dea of
getting rich quickly loses all his money quickly, but that the man who
speculates with the idea of making a fair return on his money usually
gets rich.

In our advice to our clients, we seldom recommend highly speculative
stocks, because we consider the avoidance of loss more important than
the making of profits. You may object to that statement, because you
speculate to make profits, and not for the purpose of avoiding losses.
Nevertheless, if you are careful in keeping your losses down to a
minimum, your profits are likely to be very liberal. Any trader who
trades for any great length of time is likely to make large profits
sometimes, and yet the majority of them have greater losses than
profits. It is said that more than 80% of all margin traders lose; but
we do not consider that an argument against trading on margin, because
these losses are mostly due to ignorance, greediness, and the taking of
too great chances.

Do not suppress your desire to speculate. All progress would stop if
people did not speculate. But do not speculate in stocks nor in anything
else without any knowledge of what you are doing, and try to use as
much good judgment and care as possible in all of your transactions. If
you do not know what to do, get advice from someone who is supposed to
know and who is not interested in having you buy or sell. Stock
speculating with safety is possible for those who make the effort to be
guided by correct principles.

CHAPTER XXIII.

TWO KINDS OF TRADERS

There are two kinds of stock traders. One kind nearly always makes a
profit, and the other wins sometimes and loses other times, but
eventually loses all if he does not change his methods. The first kind
buys stocks on liberal margin or outright and is not worried when the
market goes against him, because he has good reasons for believing that
prices eventually will go up. If he does have to take a loss
occasionally, it is likely to be small compared with his profits. The
second kind wants to make a big profit quickly, and he buys stocks that
he thinks are going to make big gains in the near future, but his
selections are not based upon good judgment.

We might designate these two traders as the careful trader and the
reckless trader.

The careful trader tries to get good advice on the markets and the
values of stocks. If the advice appears to him to be conservative, he is
guided by it; but if the reckless trader gets advice on stock