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 discounting
 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 “whitewash”
 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 speculafion
 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 influenced
 in their commitments by “tips” and jumbled, absurd
reasoning—and have lost their money. Usually, despite the
"See Chapter II, p. 45.