where possible, consult a competent and impartial friend; but, best of all, for a quiet mind and a sense of safety in your dealings, restrict your investments to those which show only a limited range of fluctuation; determine when you purchase to be unalarmed and unaffected by changes of value, and retain what you have gained. All rules may at times be wisely broken, and, of course, an unusual ascent in value may occasionally occur, where its very exceptional character may indicate a uniqueness of condition which will not probably return except after a prolonged interval, and in such an event it would be injudicious and illegitimate to refuse the offered chance. But the counsel yet holds good that securities, carefully chosen, should be permanently retained, both on the ground that changes up and down must pursue each other from time to time, and on the more important ground, from the point of view of the usual investor, that frequent changes to snatch a profit develop the speculative spirit and find sooner or later their natural end in a realised loss.

"Unstable as water, thou shalt not excel." I have known many speculators - men, I mean, who make it a business to be minutely watchful in catching at profitable chances in stocks and shares - but the material wealth which occasionally, though rarely, comes to such is usually accompanied by the loss or diminution of that finer form of wealth which consists in serenity of mind, contentment of spirit, and the cultivation of more excellent and enduring qualities than the quest of gain.

Hence I may repeat in summary the main considerations for the guidance of the ordinary investor.

1. Observe the rule so far as you can in settling the time for purchase and sale.

2. Do not make the exact and laborious inquiry which has been outlined if you find it difficult and uncertain to adopt, but if, as I have stated, you observe or discover that many people are exalting or buying a particular security (of the class to which you should restrict your ventures), then has arrived the time to sell, if a sale must bo attempted; and contrarily, the period for purchase is at hand when many persons are selling or decrying the investment in question. The thoughtless rush of the multitude in either direction is indicated by the record of transactions.

3. Do not keep frequently selling and rebuying, or attempting to seize the transient advantages of the changing market prices. The speculator's fato is then likely to be yours, and a reproachful memory of loss. Select carefully and with deliberation, and keep your investment, as a rule, steadily; this is your sovereign guide.

4. All things change and show the aspects of good fortune and evil, even after the most judicious selection. The prudent investor must sometimes sustain a loss in patience and fortitude, and utilise his mischance as a warning beacon for his future ventures.