Successful Stock Speculation by J. J. Butler
This book, written by J. J. Butler and published in December 1922, aims to provide readers, particularly clients of the National Bureau of Financial Information, with fundamental principles necessary for navigating the stock market. The core philosophy centers on achieving “stock speculating with safety,” countering the common perception that speculation inherently involves great risk. The author argues that most losses in speculation are avoidable if traders adhere to conservative principles focused on intrinsic stock value, proper timing, and avoiding misleading market information and manipulation.
Who May Benefit from the Book
- Buyers of speculative securities.
- Traders in listed stocks.
- “Lambs” (inexperienced speculators).
- Individuals seeking safety and profit in stock trading.
- Those needing definitions of stock market terminology.
Top 3 Key Insights
- Successful speculation requires buying stocks when the market price is demonstrably below their intrinsic value, supported by assets and earning power.
- Market information is usually unreliable, often driven by rumors or broker commissions, leading to public losses and poor decisions.
- Avoiding failure hinges on overcoming ignorance and greed, as focusing on quick, large profits invariably leads to eventual loss.
4 More Lessons and Takeaways
- Stock speculating with safety is achievable by purchasing when the certainty of future profit is high, such as during periods of extreme pessimism.
- Do not follow brokers’ recommendations on heavily advertised stocks, as these prices are often artificially inflated and due to decline once publicity ends.
- Major stock price movements precede corresponding changes in general business conditions, providing crucial indicators for long-term trading decisions.
- Use liberal margins (30% to 50%) rather than the minimum to protect against market fluctuations and reduce the risk of broker calls.
The Book in 1 Sentence
Successful stock speculation requires purchasing conservatively valued stocks, prioritizing safety over quick profits, and ignoring misleading market information.
The Book Summary in 1 Minute
Successful Stock Speculation outlines the essential principles for trading successfully by minimizing risk. J. J. Butler defines speculation not as great risk, but as the possibility of “safety” if based on fundamental principles. The key is to buy stocks only when they are selling below their true intrinsic value. Traders must understand major price cycles: accumulate stocks during times of widespread pessimism and depression, and sell during periods of high optimism and prosperity. Avoid manipulated or heavily advertised stocks, as well as relying on biased broker tips or hurried financial news, which causes huge public losses. By focusing on conservative valuations, liberal margins, and aiming for a fair return rather than sudden riches, speculators can achieve long-term success.
Chapter-wise Book Summary
PART 1 INTRODUCTORY CHAPTERS
CHAPTER I. The Purpose of This Book
“Our purpose is to protect you against losses as well as to enable you to make profits, and it is very important that you understand how to provide for safety in your speculating.”
This book is written to impart the fundamental principles used by the author’s firm when selecting stocks for clients, principles valuable to anyone trading in listed or speculative stocks. The primary goals are to protect clients against losses and enable them to make profits by achieving safety in speculation. The book stresses studying “What” and “When” to buy and sell (Chapters V. to IX.) and the influences affecting prices (Chapters X. to XV.). Chapter XXV., on Market Information, is deemed perhaps the most important because misleading information accounts for many speculation losses.
Chapter Key Points:
- Provides fundamental principles for stock selection.
- Stresses understanding safety in speculating.
- Highlights the crucial role of Market Information (Ch. XXV).
CHAPTER II. What Is Speculation?
“Stock speculating with safety is possible.”
To speculate is to theorize about something uncertain; in this context, it refers to buying and selling stocks and bonds for profit. This is distinct from investment, which involves holding for income. While speculation usually conveys the thought of great risk, the expression “stock speculating with safety” is perfectly correct. Safety, in a comparative sense, is achieved by purchasing stocks when it is almost certain the buyer will profit. For instance, buying Liberty Bonds when interest rates were extremely high guaranteed a price increase when rates inevitably dropped; the only uncertainty (the time frame) made it speculative, not risky.
Chapter Key Points:
- Speculation means buying/selling for quick profit.
- It is possible to speculate with genuine safety.
- Safety is achieved by acting upon certain economic laws.
CHAPTER III. Some Terms Explained
“The bulls and bears get them going and coming.”
This chapter defines essential terminology for traders. A ‘Trader’ is a person who buys and sells stocks. A ‘Speculator’ buys for profit regardless of the stock’s earnings, possibly selling short (Chapter XVII). An ‘Investor’ holds for income but should consider speculative possibilities. A ‘Bull’ believes prices will advance; a ‘Bear’ believes they will decline. ‘Lambs’ are the public who know little about speculation and lose their money to the bulls and bears. Other terms defined include ‘Long’ (owning stock), ‘Short’ (owing stock), ‘Odd Lot’ (less than the standard lot), ‘Point’ (a dollar or cent change), ‘Reaction’ (a decline in a rising stock), ‘Rally’ (an increase in a falling stock), ‘Commitment,’ and ‘Floating Supply’.
Chapter Key Points:
- Distinguishes between traders, speculators, and investors.
- Defines bulls (optimistic) and bears (pessimistic).
- Explains key market mechanics terms like ‘Odd Lot’ and ‘Reaction’.
CHAPTER IV. A Correct Basis for Speculating
“We maintain that there is only one basis upon which successful speculation can be carried on continually; that is, never to buy a security unless it is selling at a price below that which is warranted by assets, earning power, and prospective future earning power.”
The only sustainable basis for successful speculation is purchasing securities when the price is below the value warranted by its assets, present earning power, and future prospects. While many influences affect stock prices (discussed later), these fundamental values must be the primary guide. If a stock is purchased below intrinsic value, the price will eventually rise toward the real value, even if temporary influences work against it. Buying above intrinsic value involves risk, regardless of attractive future possibilities. Most traders ignore this rule, buying merely because a stock is active or because of a baseless tip or rumor.
Chapter Key Points:
- Success relies on buying stocks below intrinsic value.
- Fundamental asset value should guide all purchases.
- Avoid buying based on rumors, activity, or tips.
PART 2 WHAT AND WHEN TO BUY AND SELL
CHAPTER V. What Stocks to Buy
“In every instance, when you make a selection, you should consider the company’s assets, present earnings, and prospective future earnings…”
When selecting stocks, generally prefer those listed on the New York Stock Exchange. Stocks can be classified (e.g., railroad, public utility, oil). Certain classes are more favorable at specific times; for example, public utility and gold stocks were selling low in 1919 but improving by early 1922. At the time of writing (April 1922), railroad and public utility stocks are recommended. Regardless of the class selected, every choice must be based on a critical consideration of the company’s assets, present earnings, and prospective future earnings.
Chapter Key Points:
- Generally prefer listed NY Stock Exchange stocks.
- Select classes based on current favorable economic conditions.
- Always analyze assets and earnings before buying.
CHAPTER VI. What Stocks Not to Buy
“It is a good rule never to buy stocks that brokers urge you to buy.”
It is easier to list what not to buy, as this list is much larger than the list of good purchases. Avoid most stocks not listed on the New York Stock Exchange. Nearly all promotion stocks (stocks in new companies) fail; while a tiny percentage succeeds, relying on the average means guaranteed loss. Even among listed stocks, avoid classes that are selling too high. Crucially, do not buy stocks that are extensively advertised or aggressively urged by brokers. Such publicity often pushes the stock price up temporarily, and those who try to profit by riding the wave usually lose all their money attempting to repeat the short-term gains.
Chapter Key Points:
- Avoid non-listed stocks and new promotion stocks.
- Do not buy stock classes selling at inflated prices.
- Never follow brokers’ heavily advertised or urged recommendations.
CHAPTER VII. When to Buy Stocks
“As a usual thing, it is a good time to buy stocks when nearly everybody wants to sell them.”
Stocks should be bought when they are cheap, meaning the market price is substantially less than the intrinsic value. The ideal time to buy is when general business conditions are poor, trading is very light, and widespread pessimism prevails. This is when large interests quietly accumulate stocks. Since conditions constantly change, and extreme bad times never last indefinitely, the time when everyone thinks business will stay bad is the best time to look for bargains. Early April 1922 is cited as an unusually good time for buying stocks, provided keen discrimination is used.
Chapter Key Points:
- Buy when the stock price is far below intrinsic value.
- Ideal buying occurs during periods of market pessimism/dullness.
- Prepare financial affairs to buy when demand is lowest.
CHAPTER VIII. When Not to Buy Stocks
“The stocks that are not selling too high will decline some in sympathy with the others.”
Refrain from buying when the great majority of stocks have advanced beyond their real intrinsic values, as a widespread decline is imminent. During such times, even undervalued stocks are likely to decline in sympathy with the general market. While opportunities may still exist for individual stocks during generally high markets, there are definite periods when advising clients to entirely refrain from buying is necessary.
Chapter Key Points:
- Do not buy when most stocks are overpriced.
- A general decline pulls down even conservative stocks.
- Avoid purchases when the market’s technical condition is poor.
CHAPTER IX. When to Sell Stocks
“Don’t be too greedy and hold on for a big profit.”
The general rule is to sell stocks when the market price is too high. This often coincides with periods when nearly everybody else is buying, as the majority typically buy near the top. It is always better to sell too soon and lose potential profit than to hold on too long and lose everything. Trying to sell at the absolute top is usually a losing endeavor because predictions of higher prices often advance faster than the actual prices. However, a stock should not be sold just because it shows a profit, especially if it was very cheap when purchased and its sector has promising future opportunities.
Chapter Key Points:
- Sell when the market price becomes inflated.
- Sell during periods of peak optimism when the public is buying.
- Avoid greed; prioritize selling too soon over selling too late.
PART 3 INFLUENCES AFFECTING STOCK PRICES
CHAPTER X. Movements in Stock Prices
“your success in stock speculation will depend very largely upon your correct prediction of these movements.”
Speculation is possible because stock prices constantly move up or down. Statistical research over the past two decades has confirmed that some of these movements are reliably indicated by economic laws. The following chapters detail the various influences that affect these price movements, and a correct prediction of these movements is vital for success in speculation.
Chapter Key Points:
- Price movement is the fundamental basis of speculation.
- Movements are often predictable based on economic laws.
- Understanding influences is key to successful prediction.
CHAPTER XI. Major Movements in Prices
“These stock price movements nearly always precede a change in business conditions…”
Major stock price movements occur in cycles and typically precede changes in general business conditions. An upward trend signals improving business. These cycles include a Period of Improvement, followed by a Period of Prosperity characterized by high prices, high wages, and widespread optimism. Wise speculators sell all their holdings during Prosperity. Following this is a Period of Decline, often starting with a severe stock market break. Finally, the Period of Depression brings low prices, tight money, and deep pessimism. This depressed period is the time for the “big interests” to accumulate bargains, while the general public is too fearful to buy.
Chapter Key Points:
- Major market cycles forecast economic trends.
- Periods of Prosperity are ideal selling times.
- Periods of Depression are ideal buying/accumulation times.
CHAPTER XII. The Money Market and Stock Prices
“Perhaps no other one thing influences the movement of stock prices so much, in a large way, as money conditions.”
Money conditions are arguably the largest influence on major stock price movements. A massive bull market cannot occur without plenty of available money, necessary because nearly all stocks are bought on margin, requiring brokers to borrow heavily. The Federal Reserve Bank influences the market by regulating interest rates; raising rates, as done in 1919, helps curb excessive speculation. Banks accumulate reserves during depression, fueling the start of a bull market; conversely, when bank reserves drop low during prosperity, it signals that speculators should sell their stocks.
Chapter Key Points:
- Money supply is the greatest influence on large price movements.
- Margin trading requires banks to lend large sums.
- Low bank reserves during prosperity signal a need to sell.
CHAPTER XIII. Minor Movements in Prices
“The major movements are so slow that people get out of patience, and yet those who are guided only by the major movements are operating on a much safer basis.”
Minor movements (reactions and rallies) happen within major cycles, driven by technical conditions and psychological factors. For instance, expectations of a reaction cause a brief let-up in buying, allowing bears to push prices down. The subsequent rush to buy during the reaction, combined with shorts covering, creates a rally. Although most traders focus on these minor, quicker changes, operating based primarily on the slower major movements is a much safer approach. Price fluctuations are also influenced by corporate news such as earnings reports or dividend declarations, sometimes causing prices to rise even when intrinsic value decreases (e.g., after an extra dividend).
Chapter Key Points:
- Minor movements are frequent, short-term rallies and reactions.
- Psychology and technical factors cause minor shifts.
- Safety and profit are maximized by following major, slower movements.
CHAPTER XIV. Technical Conditions
“if the real value is $100 a share, sooner or later the market price will approach that figure.”
Technical conditions refer to factors influencing short-term supply and demand, such as floating supply and short interests. Price changes occur when supply and demand are unbalanced. The key principle, however, is that if a stock’s actual value is high (e.g., $100), the market price will eventually move toward that figure, even if it is currently selling far below it (e.g., $50). Traders are strongly urged to buy stocks with far greater actual or prospective values than their market prices, securing them outright or with heavy margin, and holding until the price rises. If a trading mistake is discovered, the best course of action is to sell immediately and take the loss.
Chapter Key Points:
- Technical conditions influence immediate supply/demand dynamics.
- Intrinsic value always dictates the long-term price direction.
- Conservative traders should hold undervalued stocks or take swift losses on mistakes.
CHAPTER XV. Manipulations
“It is our opinion that more money is lost by the public in manipulated stocks than in promotion stocks…”
Stock prices are significantly influenced by manipulation, though affecting the entire market is harder now than years ago. Manipulation can involve company insiders spreading false favorable or unfavorable news to facilitate buying or selling (morally wrong but legal). A common method involves pools: a group accumulates stock by spreading bad news, causing the public to sell. Once accumulated, good news is spread, the public rushes in to buy, and the pool operators sell out their holdings. “One-man” manipulation occurs when a single controller uses his position (e.g., in a mining company) to release controlled news to prompt buying rushes so he can unload stock. The lure of these manipulated, highly volatile stocks results in greater losses for the public than even promotion failures.
Chapter Key Points:
- Manipulation primarily affects individual stocks.
- Pools use controlled news to accumulate stock cheaply.
- The public often loses money chasing manipulated stocks.
PART 4 TOPICS OF INTEREST TO SPECULATORS
CHAPTER XVI. Marginal Trading
“However, when stocks are low the risk in buying on a liberal margin is very small, and the possibilities of profit are so much greater, we do not see any objection to taking advantage of this method of trading.”
Most traders buy stocks on margin, typically putting up a minimum of 20% of the purchase price. Marginal buying is not fundamentally gambling; it is similar to borrowing 80% on a home purchase or leveraging funds in other business lines. The contract difference is that a broker can sell the stock if the price drops to the level of the loan. Most margin traders use insufficient funds; it is advised to use a heavy margin of 30% to 50% to prepare for fluctuations and avoid broker calls. When stocks are genuinely cheap, using a liberal margin significantly increases profit possibilities while minimizing risk.
Chapter Key Points:
- Margin buying involves leveraging funds, usually 20% minimum.
- It is similar in principle to leveraging other assets.
- Use a substantial margin (30-50%) to ensure safety.
CHAPTER XVII. Short Selling
“Short selling is something that we do not recommend very much to our clients.”
Short selling is the practice of selling stock that the seller does not yet possess, with the plan to buy it later at a lower price. Brokers facilitate this by borrowing the stock from other brokers. The author advises against short selling as long as there are good opportunities for profit through buying. If one does sell short, extreme care must be taken. Manipulators can force prices up significantly, potentially resulting in huge losses or even “corners” for short interests. A large reported short interest in a stock often indicates that the price will sell higher later due to the necessity of buying to cover these interests.
Chapter Key Points:
- Short selling is selling borrowed stock to be repurchased later.
- Not generally recommended when buying opportunities exist.
- Short selling involves high risk of loss due to manipulation or market corners.
CHAPTER XVIII. Bucket Shops
“The man who runs a bucket shop usually has no conscience, and it certainly is an unfortunate thing for anyone to get mixed up with such a man.”
A bucket shop is run by a broker who takes margin money but never actually buys the stock for the client, relying on the client being wrong. They push clients into highly speculative stocks with large fluctuations to generate opportunities to sell them out. Bucket shops thrive in volatile markets; a continuous upward trend, like that seen from August 1921, causes them to fail, resulting in numerous failures in early 1922. Due to the inherent lack of conscience among bucket shop operators, traders are warned emphatically against dealing with them.
Chapter Key Points:
- Bucket shops take client money without executing trades.
- They profit from volatile markets and client losses.
- The upward market trend of 1921-1922 caused many bucket shops to fail.
CHAPTER XIX. Choosing a Broker
“However, if you choose a broker who is a member of the New York Stock Exchange, you have eliminated a very large percentage of your chances of getting a wrong broker.”
Choosing a responsible broker is vital. Trading with a broker who is a member of the New York Stock Exchange minimizes the risk of dealing with an unreliable party, as the Stock Exchange has strict rules and regulations. Since margin trading requires entrusting funds to the broker, clients should always verify the broker’s responsibility by getting a report from a mercantile agency (like Dun’s or Bradstreet’s) or through their bank.
Chapter Key Points:
- Choose a broker who is a member of the NY Stock Exchange.
- Exchange membership offers protection via regulations.
- Always verify the broker’s responsibility using credit reports.
CHAPTER XX. Puts and Calls
“It is generally said that nearly all the buyers of puts and calls lose, and that is our opinion.”
A ‘put’ is a contract giving the holder the privilege to sell a specified stock at a fixed price within a certain time; a ‘call’ is the equivalent privilege to buy. The fixed price is typically set a few points away from the current market price. The author does not recommend buying puts and calls for outsiders who are not constantly monitoring the market. The terms are set by “shrewd traders” (the sellers) heavily in their own favor, resulting in the majority of buyers losing money.
Chapter Key Points:
- Puts and calls grant the option to sell or buy stock later.
- The terms of these contracts favor the seller.
- Puts and calls are not recommended for typical traders.
CHAPTER XXI. Stop Loss Orders
“If your purchases were made in stocks that were very cheap, you should continue to hold them in case of a reaction.”
A stop-loss order instructs a broker to sell a stock if the price declines by a preset number of points. For conservative speculators who buy fundamentally cheap stocks and use substantial margin, stop-loss orders are generally disadvantageous, as holding through a temporary reaction is usually better. Furthermore, large numbers of stop-loss orders can be exploited by short interests, who force the price down to trigger the sales, allowing them to cover their short positions at a lower price. The only recommended use is near the top of a bull market: setting the stop order a few points below the market and moving it up as the price rises secures profits before a major reaction.
Chapter Key Points:
- Stop-loss orders sell automatically upon a price drop.
- They are usually detrimental for heavily margined, undervalued purchases.
- Stop-loss orders can be used strategically to protect bull market profits.
PART 5 CONCLUDING CHAPTERS
CHAPTER XXII. The Desire to Speculate
“The failures in stock speculating are caused mainly by ignorance and greediness.”
The desire to speculate drives progress not just in finance, but in all areas like invention and starting new businesses. New commercial undertakings carry a significantly higher risk of failure (commonly said to be 95%) than correctly performed stock speculation. Failure in stock trading stems primarily from ignorance and greediness. Stock “gamblers” operate ignorantly, seeking sudden, massive profits (e.g., 100% in a few weeks) based on tips or accidental initial wins, leading them to lose all their capital. Successful speculators aim for a fair return and prioritize avoiding loss. The desire to speculate should not be suppressed, but it must be tempered with knowledge and good judgment.
Chapter Key Points:
- Speculation drives general societal progress.
- Ignorance and greed cause most speculation failures.
- Successful traders focus on safety and fair returns.
CHAPTER XXIII. Two Kinds of Traders
“The careful trader tries to get good advice on the markets and the values of stocks… but if the reckless trader gets advice on stocks, he is not guided by it if it is of a conservative nature.”
Stock traders fall into two categories: the careful trader (who buys on liberal margin or outright, uses good judgment, and profits consistently) and the reckless trader (who seeks quick, large gains, relies on unreliable tips, and eventually loses everything). When a reckless trader wishes to change methods, they should not hesitate to sell losing stocks if the capital can be reinvested in a better opportunity. The decision to sell should be based on whether the trader would buy that specific stock if they were just entering the market now. It is best to err on the side of extreme carefulness.
Chapter Key Points:
- Careful traders use sound judgment and conservative advice.
- Reckless traders prioritize quick profits based on poor advice.
- Always sell a stock if better opportunities exist elsewhere.
CHAPTER XXIV. Possibilities of Profit
“The man who speculates with the idea 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.”
While trying to get rich quickly fails, operating intelligently for fair returns leads to eventual wealth. Historical data shows that conservative investments in standard stocks, timed correctly over long periods (e.g., 50 years), can generate enormous wealth (growing $2,500 to over $1,000,000). Even larger results are possible by taking advantage of broader intermediate market movements. By following careful, conservative methods, such as making 50% profit per annum and reinvesting, funds can grow to millions over twenty years without taking the extreme risks usually associated with speculation.
Chapter Key Points:
- Aiming for fair, intelligent returns leads to long-term wealth.
- Conservative long-term trading can yield massive profits.
- Patience and sound judgment eliminate the need for extreme risk.
CHAPTER XXV. Market Information
“Much of the so-called news that reaches the public through these instrumentalities must come under this condemnation.”
Most market information found in daily metropolitan papers is unreliable; due to tight deadlines, much of it is based on rumors, imagination, and unconfirmed reports. News agencies frequently circulate misleading “puffs,” “points,” and “canards” created by market cliques. Broker market letters are also biased; since brokers profit on trading volume, their advice pushes clients to trade frequently rather than safely. Employees in brokerage houses are often incentivized to give tips based on rumors to generate commissions. Reliable information must come from large organizations that study fundamental statistics and economic cycles (e.g., Babson’s, Moody’s, Harvard Economic Service). Cheap daily tip services should be avoided entirely due to the great risk involved.
Chapter Key Points:
- Daily financial news is typically rushed and unreliable.
- Broker advice is biased toward generating high commissions.
- Dependable information relies on fundamental statistical analysis.
CHAPTER XXVI. Successful Speculation
“There is only one SAFE way to speculate, and that is to be guided by a knowledge of the fundamental conditions of each stock and also of the industries they represent.”
Success in speculation is simple: knowing what to buy, when to buy, and when to sell. Traders must avoid manipulated, highly active stocks that are heavily publicized, as these sales chances are invariably against the outsider. Following a conservative course yields large profits with minimum risk. As an example, a list of 16 conservative stocks recommended in early 1922, bought on liberal margin, demonstrated a 32% profit in six weeks (an annual rate of 250%). Even consistently achieving 50% annual profit, compounded, results in millions over two decades. The safe path relies solely on fundamental knowledge of the stocks and their industries. The stocks most people buy are often the ones to leave alone; the best stocks are usually those heard least about.
Chapter Key Points:
- Success comes from knowing the three factors: What, When to Buy/Sell.
- Avoid highly active, manipulated stocks.
- Conservative methods based on fundamental knowledge yield enormous, safe profits.
Notable Quotes from the Book
- “We believe the principles expounded in this book are of immense value to everyone who buys speculative securities…”
- “To speculate is to theorize about something that is uncertain.”
- “Investment’ also conveys the idea of holding for some time whatever you have purchased, while speculation conveys the idea of selling for a quick profit rather than holding for income.”
- “The opposite of a bull is a bear. It refers to a person who believes that the market value of stocks will decline, and a bear market is a declining market.”
- “If the market price of any stock is far below its intrinsic value… then you may be certain that important influences are working against the market price of the stock for the time being.”
- “It never is possible for either extremely good times nor for extremely bad times to continue indefinitely.”
- “A period of prosperity is noted for high prices, high wages, and increasing production in all lines.”
- “When you see these reserves go down to a very low point, it is usually time for you to sell your stocks.”
- “The man who tries to sell at the top nearly always loses…”
- “All progress would stop if people did not speculate.”
About the Author
The author of Successful Stock Speculation is John James Butler (J. J. Butler). The book was written in April 1922 and subsequently published in December 1922 by the National Bureau of Financial Information, located in New York City. Butler’s work emphasizes fundamental principles for safe stock selection. He is associated with providing financial advisory letters, guiding clients on what, when, and how to trade stocks based on these principles.
(Note: The provided source material does not contain biographical details about J. J. Butler, such as his personal history or other published works. Therefore, this summary is limited to information directly available in the excerpts regarding the creation and context of this specific book.)
How to Get the Most from the Books
Read carefully to internalize fundamental principles, especially timing (When) and valuation (What). Apply the principles consistently to guide selections with safety.
Conclusion
Successful Stock Speculation serves as a guide for investors seeking profit while minimizing the typical high risk associated with market trading. J. J. Butler firmly asserts that sustainable success is only possible by adhering to conservative methods: prioritize intrinsic value over market price, ensuring a stock’s assets and earnings warrant the purchase. Timing is dictated by major market cycles, recommending buying during depression and pessimism, and selling during prosperity and widespread optimism. Critically, the book warns against the major causes of public loss: ignorance, greed, reliance on manipulated stocks, and acceptance of misleading market information or broker tips. By employing knowledge and patience, traders can achieve substantial long-term profits (even 50% annually) without resorting to extreme, high-risk strategies.