Arthur Crump. The importance of special knowledge

Arthur Crump. The importance of special knowledge

When the Englishman Arthur Kramp book "Theory of speculation on the stock exchange (The Theory of Stock Exchange Speculatice) at the end of l870-s reached the shores of the United States, about her was so high an opinion that at least two American publishers have also released her. As the one editor: "Few topics can boast a large number of printed stuff than speculations topic actions ... "The theory of speculation in shares," Mr Crump, an Englishman,as reprinted here may be the most sensible opinion on the subject ever written. " Kpamp, former governor of the Bank of England, was a speculator on the London Stock Exchange, has written several books and pamphlets on investment, currency and foreign exchange markets.

Sound advice Kramp contain wonderful metaphor - for example, advising novice investors to seek professional help, he wrote: "The Climber refuses to help the conductor, who was later pulled out of the crevasse, can not wait no other epitaph, even from his friends, except the that it suffered a deserved punishment for the extreme folly and stupidity. " Io even applying for aid must be careful, because "people rarely talk about their failures." Warnings Kramp had good reason: in 1870 the Franco-German soldier plunged into chaos in London markets, and there was a collapse in prices. On the other hand, the introduction of telegraph equipment in 1872 on the exchange was an important step forward in making information more accessible. More information is meant reducing fraud and fewer false "clues."

Kramp for the most important condition of successful investing - poise. He said that investors should remain cool-headed in a combat situation and "he should have the power to deter external emotions, reverse the usual displays of affection in the circumstances." Going further in this direction, he believed that the investor is a "must have a concrete strength of impartiality" and even should consider himself to some extent the bandits who want no regrets ambush on his opponent. Undoubtedly, the investor must be a scientist. According to Crump, this involves more than just financial skills. In the article "The importance of special knowledge" He explains why a thorough understanding is important for understanding the weather market fluctuations.



If the speculator is not carefully studied the specific factors influencing the stock market with regularly recurring intervals of time, he learned the alphabet of the business will try to analyze some of these reasons. Firstly, there is a mood of the public. Many people are confused by the reasons which, combined, at the same time generate activity among buyers of shares, while at other times creating a dead stagnation, and this is a very interesting study, despite some difficulty in carrying out proper analysis.

During the year there are periods when investors' mood darkens, in accordance with the fall of mercury. Dull and unpleasant weather, usually in varying degrees, adversely affecting the stock markets, depending on the strength of opposing factors. If we take the beginning of the year, in January investors typically configured with restraint, with speculators than willing, because they are aware of this fact. It's safe to say that it is useless professional speculators to shake the market, while the public is ready to take the initiative. In the first month of the year capitalists feel more or less homebodies, and the same number of buyers of the securities continue to live in a way, they take so long to leave as they can find excuses.

Speculator should have a good aneroid barometer (with a nice big arrow), which hangs in his hall, and it is not very mistaken if you will buy or sell in accordance with the instructions given by the the tool that will be bad or good weather. From a physical point of view, most people are like any one you accidentally select from the crowd. Change in fair weather will be nasty as to influence the crowd, as in this individual. Foggy, damp and dismal weather sends people home with a contented mood, if they feel they can hold out until the good weather, the same way and the storm forced sailors to seek or find the nearest harbor shelter from his wrath. When buyers shun market, prices go down under its own weight, and because of the lack of full purchase price will often fall out of any proportions relative to sales. This period is very good to change policy and start buying, because a favorable change in the weather probably will come almost exactly match the rise.

If no special reason to act, the stock markets during the first month of the year is usually the same rigid and inflexible, as the frozen ground around. At Christmas people take stock of the year, and most of them receiving less than they had imagined, stay a little out of sorts and not disposed to enter into obligations that go beyond those inherent in their business. Thus, in this period, a speculator can rely on vibrations, which are usually does not occur with the onset of February, when the whole situation is favorable for trade, and newspapers may submit their daily issues with the seasoning that encourage readers to look into the future with hope, loss, debited from the accounts begin to take less disastrous proportions, and will come forward old tendency to overspend. Professional speculative part of the community feels this movement from the public with accurate pointer, who found the bird, and they begin to seduce the gullible fictitious prices from time to time by selling the shares to be ready for the offensive slump to start anew, the skin will be another opportunity. With the advent of spring, with her charm and young leaves, with hilarious early rays of the sun, causing the singing lark and linnet, begin to dominate the mood not to attach much importance to the strict features of care that is so visibly flaunt Chillwind and shorter days of autumn of the year. During the year, when spring blends in the early summer, with all its incoming pleasant prospect, it is natural to assume that should be tempted to make money, with which all can be cool and exciting period in the most joyous time of year. Also, when is six months, people anticipate the dividend. They are always a lure for buyers, big cities are filled with pleasure seekers, import and export trade with foreign countries at the peak of activity after the release of entire fleet, which during the winter lay frozen into the ice in the northern parts of the country. Young corn begins to cover the bare arable land, and there are various fruits of the earth, which, if they are only read and hear, you can poke a sense of abundance, transforming specialist conservative half of the stock exchange in ultraradical speculator. Given the relatively favorable circumstances for a total business during the first half of the year more active than during the second six months. The parliamentary session in full swing, and a large number of people gather in all the capitals of European countries to conclude the deal, much of which invest their windfall profits in government securities. When the new year already stands firmly on its feet, say in March, when war or similar causes do not interfere with the natural course of events between this month and the end of June bull can usually find a great opportunity. This is especially happening in the London market because of the effect produced by the currency market the collection of taxes. They always provide during a specified period of relatively higher level of reserves of the Bank of England, a circumstance of great importance. In addition, in the first half of the year there is more available working capital and more opportunities to provide loans to get the profits that should be collected when the nations of the world and seduced by the revival of activity in business and in entertainment because of the mild weather and long days.

For some stocks, there is no need to specifically study the factors influencing the dividend, but not in the case of railway shares. Scalper railroad stocks should follow advance in this industry, colonial goods, Manchester and Liverpool markets, and to celebrate the character of the transactions made in basic industries. Transportation revenues of railways are very dependent on the profitability of these industries. Speculator, turn their attention to special railway shares, of course, will analyze the reports of various companies, carefully noting the published weekly transportation revenues addition, there are areas of northern zhelezougolnye whose work affects the price of railway shares in two obvious ways. Speculator, working only with the railway shares, must inform on issues every hour, otherwise it will surely "hang" as they say, with the shares, which suffered losses.

Will or will not rise more government securities as the masses after the first half - we're talking with a bull's point of view, since it operates in this direction the public in the ninety-nine cases out of a hundred - we always encourage speculators won it in the long run or not to collect their things and get out in good time. If it is a loss, which may well happen, then the more it makes sense not to continue, because then he just, more and more to increase their losses, they bogged down in deep, or as they say, "requests". If he leaves the scene and let his nerves calm down, he will return to "turn out his pockets" in a healthier mood of mind that will allow him to finally stop this occupation, without, perhaps, to such desperate measures to which he could go, if all its coffers would suddenly devastated by the July sun.

In any case, the most methodical and prudent speculator who knows how to entertain themselves and how good a player at whist, with extreme caution leaving for the end of the first half, would not challenge the reasonableness of closing their accounts with almost no interest, when the world goes on vacation.

As the first half of the year is favorable for the bullish speculators, so the second half more likely to be favorable for bearish operations. When people have finished their summer vacation and spend money, they go back to business and start thinking about the need to provide reasonable comfort, required a cool fall and cold winter. On the season, when the length of day and night compared to the world, except the area of ??the pole, a business in many important areas is starting to slow. At such times, you can make good money. However, the stock market is a very small investment business. It should be remembered that significant additional accumulation of money in the large centers in reality very often mean a whole unprofitable trade position, and while international shipping not profitable, it is felt throughout the supply chain from the major wholesalers to those who work for thirty shillings a week, and since there is no profit, then obviously there is nothing in the form of surplus income to invest. On the contrary, most people want to sell. In recent months, the movement of virtually any purpose begins to decline as related to the business and with pleasure that the impact on revenues of rail companies. If there was a bountiful harvest, so that could be exerted a significant beneficial effect, but even in this respect over the years it became obvious that the question of the crop in the UK has a relatively declining importance and there is a prospect that most of the land, located at the present time to grain, gradually returns to its original condition and be more profitable as a pasture for fattening animals.

As we have said in the beginning, the Bank of England temporarily rich due to the accumulation of taxes, but tend to fall, he is poor. People are becoming more accustomed to this ebb and flow of the financial center of London, and the problems caused by the first experiments of Mr. Lowe, now do not cause such effects, but still are one of the negative elements, and a speculator must keep this in mind as a regularly recurring negative impact.

Sure, the final terms of importance is the observation of foreign exchanges, because at certain times on them in varying degrees, affect the activity of import and export special kind of products and production.

Other effects that occur with mechanical regularity, we will treat as needed, and now continue to deepen in parts.

Take for example the activity of customers: it is clear that active buying in any market - the result of strong demand from people wanting to buy for reasons known to themselves. A strong real demand for securities means: the public is making money because they do not go on the stock markets as the true buyers until a surplus of money they want to invest and put in the form of savings. A speculator, expectant opportunity to buy, keep in mind a number of circumstances is as favorable for its operations, as well as the seller should observe the opposite number of reasons, such as favorable to the speculative sales. Bull, you should know: his big opportunity comes when the securities in general are falling in price due to a sharp commercial crisis that forced shareholders to sell on a large scale in other words, when after a long stagnation emerging from its prosperity and prices stocks are very low, there comes a great chance bull speculator. When important industries of the country seems to rise up as if from the grave and where previously ruled lifelessness and inactivity, re-hear the blows of the hammer and the roar of a domain, a new life enters the arterial system of trade, and the result is the growth of government securities. Sustained growth in stock prices caused by the purchase for cash from wealthy audience. At such times, the bull speculator should be at the forefront, as the golden harvest, prepared for his special sickle reaper beckons. Each transaction, in turn, gains confidence. We can say that in a period of prosperity the most common restore healthy stocks to a level at which they generate income in 4 1 / 2 per cent per annum, will take two years since the establishment of an explicit time increase. These two, the possibility of a bullish speculator. If it does not make money if it does not make them ever. Now we come closer to the details: "Any fool can make a profit, but you have to be devilishly clever guy to stop loss" - a cliche City of London, but truthfully it was not. Within two years, prices of which we were told would be a considerable amount of short time periods, when the bull speculator did not have to be on the market. Determine when these periods will be, and it has pons asinorum. Once he realized the value of one to keep your account ready to periodic waves, carrying him and throw him to the land income, the difficulty lies in the fact that he has understood the importance of leaving the market when the waves rolled back, taking with them the greedy speculators who were not sufficiently satisfied to take their profits.