134 THE WORK OF THE STOCK EXCHANGE 
speculation which subsequently readjusts the prices to inherent 
values. 
Moreover, hindsight is always easier than foresight. It is 
easy to detect afterwards occasions when market prices, which 
largely represent human opinion, temporarily misjudged the 
trend in values, but it is a very different matter to stare into 
an inscrutable future and accurately fit prices to future values. 
The distance into the future which present prices may be dis- 
counting is also a variable factor. But with all due allowance 
for such exceptions, the general effect of speculation, if allowed 
freedom and permitted to proceed with equal ease for the rise 
or for the decline, is to stabilize prices,*® by adjusting them 
aven in advance of changes in intrinsic values. 
Another public misconception of speculation seems to arise 
from a tendency to associate it with manipulation of prices. 
As a previous chapter’ has pointed out, in reality free specula- 
‘jon is the principal corrective of the manipulation of prices. 
Losses from Speculative Ventures.—After this extended 
account of the ills for which speculation is not responsible, the 
reader may think that the present study is an attempt to “white- 
wash” speculation. This is far from the truth. For, having 
disposed of these incorrect notions concerning speculation, there 
still remains a residuum of possible danger and harm to the 
individual which no one would attempt to deny—Ileast of all 
members of the Stock Exchange, who, if only from their own 
experience, appreciate just how dangerous speculation can be. 
This story of the real injury done by injudicious specula- 
fion is older than the South Sea Bubble and as universal as 
trade itself. For generations men have rashly undertaken 
speculative commitments in the stock market and out of it, 
have recklessly traded beyond their means, have been influ- 
enced in their commitments by “tips” and jumbled, absurd 
reasoning—and have lost their money. Usually, despite the 
"See Chapter II, p. 45.