Part 2

By owning stocks in a large number of good, sound corporations, they will average to make a certain sum of money every day in the year. They spread their invested capital over a wide field in this manner, and the laws of average make them sure gainers at every stage of their operations.

This is, as you will observe, very similar to the principles upon which the great life insurance companies are managed.

Many of these commenced business starting with but a few thousand dollars, and they now have assets of millions. They have piled up this enormous wealth by insuring the lives of human beings.

Every company which has not succeeded has failed because it did not issue a certain number of policies.

The secret of success is the large number of risks reducing the chance to a minimum.

No life insurance company could succeed if it insured but a few lives.

By the law of average, insurance companies can tell just how many of the people they insure will die each year.

When you make an application for life insurance the first question they will ask is your age, and by referring to their tables they can tell you the month and day when you will die. Now, you may not actually die upon that day, but you do theoretically, and the point is that they have so many risks that the law of average, always prevailing, in the end brings everything out just as figured.

The fact that one person lives longer than the date when his life should end is offset by the fact that another person dies sooner than expected, and thus the law of average is absolutely maintained.

The postal authorities could not come anywhere near telling how many letters would be mailed in the City of New York on a certain day, but they can come with remarkable closeness to the average for a year in advance, and predict with certainty how many people will write letters and forget to address them during that time.

It is by the working out by the law of average as best exemplified by the insurance business that it is possible to work out a plan by which Wall Street stocks can be dealt in with absolute safety and certain profit.

Of course, no man or company could purchase one hundred shares of stock without the risk of a loss. That is to say, no man should make a purchase of this kind unless he is in a position to buy again and again many times over and still hold all that he has previously purchased.

Buying a certain quantity of stock in one corporation is very much like an insurance company insuring the life of one man. But when you buy thousands of shares of stock in various corporations, some stocks going up and some going down, the law of average is an absolute protection and the statistics of stock fluctuations for the past twenty-five years show beyond the possibility of doubt that this is true.

The fluctuations in the prices of good, dividend paying stocks are something remarkable. Some active stocks show a fluctuation of five thousand times their value in a year, thus offering a continual opportunity for money making.

These are the stocks which are constantly speculated upon, the stocks on which so much money is lost and upon which the cool headed and careful operators make so much.

The Western Union Telegraph Company's shares have always paid 5% dividend, and the average market price has been about 90, making the income about 5-1/2. Now, suppose it is purchased in ten-share blocks on every one per cent. decline and none sold above the average price, it will show an income of more than 43% per annum, besides some dividends.

Suppose the very worst were to happen and there was a 20 point decline in Western Union, then we would have

10 shares at 90 $900 10 " " 89 890 10 " " 88 880 10 " " 87 870 10 " " 86 860 10 " " 85 850 10 " " 84 840 10 " " 83 830 10 " " 82 820 10 " " 81 810 10 " " 80 800 10 " " 79 790 10 " " 78 780 10 " " 77 770 10 " " 76 760 10 " " 75 750 10 " " 74 740 10 " " 73 730 10 " " 72 720 10 " " 71 710 10 " " 70 700 ------- Total Investment $16,800

It will be seen that $16,800 will handle a ten-share lot of Western Union Telegraph through a regular "Black Friday" panic, with a resulting investment as stated above. It must be borne in mind that the average prices of these purchases is 80, giving a dividend of 6% on the investment, but when the market has resumed its normal condition (90), the profits will be $2,100, exclusive of dividends.

If lots of 100 shares each were purchased, there would be profits of $21,000 exclusive of dividends.

The shares of the American Sugar Refining Company fluctuate 4,900 times their par value every year, and our method applied to them will give a profit of from 200 to 300% per annum, exclusive of dividends.

While we refer to the possibilities in making investments in Western Union and American Sugar Company's shares, we include in our operations a number of different securities, all at the same time.

For instance, when we would purchase one hundred shares of one stock, we divide it into five or ten different lots and do the same thing in, say, ten or twenty different stocks all at the same time; therefore, instead of having on hand a few large lots, we have two or three hundred small lots, purchased down to the lowest prices, and by purchasing outright a large quantity in little "lots" at different prices, the average cost eliminates the risk of loss and insures certain profits.

According to the results of speculation and manipulation, the twenty different stocks that we deal in do not usually all go down at the same time. Some are going up, while others are going down; therefore, we are receiving profits in one, while making advantageous investments in another.

We have been established in Wall Street for a number of years, and we know about the various stocks on the market, their value and earning capacity. We know the stocks which are most sought after by investors, and the stocks which are used by speculators to make money out of the public.

We now offer to the public the best plan for a legitimate investment speculation. We have an authorized issue of $500,000 debenture bonds due and payable in three years, with interest at 5%, payable semi-annually, for the purpose of buying and selling stocks and securities as dealt in upon the stock exchanges of New York.

In consideration of one-half of the net profits accruing from these investments we guarantee the bonds and interest at the rate of 5%, and conduct, manage and direct the business.

We distribute the net proceeds on the first of every month, one-half to the bondholders and one-half to our company.