auses.

91. #How to avoid Loss by Crises.# Now, these bubbles and crises are
very disastrous things; they lead to the ruin of many people, and there
are few old families who have not lost money at one collapse or another.
The working-classes are often much injured; many are thrown out of
employment, and others, not seeing why their wages should be reduced,
make things worse by strikes, which, after a collapse, cannot possibly
succeed. It is most important, therefore, that all people--working-people,
capitalists, speculators, and all connected with any kind of
business--should remember that #very prosperous trade is sure to be
followed by a collapse and by bad trade#. When, therefore, things look
particularly promising, investors should be unusually careful into what
undertakings they put their money. #As a general rule, it is foolish to
do just what other people are doing, because there are almost sure to be
too many people doing the same thing.# If, for instance, the price of coal
rises high, and coal-owners make large profits, there are certain to be
many people sinking new mines. Such a time is just the worst one for
buying shares in a coal-mine, because, in the course of a few years, there
will be a multitude of new mines opened, the next collapse of trade will
decrease the demand for coal, and then there will be great losses in the
coal business. This is what has happened in the last few years in England,
and the same thing has happened over and over again in other trades. As a
general rule, #the best time to begin a new factory, mine, or business of
any kind, is when the trade is depressed, and when wages and interest are
low#. Mining, building, or other work can then be done more cheaply than
at other times, and the new works will be ready to start just when
business is becoming active and there are few other new works opening.

This rule, indeed, does not apply to the schemers, speculators, or
#promoters#, as they are called, who start so many companies. These
people make it their business to have new schemes and shares to offer
just when people are in a mind to buy, that is, during a bubble or time
of excited trade. They take care to sell their own shares before the
collapse comes, and it is their dupes who bear all the loss. A prudent
man, therefore, would never invest in any new thing during a mania or
bubble; on the contrary, he would sell all property of a doubtful or
speculative value, when its price is hi