Author: Henry Voorce Brandenburg & Co.
Profitable Stock Exchange Investments
PRINCIPAL AND INTEREST
Henry Voorce Brandenburg & Co.
6 WALL STREET, NEW YORK, N.Y.
Henry Voorce Brandenburg & Co.
This book is published to show the absurdity of trying to make money speculating in Wall Street without adequate capital and the ease with which it can be made with capital and proper methods.
The following pages open to the public a safe, conservative, and highly remunerative channel for the investment of their surplus funds, which does not have the element of risk and uncertainty that exists in general business.
You read a great deal about the money lost in Wall Street.
As a matter of fact there isn’t any money lost in Wall Street.
It simply changes hands.
People talk loosely about gamblers and speculators losing all their money in the end.
If money is lost, somebody has got to win it.
The people who go plunging around in Wall Street making all sorts of speculations on margin naturally lose their money. They ought to expect to lose it, and they ought to lose it whether they expect to or not. They are simply gambling with all the odds against them.
Meanwhile, the wise and shrewd operators follow prudent, business-like methods and get the money.
The Vanderbilts, Goulds and Morgans of Wall Street are sometimes described as robbers waiting in their dens to slaughter the poor innocents who venture within reach. That is all nonsense. They win because they know how to play the game, and others who have sense enough and patience enough to play the game in the same way will win too. They absolutely cannot help winning.
The purpose of this book is to inform the reader fully as to the methods by which money can be taken out of Wall Street—the methods used by the successful operators of the past twenty years to our knowledge—the methods which positively must win year in and year out.
We purpose to give the public an opportunity to make a safe and profitable investment in Wall Street, and have their money handled for them according to correct and profitable methods.
The men who win in Wall Street are those who invest in stocks—good, dividend-paying stocks, buying them when they are low, selling them when they are high.
This is not gambling nor speculation any more than any legitimate business is gambling or speculation.
In all classes of business we buy at a certain price, and sell at a higher price.
We buy under the most advantageous circumstances possible, paying the least possible price and selling at the highest market price.
This is what we are doing in Wall Street, and as we handle only the stocks of sound and stable corporations, the security behind our operations will be the strongest in the world.
The gist of the matter is that the stocks of the leading and most stable corporations of the country are tossed about in Wall Street from speculator to speculator, going up and down constantly and varying enormously in the prices at which they are bought and sold.
These changes in prices are nearly always due to a feverish and excited market. The stocks themselves do not actually vary in real value. They are worth a certain sum all the time. They are paying dividends on that sum and the stocks at their real value are always a good investment. Yet by the manipulations of the speculators and on account of the exigencies of these Wall Street marginal gamblers such stocks can be bought at times at a fraction of their value, and by reason of the same causes can be sold at other times for far more than they are really worth.
The men who make the money in Wall Street are those who know what stocks are really worth and who buy when prices, go down and sell when they go up, buying and selling the same stocks over and over again, and making a handsome profit on every transaction. They do not care how low a stock they hold goes for the reason that the stock belongs to them, they know what it is actually worth as a dividend payer, and in the skyrocket performances of the speculators of the Street they take no interest except as it gives them opportunities to buy and sell. They do not care how high a stock goes; they have no shortages to cover, but can simply sit back and sell as much of their holdings as they choose whenever they see an opportunity to make a big turn.
Such men will turn a block of stock in a given corporation over and over dozens of times in the course of a year, making so much money on it that even if the stock should disappear off the face of the earth altogether, they would still be far ahead on it, simply on account of the numerous advances and declines.
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 5½. 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
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.
These bonds are issued in sums of $25 and upwards, as purchasers may direct, and are transferable only upon the books of the company.
The first thing to be sought is absolute safety in investment. Only sound, dividend paying securities will be bought and only at a bargain when it is known beyond question that the price is below their actual earning power. Having purchased and paid for the securities the bondholders become the owners of them, and they will be placed in our vaults until such time as they can be sold at a handsome profit.
No get-rich-quick methods will be used, and no speculation indulged in.
No large amount of money will ever be tied up in one stock.
The operations will be spread over a large amount of ground, making small investments in proper securities, thus practically eliminating all risk of loss. It is more certain than life insurance business.
The chances of loss will be considerably smaller than they would be in banking, manufacturing or mercantile enterprises.
Purchases will commence when a stock is over-depressed and evidently selling below its real value.
Purchases will continue so long as the price continues to go down.
These stocks will then be held and we will have every advantage over the market, instead of the market having the slightest advantage over us, as it does over ninety-nine out of a hundred speculators.
When the speculator is forced to sell at a low price we begin to buy.
When he is forced to buy at a high price we will be ready to sell.
We have the advantage over the market at every stage of the game.
The market cannot force us to do anything because we are in a position to do precisely as we please.
This business is strictly cash, buying for cash and selling for cash, trading in securities of strong, dividend paying corporations and going steadily forward every business day in the year.
No credit will be extended or asked.
There will be no bad debts.
No money has to be expended for plant, equipment or other costly things which figure in ordinary lines of business.
Every cent of money will keep working all the time, and such of it as is not invested will be drawing interest in a Trust Company.
There will be absolutely nothing to worry about.
When we want to buy other people are unloading. They have been frozen out and have to sell.
The more freezing out there is, the more panicky things get, the better it is for us.
There is more money to be made in one panicky day than there is in weeks of ordinary Wall Street trading.
Then, on the other hand, when everything is looking first-rate and prosperous, Wall Street is full of people who want to buy. There is where we are ready for them again.
We bought the stocks when people had to sell them.
Now the people want to buy and we are right on hand with the goods—bought cheap at the proper time and now glad to sell at a goodly profit.
This method of ours is nothing new or untried. It has stood the tests of time and made many a millionaire.
It is founded upon the firmest possible foundation, and has gone over squalls, slumps and panics, and in twenty years, to our personal knowledge, it has never failed to win.
We know of a number of people who have become rich by following this method. We know of one man who operated for fifteen years. He retired January 1, 1898, reputed to be worth twenty millions of dollars. He never lost, paid for what he bought, buying proper securities in small quantities at a declining market, going right along to the bottom still buying and then holding on until the market was in its normal condition and he could pocket his profits and be ready to do it all over again.
You will note that this business absolutely cannot be affected by financial calamities.
On the contrary, a panic is a blessing.
It may seem to you that if this method of taking money out of Wall Street is so simple, that you can do it yourself. You certainly could if you had the capital, knew the stocks and their value thoroughly, could devote your whole time to it, and, what is more important, had the firmness and will power to follow the method and not be swerved from it by the temptation of speculation.
Not one man in a thousand can go into Wall Street and fail to be influenced by the wild speculation which is going on there, the apparent opportunities for getting rich in a minute, the tips and rumors and all that sort of thing. That is precisely why so many people are wrecked in Wall Street, and the reason why so few succeed is that they have not the patience and the cool, calm judgment requisite to play the game in the only way in which it can be beaten.
The Manager of our Corporation will not be allowed to be influenced by anything except our instructions. He will be under sufficient bond to follow his instructions, which will be precisely as outlined above. He will be a buying and selling machine, oblivious to all outside influence. He must carry out our orders regardless of whatever may happen, and he is a man who can be depended upon to do it.
A corporation, being a machine, can succeed by this method for the reason that it must follow a certain outlined course and cannot, and dare not, deviate from it by a hair’s breadth.
The individual left to himself in Wall Street soon finds himself figuring, speculating, making forecasts, listening to tipsters, reading financial newspapers, living with one eye on the ticker, and pretty soon he has forgotten all about the method he intended to follow, and is a plain, ordinary Wall Street gambler—and the shrewd and cautious wise heads of the Street soon get his money.
The marginal operator is always at the mercy of the market instead of having the market at his mercy.
The wonder is not that so many of them lose so much money, but that any of them win at all.
It is only a question of time until they are wiped out. The odds against them are altogether too great, and while they may weather a few slight squalls and run along smoothly for a time, sooner or later disaster comes, generally unexpected and overwhelming.
What is the use of trying to make money in Wall Street by marginal speculation when the