Arthur is a 24-year old bookkeeper who has not yet found his role in life. Thirsty for knowledge, innovative, fond of traveling if the occasion arises. Not a bundle of communication, but capable of association, a pragmatist, unafraid of risk.

***

Anthony is a 26-year old sales manager (he works only with business customers, a fact of which he is extremely proud) who has lots of friends. Making new contacts comes easily to him. He is frivolous, but he appreciates the real McCoy. He tends to ardor, but is capable of skilled control of emotions.

***

A tune. I heard a tune. I should not say that it was an unpleasant one, but it sounded somewhat shrill…even, very shrill. Little by little, I began to recollect, that I have chosen this tune myself. I opened my eyes slowly, but it was still dark. The alarm clock kept ringing implacably. Gradually rising, the sound became louder and louder. The tune mode is rather fuzzy, but there was nothing better to choose from at the time. I should have gotten up and switched it off, but an invisible force, as if with hands of steel, dragged me back. Yeah, I should have, but I waited a bit more.

At that moment, there was no point in getting up; soon the alarm clock would stop on its own. It rings precisely one minute, so if I do not want to rise immediately, I need only listen for a minute and the ring will stop. That’s what I was doing right now. When the ring stops, I stay in bed for a couple more minutes. I am aware that I will have to get up anyway, but I am in no mood to do so. I have heard it is bad for one’s health to jump from the bed straightaway, until the heart is in a working regime. Who knows where the truth lies, but to be on the safe side, I stayed in bed for awhile longer.

I extended my hand to reach for a switch. Light instantly blinded me. A terribly unpleasant feeling. Why has nobody invented a wake-up chandelier? The chandelier could be like any other, but its bulb might slowly shine stronger and stronger, slowly enough for your eyes to adjust to the light. It would be lovely to have such a chandelier and, even better, if it started instead of an alarm, allowing me to wake up leisurely – like the sun — only the time would be preselected.

My mind getting clearer, I suddenly sensed I’d been staying in bed for well over a quarter of an hour. I had set the alarm-clock for 7:05 a.m. and had to be in the office at 8:00 a.m.; I need at least thirty minutes to get there. It takes me a little while to puzzle out that there were only some ten minutes left for me to get ready. Suddenly, I jumped out of bed, running through the door after a quick shower and having jumped into my suit. For breakfast, I shoved an apple in my pocket.

Alas, I was nearly ten minutes late for the work. Almost as long as it took me to find a place to park the car, but those are my problems, I should say. Being ten minutes late is not much, of course, especially, if you often work long hours. Unfortunately, though overtime remains unnoticed at my job, everyone sees you coming in late, even a few minutes. As if to say, “Aha, you are late, we got you this time!”

Do not think I am a complainer. A job is a job, right? It’s just a typical work in the office. I spend most of the day at the computer. But the computer is not the worst part of my work. As a rule, the day goes quickly. Although every day has a few moments when the time stops and I begin to wonder when it will end.

At least today I was completely content about the day coming to an end and work would soon be over. And I would see Anthony this evening. Anthony is one of my few friends left from the old days. The old days are indeed an undefined term. When he was 34, my uncle kept reminding me that until 30 all men are half-baked, only those over 30 are real men. Of course, when he struck 40, the bar was raised – only those in their 50s were real men. The same happened when he struck 50. And you could not contradict him: age, like time, is a relative matter.

I knew Anthony from my school days. We never learned together, but our paths often crossed and, from time to time, I ran into him. I was looking forward to our meeting, as usual. He was probably the only person I could talk to about any issue and he felt the same of me, I guess. At the very least, that helped us to save money on psychologists!

***

In anticipation of the upcoming meeting, the rest of the working day passed incredibly quickly. Quite soon I opened the door of the bar where we agreed to meet. While looking for Anthony, from somewhere behind a table I heard:

“Come here, Arthur! I am here!” I saw Anthony nearby waving to me.

“Hello! How are you doing?” I nearly shout, extending my hand cheerfully.

“You know, nothing in particular. Nothing to complain about, but on the other hand, no place for happiness either.”

So after exchanging our views on recent developments, we had been talking for almost an hour and the second mug was nearly dried. Then Anthony unexpectedly asked me:

“Listen, Arthur. Are you satisfied with your life?”

“I think so, yes. I have a good job, a car, friends, rent quite a decent apartment. I should say I have nothing much to worry about. And you, Anthony, aren’t you content with everything? Why do you ask?”

“You see, me neither. I have nothing to complain about. But the question is whether life is meant only for you to have something to complain about or not? Don’t we need anything to be proud of?”

I was about to reply that I had already mentioned the car, job and all the rest. What else did he expect to hear from me? But Anthony interrupted my considerations.

“Okay, you say, a job. You boast about having a good job. That’s a good one, ha-ha…” he laughed.

“What’s so funny about that?” I replied seriously. “It is a nice job, right?”

“My dear Arthur, I am not referring to your job, my job, or anybody else's job. Even if I was talking about your work, I don’t think it would make you feel any better – both of us know work sucks. I’m talking about work as a whole," Anthony was serious now. “Is a job of real value or is it a form of slavery that sucks everything out of you?"

“I would really prefer my job to slavery,” I said without a hint of doubt.

“Ha-ha, but you do not know what the modern slave-owner would make you do? Maybe he would have you do the same things you do in your office every day, only, most likely, for a bit longer and in a similar regime, like in Asian countries.”

I reflected on this as not the worst option that might happen, but, on the other hand, far from the best. So indeed, what is the difference between slavery and my current job?

“But Anthony!” I replied after a pause. “There is a fundamental difference. Right now, I can stop working at any moment or simply stay home, if I don’t feel like going to work. If I were a slave, I wouldn’t be given this option.”

“Of course, that’s true. But only at first glance. As a matter of fact, psychology is a decisive factor here. May I ask you when you have taken advantage of such an opportunity recently? When was the last time you woke up in the morning and decided that you were not going to go to work?”

By now, Anthony was asking with resolution in his voice; without the slightest doubt that such occasion had never taken a place. And he’s right. I have never exercised such privilege; perhaps owing to fear of losing my stable source of income.

“I am not quite sure at the moment…” I said to Anthony, but he only smiled fixedly, “But I can reassure you it is far from slavery, anyway. Because if you are working somewhere, having to do things you don’t want to do, you are always free to look for an alternative, more acceptable occupation.”

Now it was my friend's turn to ponder. But in a moment he revealed an ace up his sleeve.

“Maybe. Ok, work may not be complete slavery, maybe it’s a little more like feudalism. I daresay capitalism is a sheer analogy. While some people are in control of the wealth, others work hard to make money for them. This is the old same story, just different times.”

“How cruel you are, Anthony, even merciless. But, you know, I assume pros and cons can be found everywhere…”

But Anthony interrupted my thoughts.“Yes, indeed, but isn’t it always that some reap the pros while the cons go to the others and, most often, to the cons go to the majority. It is not me who is cruel, but the world, Arthur. Please understand, no matter the political system – slavery, feudalism, nationalism, communism, capitalism – the result is always the same. The majority work to satisfy the interests of the minority. The population that surrenders to the existing political system is obliged to go to work every day, like serfs in bondage, executing the given instructions. So what is the difference between this and present-day work? The truth is, there is absolutely no difference. Open your eyes and look at it in a realistic manner! Doesn’t it just drive you to desperation?”

I said nothing, but my brain started to work. Is it everything as damned as he says? For centuries, people have fought for freedom. Freedom to speak their native language, freedom to live off the land, freedom to do their own thing. Now, it seems, we resign that freedom without resistance. At least, it is rented for a paycheck subscription.

“Well, I can swallow any story.” I utter only after a pause, my third mug having emptied some time ago. “Unfortunately, it is time for us to go. No matter what, tomorrow we have to go to work, one way or another. We can meet in a week to continue the discussion on the matter, can't we?" I suggested to Anthony, although without the slightest expectation we would return to the same conversation. We frequently discussed one issue or another, however, never reverted.

“Yeah, Arthur, surely. We will think about it again.”

“Perfect,” I said and, after saying good-bye, we turned to go our own ways.

Although I believed I would not return to this subject, quite the opposite happened. The thought of going to the bondage did not give me any peace of mind. Pitching in at work used to fall by the wayside until I received a nonsensical assignment and being obliged to perform it, I again remembered the bondage. Damn, I thought, is life always going to be so wretched? What can I do to change all this?

One or another idea came to mind, but it all came down to one principal matter. I needed to get on the other side. The side where capital is accumulated.

While it seemed simple to do so, I didn’t have the slightest idea of how to do so or even where to start. And then I recalled the promise I’d made to meet Anthony again. So, after giving him a call, I arranged another meeting for the next evening.

Until then, I switched on the TV. For awhile, I watched a talk show mindlessly. Failing to get the gist, I turned to business news, where a discourse was going on about rising market conditions.

Watching TV, I routinely skip the advertisements, but the amount of them frustrates me. However, nothing can be done; either you watch that damn TV or you don’t. If you prefer watching television, watching the ads is required. Alternately, you are free to switch channels every five minutes. But that doesn’t quite work either. Little by little, you turn into a maniac with a remote control in your hand, which at least, gives you an allusion of control. The idea made my hair stand on the back of the neck and I switched off the TV.

Switching the TV off causes gloomy feelings. Strange feelings, as if some significant part of life is gone, sort of like not being in my own home. I attempted to read a book I’d bought a few months ago, but found it difficult to concentrate. The thought struck me that I’d been spoiled by television, because reading a book seemed almost impossible.

Failing to come up with anything better to do, I went to bed. Sleep always is a good pastime. However, I almost never go to bed so early, so falling asleep right away was difficult. Soon thoughts about slaves, slave-owners, capitalists and workers began buzzing in my head.

As agreed, the next day after work, I met up with Anthony, who seemed in high spirits.

“Did you quit your job already?” he asked jokingly.

"Of course, I’ve been thinking about it, like every morning, but, you know, I keep changing my mind at the last minute,” I replied in a similar intonation.

“Yeah, it happens.”

“What have you accomplished since we last talked?”

“Ugh, nothing to be proud of. But, you know, I’ve been thinking about what we talked about last time.”

“What a strange coincidence, I’ve been brooding over it as well,” I babbled to Anthony, though, in fact, I had been chewing the cud in all its gory detail.

“So what are your conclusions from this painful process?”

“Nothing in particular, except one thing. I am absolutely convinced that the system of working itself is really not a bad one. It is far from perfect, but it’s still much better than previous systems. As a wise man once said, ‘Democracy is the worst form of government except for all those others that have been tried.’ Democracy travels hand-in-hand with capitalism. Capitalism has its weaknesses and strong sides, but, as you said before, the advantages are not available to everyone. Then the main problem comes: Should we infiltrate those who exercise the privilege of taking the fruits? In other words, we must become capitalists. Am I right?”

“Yes, indeed. I share your opinion,” slightly nodding his head, Anthony agreed. “However, I can reassure you that doing so is far from easy. In principal, there is but one way. What do you think is the engine of capitalism that supports and pushes the system forward?”

“Money?” I responded, interrupting, though Anthony seemed eager to develop the thought himself.

“Money? I should say money is more the fuel than the engine. The engine is consumption. It moves the entire system. Just think, why do so many people try to build a successful career? Because the more you earn, the more you can spend. Then the question becomes: How much is necessary to spend and how much are you willing to spend?”

This time I fail to intervene and Anthony continued, “Society is doomed for consumption – business sentences it to behave that way. In earlier days, people had a single dream of sleeping comfortably, eating deliciously and to reproducing and most people were content with this. However, some people still wanted a little power and glory. How many people would be content with those simple pleasures now?

“So if you have a place to live, then you want a bigger apartment or a house, if you have a car, you want a larger and more luxurious one. More lavish clothes, exotic voyages in grand hotels. Everything must be better and more convenient than it is now. Society is now doomed because of this. But who has doomed it?

“It is business that employs us. Business exploits human psychology, allocates enormous assets to market formation and models demand. It is business that forms a consumer society for its own needs. In such cases, people want to acquire more, and they need more money to do so. In order to make more money, they need to work more. Work for whom? Work for businesses, so in producing a consumer society, business models not only customers for production, but also workers. It’s a vicious circle, but capital keeps growing.

Both of us pondered it for awhile and after a short pause, recalling watching television, I uttered:

“You know, I completely agree with you. Wherever you go, there are ads on every corner, enough for anyone to be brain washed. Actually, such brain washing is not complicated at all when you realize that human brain activity is based on associations, so in reality, any freedom of choice for humans is only imaginary. One can only choose between the various programs that are established in a subconscious, which has been mainly shaped by the surrounding environment. A surplus of advertising in one’s surroundings creates a permanent job for human brains to process.”

“How am I to feel when such things are going on? The point is that consumers have very few options. For one, to consume more for the money he has earned or borrowed, he must keep on working until retirement or death. A variant is to renounce consumption and stop working, and the third alternative, as you have said, is to become a capitalist and everybody will be working for you.” Now, Anthony had a slightly devilish smile on his face.

“I am not going to flounder all my life until I collapse at the end in this spiral of work and consumption. We have to do something about it.” I wanted to say what had to be done when I paused in confusion. Anthony also kept silent, so I did my best to continue with the discourse. “Something is needed to principally reverse the situation. The idea of renouncing consumption sounds good, although it seems to me it would not be an easy way out. I probably could reduce my consumption quite significantly, yet I do not believe that I could completely stop making purchases. I would still have to pay rent for my apartment, I still need to eat. Most likely, it is almost impossible to avoid consumption entirely.”

“I share your opinion, Arthur. Unless you left for an inhabited island and tried to settle there, but, most likely that wouldn’t be very successful. Even a significant reduction in consumption is far from easy. Just imagine your child asking you, ‘Daddy, daddy, why does everybody drive a new car and we clatter along in this rattletrap?’ And you would find it difficult to explain consumption to him, among other matters, and that your rattletrap is a nice car, indeed, if it is still moving.”

“So, what about capitalists? Do you think it is easy to become one? You know, I’ve always thought it would be a good idea to have my own business. I have read that among millionaires, the most prevalent are those who own private enterprise.”

“This is true, but I am convinced that the portion of business men who are bankrupt, ruined or have committed suicide is equally large, but for some reason, such statistics are not touted.

“See, being a businessman is no longer a profession, it is a lifestyle that must be liked, in essence. If you want to be a businessman, you should not be afraid to put pressure on your employees, suck their blood. Not too fast, but no mercy either. As a businessman you can get rich, however, you are deprived of holidays, weekends; all your thoughts will be about business, and only business. If you succeed, you may be the one in a thousand who develops a large company. You will achieve great power, money… Whacko! If your undertaking grows really fast, you will be compelled to take especially risky decisions that serve the purpose under favorable conditions, but sooner or later such perilous determinations will recoil on you and BOOM! The business goes bankrupt. What’s then?” Anthony concluded in a slightly menacing tone.

“Well, I don’t know…” I mumbled. “You exaggerate. There are plenty people who develop successful businesses.”

“Of course, there are,” Anthony agreed. “But great entrepreneurs who came from small businesses are more the exception.”

“But why do you keep talking only about how to become a giant entrepreneur? Maybe you’re starved for power?” Now it was my turn to smile. “It is also fully possible to develop a small business, work as much as you like, with nobody but you is in the catbird seat. Isn’t this freedom?”

“It isn’t that simple as it looks at first. Yes, it's possible, but that would not be a complete freedom either. You would have to assume obligations that come with your entrepreneurship. You would have even more of them than you have now. Of course, you may say that you are free to behave as you wish. But this is nearly the same as saying that you can stay home from work whenever you want. The problem is that this possibility cannot materialize in principal.”

He went on after a short break. “Savvy, but you would be in the dark with your small business until the end of your life and live how you want.”

Anthony’s comments gave me pause. Is it all so complicated with entrepreneurship? As if on purpose, I began to think about some acquaintances – well, more precisely, I have heard about their deeds – who have attempted to start their own businesses. One went bankrupt a long time ago, another is on the brink of bankruptcy. Unfortunately, I could not think of a single very successful example with which I could oppose Anthony. As a matter of fact, it was much easier to find such examples in the press, but they could easily be contradicted – they are just exceptions to the rule. Unable to counter his argument, I was obliged to agree.

“So, you mean to say that neither of us has a chance of starting a profitable business?” I questioned.

“There is always a chance; but I should say, it is low, because you have to compete with big businesses and it would be far from easy. Big businesses have a number of advantages,” Anthony was silent for a moment and then continued. “In order to oppose big businesses successfully, you must either be far superior, aware of matters nobody else knows about or have some amazing business idea can evade direct competition.”

“So, the best way out is to own a big business?” I replied, not in a state to disagree.

“Men you are unstoppable,” Anthony laughed. “It goes without saying. Yes, the best…”

“Simplicity is the root of all genius,” I stopped him abruptly. “It is not necessary to own the whole enterprise, suffice it to obtain a few shares of it. If you haven’t heard of it yet, they call it investment,” now it was my turn to reply tauntingly.

“Well, well. What an investor we have. What do you know about investing?”

“Maybe not much, but there always is a chance for me to stick my nose into it.”

“You are right at this point. It shouldn’t be too complicated.”

“Who knows?” doubts crept into my mind. “But this option seems the most appropriate to us…”

“Never try, never know,” Anthony neither agreed, nor disagreed, as we prepared to get up from the table. “Meanwhile, I think it’s time to go.”

Discovery

I don't like money actually, but it quiets my nerves.

Joe Louis

***

Perhaps those conversations had a decisive impact on Anthony and me when it came to choosing the future tracks of our lives. Before saying good-bye, we agreed to learn as much as possible about investing. How do we do it, where do we begin and what is necessary to know?

I began to study with great fervor. Almost immediately, I went out and bought a few books on investing. However, to be honest, after completing them, I felt slightly disappointed. Although they were supposed to teach me about investing, to my understanding, the fundamental issues covered were only skin deep and without giving me the complete picture; at the same time, too much consideration was given to trivialities that did not seem important to me at all. Having read only a few books on investing, I still felt feeble, but I wanted to appear superior to Anthony, as I was absolutely convinced that he was also struggling with the same lack of knowledge. So I kept looking for valuable information.

Searching for more information on the Internet, I read through nearly all the material on “Investopedia.com” and “Investingforbeginners.eu,” where the information seemed rather concise and clear, although I understood far from all of it. I also searched for practical data in informational magazines and other publications.

More than a month into my search for information, I had learned quite a bit about investing. First, it was clear to me that investments can be made in a wide variety of securities, but the most popular and most appropriate for investors like me were stocks and bonds. Investments can be made directly in these securities or in investment funds.

It is hard to say which – stocks or bonds – are better to invest in, because each has its own advantages and disadvantages. Investing in bonds is much safer, as more or less, it is clear what profit bonds will offer. Bonds are credit securities and, in plain language, bond buyers are lending money to the issuer with predetermined conditions. As the conditions are defined in advance, the profit is also known in advance. Profit is usually expressed as the yield, i.e., the annual percentage of interest earned by owning such bonds, if they are kept until redemption.

This percentage can vary significantly. Bonds also can be very different; depending on the issuer, terms, markets and other conditions, bond yields also diverge. Bonds issued by the governments are considered safest, but governments also sometimes default, which means they are unable to meet their obligations; this is the worst thing that can happen to the bondholder.

But I was not so infatuated by the bonds. I do not believe they are bad, or there’s anything particularly wrong with them; however, I just feel that bond investing is not for me. Perhaps this is because the profit from them can be unduly low. Yields may vary from a couple to tenfold percent. As a rule, the most reliable government medium or long-term bonds only offer two to five percent returns, depending on market conditions. The returns from corporate bonds can be extremely diverse, but in the cases of large, reliable companies that manage their finances carefully and have high credit ratings, bond yields are only just a bit higher than average government bonds.

Perhaps more risky bonds might be more profitable. Yield of bonds issued by the companies with poor ratings can easily exceed ten percent annually and grow significantly in a worsening situation of the market.

However, if you are not afraid of that kind of risk, it seems to me that it’s better to deal with stocks. True, uncertainty is a frightening factor, because you never know what profits those shares will earn. Or even loss. Your return is always a big question mark. Shares of certain enterprises could grow exponentially, instead of by small percentages like bonds, but such cases are extremely rare.

How low stock prices can go up is also a question that cannot be answered manifestly; but in the case of bankruptcy, the shares of bankrupt enterprises become worthless. Essentially, the success (or failure) of a company’s stock is entirely in the hands of the company: if the enterprise operates swimmingly, its shares typically go up, and vice versa.

Stocks are real investments and deserve your consideration. They are nearly a gold mine. Of course, there can be rises and falls, those things I understood clearly. But as the saying goes, “Those who don’t risk, don’t drink champagne.”

After completing my investor’s primer, I decided to catch up with Anthony again to find out what achievements he had made. I had no doubt that he had a lot new things to talk about, regardless of whether or not he’d been reading as intensely the whole month. I had no idea what his sources were, but he always had something to say.

Preparing for my meeting with Anthony, bad news began to strike me one after another. I was at a loss; should I laugh or cry? The first piece of news was about my aunt, who had been living in London for a good many years. She’d lived alone for some time and her health was poor. From time to time I visited her, but, I have to confess, my visits had grown infrequent. She was a lovely woman and I loved talking with her. And she enjoyed talking a lot, must probably because she had few chances to interact with others. Unfortunately, there will be no future occasions to consort with her, her weak heart had its own whims.

To gloat or to grieve, that is the question. But she mentioned me in her will. Indeed, I never expected her to and I could not believe my ears when I heard the news. My aunt was childless and had decided to split her property between her four nephews. And I was among them.

As she wrote in her will, let it be used for settlement and the beginning of a happy life. Surely, she might have donated or offered her money for other purposes, but she had considered gifting her heirs to be the best option.

My aunt was not extremely wealthy, but she owned a decent apartment in London's third zone. Although difficult to guess its value, the amount was likely to be impressive to me or, at least, something had to remain after deductions for the lawyer’s services.

The lawyer who settled the affairs notified me that, in order to execute the will properly, her property must be sold and the inheritance split equally. The proceedings were likely to extend for a couple months and the exact duration would depend on the speed of the property sale.

Shortly, I met with Anthony. As usual, he was in high spirits:

“How are you doing, Arthur? Why do you look so grief-stricken? Anything wrong with you?” he asked me immediately.

“Hello, Anthony. Still not sure, maybe I am quite well.” I acknowledged silently.

But he would not leave it alone until I told him all I knew about my aunt’s will. In the end, Anthony, who had never been distinguished for sentimentality, pronounced encouragingly, “Arthur, it’s a manifestation of fortune to you. How many friends do you know who have succeeded like you do? It is a real miracle!”

“It may be a fortune,” I told. “But even so, I feel unpleasant. What will I do with the money?”

“What do you mean by that? Of course, invest the money. By the way, how successful were you in learning more about investing, are you already an investment professional?”

“I feel far from that, but I think I could start to invest, little by little.”

We discussed our main achievements since the last meeting and most points coincided with what I had read. However, the most striking thing to learn was what Anthony related about a familiar broker who deals with securities and offered to see us to help us get started investing.

Broker

Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it doesn't go up, don't buy it.

Will Rogers

***

Alex is a 27-year old broker employed by a major brokerage firm. Broker performs securities transactions and provides trading consultation for customers. Alex has worked in the brokerage field for three years, but he is a professional, sure of himself in association with strangers, although not very brave at heart.

***

As Anthony and I have small savings, after a while we arranged a meeting with Alex.

"So, guys,” Alex lectured. "I can tell you that there is nothing special about investing. All you need to do is sign a trading agreement with us and transfer money into the securities account. And that’s it. Sell, buy and take profits in the account. Easy as that. Profits can be reasonable,” Alex smiled.

“Sure, profit is always a good thing,” half-jokingly I agreed with him. “But perhaps losses are also possible with bad luck, aren’t they?”

“Anything is possible,” there was no hesitation in his voice. “You should remember that stock trading is a risky business. But you must risk, if you want to profit. Should you prefer to stay on the safe side, buy bonds and earn just a few percent interests. It is up to you to decide.”

“Well, well, we know what you are talking about,” Anthony joined the discussion, showing he was not the last to put two and two together. “But from your experience, what is the probability that we will gain or lose?”

“You see, Anthony, probability is difficult to define. Recent experience tells me that in three last years, most transactions have been profitable. Sometimes profits are higher, sometimes lower. But, in general, my actual profits are substantial. The market is growing and now is an excellent time for investing. My advice is: Don't miss this opportunity to invest, as even in less than a month, prices may increase substantially.”

“Or decrease,” I mumbled. Somehow such optimism seemed suspicious to me.

“Prices may decrease as well,” Alex seconded. “The market is the market, nobody can forecast the future. But the lion-hearted who risk their necks make big money with the sweep of a hand. If you don’t want to be one of them, that's your choice, suit yourself.”

“But why should we sign an agreement with your company and not someone else?"

“Of course you can invest your money elsewhere, but you will hardly find anything better. If you work with us, you will be able to make all of your transactions on the Internet or through your broker, so to say, through me,” Alex bent back with some pride.

“What about fees? Aren't they higher at your company?”

“Definitely, not. If you don’t trust me, check yourself. Perhaps they are not the lowest, but surely not the highest. Our systems are reliable, we react quickly to customers and I strongly recommend dealing with us. There are no annual account fees and custody fees are not high either.”

“Is it better to deal online or through a broker?” I was curious.

“As they say, there are advantages and disadvantages to everything,” after some hesitation Alex continued talking and I believed that he was going to state the advantages of using a broker versus the online trading platform, attempting to defend the need for his profession.

“The Internet system is designed for people who prefer to do everything by themselves, those who have the time to follow stock exchange information and, unlike most, can afford such luxury. Skilled brokers perform transactions best. They can call other stockbrokers and find the ones with whom the deal can be done at the best price, if the supply or demand is not sufficient on the stock exchange. This can be extremely important for large orders.” And after glancing at us he added, “But, most probably, that is not relevant to you.”

“Well, well, we are not some peasants to you, are we Arthur?” Anthony played at getting into a huff and nodded his head after turning to me. After my identical reply, Anthony attempted to interrogate further.

“What are the advantages of trading on the online trading platform?”

“Online? That depends. Online is online. For instance, online trading may be better when orders need to reach the stock exchange immediately, while using a broker can cause some time delay. Also the trading fees for Internet transactions are slightly lower. But even if you pay up to one-half a percent for the transaction commission, does that really matter in comparison with the tens or hundreds of a percent the shares may move up in the near future?” Alex continued.

“So in the very end, using a broker is more expensive…Why is that?” To my mind, transactions online seemed faster and simpler. So far, Alex’s rhetoric about the advantages of using a broker hadn’t had much impact on me.

“Why so? Just think about it! The computer won’t advise you what to buy or when to sell. And I assume broker trading is more reliable. Anytime a human being is needed in the process, it costs more. You are always free to choose which option you like best, which seems more appropriate to you. No pressure,” with a smile, said Alex who looked to be in a cheerful mood, although he was clearly trying to put the heat on us, although in a very subtle way.

“Got it,” Anthony also expressed friendliness, moving a bit toward to Alex.

“Have you given any thought as to what, in particular, you are going to invest?”

Anthony and my eyes crossed. Clearly, neither of us had thought that seriously about it yet. I paused a bit, expecting Anthony to answer the question. But not seeing his reaction, I took the initiative,

“First we want to find the right opportunities and then we will see where to invest specifically.”

“Roger. Got any more questions, then?”

“So far, that’s it,” we decided in unison.

“Fine, then I have to go and let you two decide what to do next. In a couple of days, I will forward you some material about a few good investments.”

After bidding farewell to Alex, Anthony and I were left alone to chat. When I asked what was on his mind, Anthony took a deep breath and slowly made a declaration,

“You see, brokers are brokers, you never can tell when you can trust them and when you can’t. As one countryman once said, ‘You know, brokers are also needed,’" he said in a strange way.

“Once a broker, always a broker.”

After some small talk, we both headed home.

On the way, I had a lot to brood over. Yes, the game of stocks is a risky thing indeed, but as far as I can tell, it is probably the shortest way to freedom. Maybe I will not turn a profit in the beginning, but, as Anthony put it, twenty percent in one year could be a reasonable expectation. Take twenty percent by twenty percent and you will have made some real money after a couple of years. If I fail, I won’t make too much of a fuss about it, I will just live as everybody else does.

After some consideration, a couple of days later I went to Alex’s company, and after signing all the necessary papers, transferred my savings into a trading account, leaving only a small amount of cash for myself.

It did not take long before my money was available in the securities account and something had to be done about it. As promised, Alex sent me tons of material. To tell the truth, I did not expect to read such a pile of information. I did my best to scrutinize the material as long as my patience could last. When I grew bored with the reading, I was struck by the idea that most investors rely on the intuition more than estimation.

Of all the material I looked through, I chose six companies as the most attractive. Two were banks, one a clothing company, another merchandised food and other daily stuff, another was a pharmaceutical enterprise and the last one a telecommunications company. To me, all of the companies seemed like normal, working companies with bright prospects.

I liked the banks most. It seems that no matter what happens, the financial institutions know how to make money and nobody can manage without them. Most people transfer their salaries to banks, all of us make payments from our deposits or credit cards, most payments are made via banking transactions. Soon, living without banks will seem utterly impossible; nobody will carry cash and all operations will be performed only with the assistance of mediators. Who is going to benefit? Banks, of course. And me, if I own some stock in the bank. What about loans? More or less, everyone take loans, though it is hard to say how much of the pie goes into the bank’s pockets, but I believe lending certainly doesn’t leave them banks poor.

Both of the banks I chose to invest in seemed to me known and reliable. In fact, according to their income statements, one bank was nearly twice as large as the other, but I liked the second as well. The income and profits of both banks were growing rapidly. In two consecutive years, their profits almost had doubled.

I had read that company growth was equally important. If a company is growing, it is likely that the share price will also rise. And the faster the growth, the more rapid shares will increase in value. Everything looks simple at first sight.

The clothing company also offered a pleasant impression. It goes without saying that you cannot get away without clothes and sooner or later you will have to buy them. The only question is where. By the way, I personally liked to shop at the chosen company’s stores. If the economy is booming, standard of living levels also rise and people tend to avoid places where items of doubtful quality are on sale and prefer shops with better reputations.

My chosen grocery company looked equally valuable. It was similarly fast developing and opening new stores around the country. Nearly all shops and land sites were owned by the company, so there was no need for them to pay rent. Their supermarkets easily push out smaller shops from the market and I had no doubt that the future was in their hands.

The pharmaceutical enterprise looked promising as well. As society gets older and sicker, pharmaceutical advertising accustoms people to treatment, even if they do not need it at all. With rising living standards, health care becomes more and more important, so people tend to buy the pharmaceuticals, vitamins and various food supplements that are produced by pharmaceuticals. The company’s operating results confirmed this fact. It is also a perpetual business, even in bad days, pharmaceuticals are in great demand.

I had slightly more doubt concerning the telecommunications company. It provided some principal communication services, like fixed and mobile telecommunications, Internet and television services. Fixed telecommunications is not very fancy; however, the remaining two looked segments of the market looked promising. Mobile telecommunications are growing fast and life without it seems difficult to imagine. Even my grandmother has a mobile phone. To my understanding, the Internet has a similarly bright future.

Another important aspect of choosing the right company to invest in is the steady growth of the company’s stocks price. It was Alex who advised us to pay attention to the fact that share prices grow if the company’s activities are successful, but if the price drops, then it’s better to avoid such companies, while they might be suffering some problems that are not easy for amateurs to see.

So as soon as the stock market opened on the day I was ready to invest, I loaded the website of Alex’s company and connected to my securities account. Rather easily, I placed orders to buy the shares I had selected. In a couple of days, my portfolio was created and then I only had to watch further developments.

Almost every day I watched as the prices of the shares I had bought changed and practically each check made me extremely satisfied. Sometimes there were days when the shares lost some value, but the aggregate rise was much more significant. Within the first two months, the prices of all the stocks I had bought increased, except for those of the telecommunications company. Over that period, its share price remained about the same. After costs, it appeared that the value of my investments over those two months had grown by fifteen percent. The success was unbelievable, albeit I had been dreaming about such a result practically for the whole year. And it came true, but only in a pair of months.

I was so thrilled that I wanted to share my success with Anthony and to find out how he was doing. A few days later, we were shaking hands, our eyes revealing our elation.

Anthony was in a state of euphoria, just like I was. The first question he asked was about my investments.

“How are your investments doing? Have you already made it rich?”

“Well, well, Anthony, right away. I’ve already quit my job, bought a villa in the Maldives Islands. You know, nothing new, as always.” I joshed. But then I told him about my procurements in the market. At the end of my story I asked how he was doing with his assets.

“To tell the truth, I am very much like you. I bought shares in four companies, by the way, three of them jumped like yours, probably, because we made our choices from the same material that Alex sent to us.”

“There is the rub,” I plunged into reverie. “This means we have not invented the wheel and many customers of the same brokerage firm invest in the same companies we do.”

“Yes, you are probably right, but there is nothing bad about that. There are enough shares for everybody," Anthony comforted me.

“Enough is enough, but the largest profits can be expected from investments in the small businesses that are yet undiscovered by investors, while here, if everybody invests in these, we have absolutely no chance of being the lucky ones,” I contradicted him.

“Most likely, yes, but for the time being, we cannot complain, while our investments steadily rise. At least, I can’t complain and I don’t think you should.”

“I won’t complain either,” I uttered in a reserved tone, “Too little time has passed. I believe, don't count your chickens before they're hatched.”

This put an end to our conversation about investments. Later, our talk turned to various subjects with the memories of funny adventures. Before parting, we agreed that it would be interesting to meet up with Alex again and to get his point of view about our purchases in the market.

My passage home was slow. I began to forget my daily troubles, leisurely making step after step, permitting my feet to shuffle over the fallen maple leaves faded by autumn.

The next month was not so successful for my investments. Although in the beginning, they continued rising further, later most of the value dropped slightly. While this was certainly not a happy thing, I have to admit that it did not scare me too much. Perhaps I might have been alarmed more if the drop had been more serious; however, the aggregate increase of the share value from the day of my acquisitions was still around fifteen percent, so I was still fairly content.

One day, I was tempted to sell the shares and then wait to watch their remarkable fall. Their appreciation could not be eternal. But my intuition was prompting that it would be better to refrain from selling them for a little while longer. In addition, I had found in my research that frequent buying and selling was not advisable; it is much better to hold stocks for longer periods.

For some time there was a considerable calmness, life was running smoothly. The market was lulled and not creating much interest.

The routine was brightened by news from the lawyer taking care of my aunt’s inheritance. Her apartment had already been sold and the portion allotted to me was a rock-solid seventy thousand dollars. He also mentioned that it was a great piece of luck, as though the real estate market was getting troubled; purchase of the apartment was fairly lucrative for the family that particularly liked it.

I knew that I needed to invest this money too. And the investment had to be done as soon as possible. Though the market was lagging, I knew it would really rocket once again. So far, I was fully satisfied with the companies I’d invested in, except for the telecommunications company.

After careful consideration, I decided to invest my inheritance money in the same companies as I had previously, with the exception of the telecommunications. I placed the orders, determining the purchasing price according to the last transaction price. In fact, if I noticed that demand outpaced my offer and the share prices were already rising slowly. As a result, I increased my order price to the level of the last transactions.

The following two months were far from bad. Particularly successful were the bank and clothing companies – their stock prices grew by twenty percent in only two months. The value of the grocery company had increased by almost ten percent while the change of share value for the pharmaceutical and telecommunications enterprises was insignificant. In total, the value of my portfolio was now close to ninety thousand dollars. Indeed my money was flourishing. It was a pleasure to see money make money.

Now it’s hard to say whether my success was coincidental or whether the decisions I made were the right ones, but the fact was that the market was continuing to go up. The national economy was moving forward at a high rate. Company turnover and profits were also developing quickly. How long would such good fortune last? Over time, slumps always change to booms and vice versa. But in the meantime, things were going well. Could the market take a downturn? Probably, however, without investing, a great opportunity to profit from such fast developments would be lost.

In order to understand the situation better, Anthony arranged another meeting with Alex. After a few days, the three of us were sitting in together sharing a pint of beer.

Alex was curious to know how we were doing in the market.

“So, guys, have your stocks done well?" he asked.

Suddenly, it hit me that his question was more to me, than Anthony, because Anthony made all of his transactions through Alex, so he should have been well aware of Alex’s successes. Giving a squirm in the chair, I started my story:

“Not bad, Alex…I should say, even quite well. I selected the companies I liked best from the material you sent me, and, at least for now, I am not disappointed with their performance, except for the telecommunications company, it’s not been nearly as gratifying.”

“Well, yes, it is a more conservative position, but in more miserable times it should look respectable." Alex consoled me. "What were your other choices?"

“I bought two trading companies: one deals with clothing and the other owns supermarkets…there’s also a pharmaceutical company and a bank." I went into more detail on the chosen companies, adding that choosing one bank out of the two was the hardest task, as I liked them both, but decided to choose only one of them to make my investment more concentrated.

Alex listened attentively, but with an obvious grimace of disapproval. At last, he said, “You should have doubts about such concentration. There are two theories about investing. One alleges that you shouldn’t keep all of your eggs in one basket. Following this line of thinking, investments are best scattered, so you would not have lost anything, but rather gained dispersion if you had acquired the shares of both banks rather than just one. This is so called diversification, when investments are dissociated broadly.”

“On the other hand, some gurus insist that diversification is only for amateurs and if you mean to earn really serious return on your investments, then they must be concentrated in just two or three companies. In my view, this idea doesn’t seem quite right because nothing can be controlled in the market, for sure. No matter how promising a particular company may look, remember, it can turn inside out in a day, or even in a flash.” Alex continued his speech.

“True, concentration has a few minor advantages. If you don’t have enough time to follow and analyze companies carefully, then covering 10 or more companies becomes almost impossible. In this case, it is better to take a closer look at only a few companies, but more attentively. One way or another, for rookies, it is next to impossible to delve deeply even into all the elements of even one company. So to be on the safe side, you would need to diversify your investments more broadly.

“By the way, how did you decide on the bank you chose, of the two?”

While Alex was telling relating the idea of diversification, I felt a bit foolish, as if a complete noodle. So, slightly worried I’d become a laughing stock again, but sure of my choice, I started with my justification.

“The thing about diversification is that you just repeated my minds. I knew that I’ll be short of time to analyze all the companies.” I told the untruth, because the principal portion of my analysis required only check on changing stock prices and sometimes I have been reading the market news.

Then I continued in a bullish tone, “When it came to the two banks, I decided to buy the cheaper of the two. The share price of one was about fifty cents, while the other was about $1.50 per share. So with the difference in price being triple, naturally, I preferred the cheaper, as it had more room for a price increase,” I stated my thoughts in a prudent voice and a serious face.

For an instant, Alex sat stiff, suppressing his smile as hard as he could. But failing to contain himself, he burst into laughter so hard, I thought it nearly impossible for him to laugh any harder without injury. He calmed after a few minutes, but still laughing, he said to me,

“Don’t be cross with me, Arthur. If this were an award ceremony for the funniest story, you most certainly would be given the prize." Alex paused for a second to breathe in, as he was still short of breath after the outbreak of laughter. “To tell the truth, it’s been ages since I heard such absurdities declared in the most serious face. I really must tell the other brokers about it.”

Though Alex asked me not to get into a huff, the request was damn difficult to fulfill. I had turned purple with rage. I kept silent for a while and then, having coped with my emotions, but still in a solemn face, I uttered, “I don’t think it’s funny or goofy, all the books say the same thing: buy low, sell high.”

“Well, yes, in a way, but you shouldn’t take everything word for word. You see, the shares of one company can hardly be compared with those of another based on the assessed value, and appraised as ‘cheap’ or ‘expensive.’ You know, the cost of each share is just a mere made-up value anyway. Different companies might have a different number of shares, and the numbers are changing over time." Alex lectured briefly, but my countenance alerted him as to my lack of understanding, so he continued.

"Imagine some company — let it be your bank — as of today, had issued a thousand shares. Consequently, if you bought ten shares, you would own one hundredth of the bank. But what would happen, if that same bank decided to issue a thousand more shares from its reserve, distributing them among present shareholders, free of charge, which is quite possible? And on the top of this, the company changed the denomination of the shares, thus, decreasing the face value of each share from five dollars to one dollar, splitting the shares? In the end, the bank would comprise ten thousand shares, while in the beginning it had only issued one thousand. So, now if you bought 10 shares of the bank’s stock, you would own only one 1,000th of the bank! There are also cases where the face value of the shares is not indicated, but it doesn’t make much difference because the number of shares issued by different companies can vary.”

Alex stated his thoughts rather convincingly. I realized that the method I had chosen to evaluate the bank’s stock was fairly simple-minded, but it left me with more questions than answers, so I wanted to take the chance and, while Alex was with us, get my questions answered once and for all.

“So then, what would your advice be in order to determine which stocks are cheap and which are expensive?”

“This is much more complicated,” Alex took a short breath and then continued. “If you want to compare the general costliness of particular shares, it would be more appropriate to match market capitalization, which is a measure of the value of all the issued shares at the present moment. But, having said that, I don’t mean to imply that doing so is the ideal way to compare companies, because companies vary in size: one is likely to have a larger share in the market than the other, earn more income, higher profits or be indebted on a larger or smaller scale. There are many shades between black and white. To really assess the costliness of particular shares, brokers use ratios like P/E, EV/EBITDA or similar. But explaining that subject is certainly a king-size matter. If you’re interested, you’ll need to read more about it by yourselves.”

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