Passages from my book In Praise of Speculation!

It is said that the desire to speculate is very strong in the American people. That is why our country has made greater progress than any other country in the world, because progress is the result of speculation. We are not referring merely to stock speculations, but to the word in its broadest sense. Every new undertaking is a speculation.

An inventor speculates on what he is going to invent. Often such speculations result in losses, because many inventors, or would-be-inventors, never accomplish very much. They spend their money, time, and efforts, and probably live years in poverty, and then if the invention is not profitable, they are heavy losers.

It is the same thing with every new business. It is purely a speculation. It is a common saying that 95% of commercial undertakings fail. We do not know if that statement is correct, but there is no question but that the number of failures is very great, which shows the great risk in going into a new undertaking. It is far greater than the risk involved in stock speculating when it is done in accordance with the advice given in this book.

Yet, there would be no progress without speculating of this kind. If those entering a new business would make a careful study of the venture before entering it, and would exercise greater care and judgment in conducting it, the number of failures would be very much less. The same thing is true of stock speculating. The failures in stock speculating are caused mainly by ignorance and greediness. Many people, who would be satisfied with a fair return on their money in a business enterprise, think they ought to make a 100% profit in a few weeks in stock speculation.

It does not pay to take big risks. That is true in stock speculating the same as in any other undertaking. Most speculators are keeping their minds all the time on the possibilities of profit and not thinking about the possibilities of losing.

There is an old saying, and we believe a very true one, that a 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.

Do not suppress your desire to speculate. All progress would stop if people did not speculate. But do not speculate in stocks or 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. Stock speculating with safety is possible for those who make the effort to be guided by correct principles.

Michael Bigger. Follow me on Twitter and StockTwits.

P.S. Our New book How Traders Achieve Creative Flow will be released shortly (about 2 weeks). Performance Strategist Renita Kalhorn had this to say after reading the rough draft:

I LOVE IT!!!!!!!!!! I always feel smarter after reading something you’ve written. :-)

You have such a cool way of introducing new applications of concepts.

Lots of ideas percolating. Thanks for sharing, and including me!

If you are a blogger, I would be happy to send you a free copy of the material if you promise to write a review (good or bad) about it on your blog. Ping me if you’re interested. A copy of the material will be sent when the book is complete.