Bucket Shops

There has been so much publicity given to bucket shops, nearly everybody

is familiar with the term. A broker runs a bucket shop when he sells

stock to his clients on margin and either never buys the stock for their

accounts, or else sells it immediately after buying it. The bucket shop

simply gets your money on the supposition that you are more likely to be

wrong than to be right. Of course, if you take the bucket shop's advice
you surely are likely to be wrong. Bucket shops get their clients into

the very speculative stocks, where there is likely to be a great deal of

fluctuation in the price of the stocks, which gives them frequent

opportunities to sell out their clients.

When the market is going down or when there are many movements up and

down in the price of stocks, the bucket shops make money rapidly, but

occasionally there is a long period when the market is working against

the bucket shops, and unless they have a great deal of money they must


In August, 1921, Stock Exchange stocks started to go up. The upward

movement was very slow but it was continual. Up to the time of this

writing, there has not been a three-point reaction, except in a few

stocks, in all of that time. Without a fluctuating market, the bucket

shop has no chance to clean out its customers. As a consequence, the

bucket shops began to fail in the early part of 1922, and up to the

present writing (April, 1922) there have been more than fifty of these

failures. However, it is not likely that all the bucket shops will be

put out of business. The more successful ones are likely to "weather the


Many laws have been enacted against bucket shops, and we believe some

way will be found to get rid of them at some future time; but we do not

expect that to happen soon, and we warn our readers not to get into

their hands, because if they do not get your money away from you one way

they are likely to get it some other way. The man who runs a bucket shop

usually has no conscience, and it certainly is an unfortunate thing for

anyone to get mixed up with such a man.