ORGANIZED SECURITY MARKETS 
47 
Moreover, the system is self-corrective, owing to the con- 
stant speculation in the stock market. \Whenever a price of a 
stock deviates temporarily from its intrinsic value, an oppor- 
tunity for a profit is at once afforded to thousands of keen and 
experienced speculators, who are not slow to seize it. If the 
price is below the value, they buy “for the rise”; while if the 
price is above the value, they sell “for the decline.” As a result 
of this speculative buying or selling, the inaccurate price is 
speedily driven back to conform with the inherent value of the 
security. Inaccurate judgment on the part of the speculator is 
quickly discouraged by the surest method that could possibly be 
devised—he loses money. Only in a highly organized market 
can short sales be readily and safely effected. In consequence, 
only in such a market do current prices have the full benefit of 
the free and unhampered interplay of speculative forces. 
It is, of course, true that prices established on a great stock 
exchange reflect collective human judgment, which like all 
human things may occasionally prove quite in error. It is also 
true that in markets into which the public freely comes, the 
collective psychology of the market sometimes may become 
subject to public excitement. The price movements of such 
markets up or down are likely to be accentuated by the exag- 
gerated hopes and fears of the inexperienced, just as the roll 
of a ship is increased by the movements of its loose ballast. 
Nevertheless, the collective judgment of the public as reflected 
in Stock Exchange prices is superior to its average judgment, 
since the stock market is affected by economic as well as merely 
psychological factors. The convincing reply to those who criti- 
cize the stock market as a very imperfect register of security 
values is, that if their own individual judgments are really so 
superior to those of the market, they have discovered for them- 
selves a royal road to fortune. Few such critics, however, ever 
seem to avail themselves of their unique gifts by a practical 
demonstration in the market. 
It is a mistake to associate manipulation with stock ex- 
changes. The more highly a market is organized. and the