buying of stocks. When the market has had a considerable advance during the few years following a period of general depression declines are apt to become continually more severe and often. At such times conservatism must be observed more strictly and even the investor should begin to realize that there are two sides to the market, and that there will surely be a time when it will prove advantageous to take profits and await recessions upon which to repurchase. In fact, by selling on bulges and repurchasing on recessions, it should be possible to make far more than the dividend return. Say a stock pays a dividend of 5 per cent. per annum. If sold on a rise and repurchased five points cheaper the entire year's dividend could be made on one transaction, which operation might be repeated several times during the year.

At times, however, one might feel that while the market had had a good rise it might go still further, and, therefore, hesitate to sell all his stock. He could, however, compromise by selling a small lot, and, if the advance continued, sell more every few points up. In this way when a break did come he would be sure to have part of his stock sold near the top, and be in a position to repurchase at a profit every few points down.

HINTS TO TRADERS

In order to observe conservatism, therefore, it might appear to be a good plan for a man of moderate means to use some such system in trading as the following.

Suppose he is in a position to carry 100 shares of stock. Instead of buying 100 shares of Union Pacific at 180, buy 20 shares and on each decline of three points take 20 shares more. Should the price advance instead of recede, he will be sure of his profit on the 20 shares. If, on the other hand, an extensive decline sets in he will be continually adding to his holdings at lower figures, and when the market has reacted 12 points to 168 he will have his 100 shares at an average price of 174 instead of 180. It is seldom that such a decline is not followed by a sharp rally, and as the price again rises he can take his profits on the various 20 share lots as they appear, and thus be in a position to repurchase should the decline again be resumed.

Of course the amounts and points away on each purchase can be changed to suit the means of the investor. A man with a fifty share limit could purchase 10 shares at a time, or each purchase could be made at a two, four, five or any other number of points recession, thus regulating the extent of decline provided for. Should no decline come, the profits would not, of course, be so great on a small as large amount, but profits are surer, and more could be bought as they accumulated.

This method is of especial advantage to out of town customers who are not in constant touch with the market. Orders may be placed for purchase of a certain amount of stock every few points down and profits taken on each lot at a certain advance. Likewise orders may be placed for the sale of stock at certain points above the market and for repurchasing on designated declines.

Do not be obstinate. Be willing to change your position with conditions. Ofttimes a man who is bullish on the market is right in his position for some time but sudden adverse developments naturally change conditions, and if he is not willing to change his position he will in all probability lose not only his profits but considerably more in addition. In the same way a person who is bearish in a declining market and refuses to turn to the long side when conditions change for the better will also be the loser thereby..

The market always looks good when high and bad when low. The stock market anticipates and discounts good and bad conditions. In prosperous times when business is in full swing people are naturally bullish and willing to pay high prices for stocks. This is usually the time when the "big interests" are unloading. When business conditions are poor the public is down in the mouth and anxious to dispose of their securities. It is always darkest just before dawn, however, and when the public is most anxious to sell the insiders are usually buying in stocks.

Nine times out of ten when favorable news, such as an increase in dividend, is announced the stock in question has already advanced sufficiently to discount same and insiders who purchased much lower in anticipation take advantage of the opportunity to secure profits and under this selling the price soon recedes, even though but temporarily. Conversely, when a cut in dividend or other "bad" news on some stock is announced same has been discounted and stock sold previously at higher prices is purchased from frightened holders to whom the news is a surprise. Of course, this rule would not apply in the event of adverse developments unexpectedly by even the controlling interests.

When a few days of wild trading come after a continual rise or decline a turn is usually imminent. After a rally from the low point or decline from the high point prices usually react again to the low or high as the case may be. After a material advance stocks usually react about midway to the previous low and same holds good conversely in case of an extensive decline.

As a general thing do not buy stocks after an advance. Wait for a reasonable reaction even though it comes from a somewhat higher figure. Likewise under general conditions it is not well to sell after a decline. Wait for a reasonable rally.

Undoubtedly the most dangerous pitfall in the path of the speculator is the tendency to overtrade. A man who purchases a conservative amount of stock and makes a profit is very apt to feel disappointed because he did not buy a larger amount on a smaller margin and make just that much greater profit. This would be all right when the market went his way, but if a break came his smaller margin might be wiped out, whereas he could easily have carried the lighter load until the price again advanced. Furthermore, when a man becomes nervous and begins to worry over his commitments he is practically lost. A cool head is necessary for success in this as in any business and when an adverse market movement finds one overloaded he is very apt to sell out just before the turn comes in order to save a portion of his funds.

It has been truly said that "a bull can make money in Wall Street and a bear can make money in Wall Street, but a hog never can." The top and bottom prices of a movement are caught by only one or a very few persons out of a multitude interested in the stock, and the man who keeps looking for the final fraction will in nearly every case find that he has lost his market and ultimately take a loss or be glad to get out about even. Be satisfied to take a reasonable profit; let someone else have what may be left and remember that the risk constantly becomes greater as the movement continues.

OPENING AN ACCOUNT

In opening an account deposit should be made in New York funds (draft, money order or check) or, if the depositor resides outside of New York, money may be deposited to our credit with his local bank, and upon receipt of telegram to that effect from the cashier of the bank we will accept orders against same.

ORDERS

We consider all orders sent by mail or telegraph as "good until countermanded" unless otherwise instructed. Orders to buy or sell may be cancelled at any time before execution and new orders entered. Some stocks traded in on the New York Exchange, such as Reading, Lehigh Valley, Pennsylvania and Westinghouse, are of only $50 par value and known as "half stock." The quotations, however, are for $100 par value. Thus a quotation of 167 for Reading means $167 for $100 par value, or two shares. Therefore, an order to buy $100 par value, or $167 worth, would be for two shares. An order to buy 100 shares of these stocks would mean 50 full shares of $100 each.

Great care should be taken in making orders explicit, as we simply follow instructions as received and never accept discretionary accounts.

Many times we are asked to use our own judgment in making a selection of stocks to be bought or sold, and also as to price, but we cannot use our discretion in this as such a proceeding is very apt to result in misunderstanding and ill feeling at one time or another.

REPORTS AND STATEMENTS

Reports of purchases and sales are mailed on the evening of the day on which the transaction is made and statements of accounts are rendered monthly where there has been any change, or as often as the customer may desire.

All of the details of transactions are looked after by the broker. These include borrowing and loaning the stock and borrowing and loaning money to carry on the transaction. All that is required of the customer is to deposit the necessary funds and give orders to buy or sell.

While we do not confine our business to "fractional lot" trading, we will be pleased to accept orders for the purchase or sale of stocks for cash in any amount from one share upward and will carry on margin stocks traded in on the New York Stock Exchange in lots of five shares or more.

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BUYING AND SELLING TO SUPPORT THE MARKET 1

"EXHIBIT NO. 1321"

During the course of the Pujo investigation at Washington last December, testimony was submitted showing the stock market operations of the syndicate that was formed to sell $5,000,000 California Petroleum stock, which had been received as a bonus. The following figures were taken from the exhibit, showing the number of shares of California Petroleum traded in by the syndicate managers between October 5, 1912, and October 31, the buying orders being placed to support the market in weak spots until the 50,000 shares were unloaded: