(6 of 6)
Wall Street, from long association with speculation, has a maxim about speculators who overreach themselves: "Bulls make money, bears make money, but pigs never do." But there is no maxim or method for determining how much speculation is too much. Some is necessary and desirable. With farm surpluses dropping, Government subsidies are becoming a smaller factor and speculation a larger one in maintaining prices for farmer and housewife. And stock market speculators willing to risk venture capital are the means by which many a U.S. corporation got its start, in electronics today or in airplanes a generation ago. Speculators, moreover, help maintain the market liquidity which guarantees that an ordinary investor can always cash in his chips when he wants to.
In markets that have always preferred to regulate themselves voluntarily, "too much" is probably the point at which federal regulators wielding laws or threats of laws move in. Speculation is broader than ever and, while hardly anyone concerned believes that it is at the danger point, Congress, as well as the SEC, is asking pointed questions about the performance funds in particular. All of which suggests that it is time for speculators to refresh their memories that two and two add up to four, not eight or ten.