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10/. for the same as this remark might be misunderstood I explain that no man can safely speculate in bubble companies unless he is acquainted with the plans of the promoters--or; in other words, is as great a rascal as the promoters are.
chance of winning 500/. that the stock gambler in the other case has of winning 50/. True, the latter has the chance of winning some smaller sum; but, as a rule, the gambler in stocks never is content except with a large profit, of which he may boast as a fine stroke either of skill or luck.
If we compare the smallness of the amount risked with the sum which may be gained, all lotteries have a great and some have an immense advantage over Stock Exchange gambling. For five dollars or rather more than a pound, a gambler has in the Louisiana lottery the chance of winning 200,000 dollars' Where the stock-gambling system seems to the dupes to have a great advantage over the lottery system is in the apparently small percentage of profit reaped by the person who manages the transaction. Just as players at trente-et-un used to imagine the advantage of the refait held by the bank so small as to leave the terms of the gambling all but even, and used to rejoice over the bank's small percentage of advantage on each trans- action, so does the stockbrokers dupe, who would probably pay ten or twenty per cent., as the lottery gambler does, rather than not Court ruin at all, rejoice at the nominal 1/16 per cent. I have shown that in reality the percentage on the money risked is more than 6 per cent. It may be argued, and justly enough in a sense, that the risk of the cover-speculator who pays in 10l. is, in reality, precisely the same as, the risk of a full speculator who actually bought 1,000/. s worth of stock.
readily aider buying the stock as the cover-speculator does at the outset. All he would have to do would be to watch the progress of prices, and sell so soon as the fall corresponded to a loss of 10/. At least he could do this in the case of far the greater number of stocks--in fact, this is practically what the stockbroker does for the cover-speculator. So that the percentage for brokerage is properly extended to the full amount. This is perfectly just in the case of a legitimate investment. But so soon as we consider how the cover-speculator renews and re-renews his risk on the smaller amount, we see that the percentage taken by the broker is very much more than 1/16 much more even than 6 1/3 per cent. Like the Homburg bank's advantage on the refait, it is small on individual transactions, but mounts up to something enormous as a percentage, when considered with reference to the total amount of probable gain or loss after steady persistence in gambling.
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