(First published in 1963.)
0f what use is the stock market, and to whom? A mathematician or a physicist when seeking the essence of a thing or event, frequently finds the key in an analogy that to others seems merely frivolous. This may be one reason scientists are so widely mistrusted. For example, a "game theory" of anything so momentous as war and defense policy strikes the nonscientist as a bad joke in bad taste, and helps to explain why it has not received the public attention it deserves. We suspect of pulling our leg a social scientist who suggests that the essence of political practice may be discovered by considering it as a branch of show business. Perhaps a less alien, because more frequently advanced, parallel suggests itself as a means to recognizing the chief value of the stock market; that is, horse racing. The stock market's apologies for staying in business are two: It gives business firms, upon which our continued well-being is dependent, a place to raise money on which to start and grow. And it is the instrument by which ownership in, and income from, the means of production may be widely distributed in a manner consistent with beliefs which are the foundation of the existing social order. But as a capital market, and a means to distribute income within a free market economy, few devices can rival in efficiency a well run race track.
Race tracks are numerous and freely accessible to all, irrespective of race, creed or previous condition of servitude. People bring to the track such money as they have been able to set aside or come into, and invest, according to their best lights, on one of several factors in a competition unimpeded by conspiracy or Government intervention. The combined judgment of the auction market, the individual assessment of all players, determines the prize quickly and precisely (less taxes paid by the track and by the individual, plus overhead). Parimutuel tickets are freely negotiable during the race, or in the case of a Daily Double, between races. The player may bet on as many horses in a race as he wishes. Horse and man, the fittest in judgment, training and native capacity, take home the most money. Even the place and show horses and their backers receive enough to more than cover their investment. Information is freely and inexpensively available from the Racing Form, and tout sheets sold outside the stands by the equivalent of customers' men. Also, the track does its part for the Gross National Product. It employs a large work force, most of whom are well paid, or, like the concessionaires, are paid commissions on sales. About the only thing a race track lacks is a public welfare agency, where those who get cleaned out can pick up a free sandwich and train fare home,

HERE we come to the critical difference between the race track and the stock market, which is that the race track offers a player opportunities for the exercise of fewer kinds of desire and fewer of his faculties than does the stock market (or, for that matter, a poker game). The stock market is essentially an auction involving too many separate items and too many customers with too many objects in mind, and representing too many gradations of ambition and information, to be comprehended all at once by a single mind. To be successful, therefore, requires precise definition of aim (income, quick profit, growth, or some combination from among the three), plus a venturesome but prudent spirit attending to it. In return for an abundant assortment of opportunities, it exacts more than most players are able, or willing, to give to it. The successful investor must bring industry and diligence to the search for opportunities; attention to detail for a sound appraisal of them; discipline to avoid being swept away or distracted; boldness to back an unpopular conviction, and decisiveness. The investor should be grounded, at minimum, in science and medicine, trends in education, labor relations and the operations of Government. He should be a sound judge of popular psychology and a canny interpreter of events. For example, in order to have assessed the effect of a recently introduced birth control pill on the manufacturer's earnings, the investor should have been able not only to weigh its competitive advantages, and chances for acceptance by consumers, but also to anticipate a theological debate and its likely effect on Government policy. He must then have been able to guess what conclusion other investors would reach on the same set of facts. This is an indication of why the most efficient way to keep informed these days is by reading newspapers and magazines directed primarily at businessmen. The executive who keeps his nose in the Wall Street Journal, Fortune and Business Week is likely to be better and more accurately informed - money being the unpolitical, unsentimental and cant free thing that it is - than the rest of us.
In short, legally gotten gain from the stock market requires better of a man than does legally-gotten gain from the race course, which is why brokers go to the races to relax. The question that is coming to be heard more frequently, however, is whether the stock market insures that capital will be channeled to uses which will create the most jobs, most efficiently advance technological progress, reward the deserving and the virtuous, increase the standard of living, or other, equally commendable, purpose. It is not a question the stock market should be called upon, or should attempt, to answer. Those who cherish the stock market also wish that its representatives at the New York Stock Exchange would not shill for it in the guise of being midwives to a new social order called People's Capitalism. The notion excites the unwary to expectations of the day in which everyone will be living off the fruits of invested capital, and latrine attendants will be the highest paid class in society as an inducement to keep them working. As reality begins to fall short of expectation, the critics will begin asking again whether some sort of mechanism is not possible that will make sure that the highest rewards go to those who most deserve it. We have been through that argument before, and it was nearly the undoing of the stock market.

Among the translators s Lancelot Andrewes hired on to help render the King James bible was Richard Clarke, a fellow of Christ's college, Cambridge, whose collected sermons were said to be a "continent of mud." This snapped into mind as I read David Brooks' second column for the New York Times op ed page. I suppose it takes awhile to find one's voice in essaying a new column, whatever finding one's voice means; finding one's footing is more like it. The quotation came, incidentally, from Adam Nicolson's splendid book God's Secretaries: The Making of the King James Bible. Of course, I have often seen my enthusiasms pushed off toward oblivion on a leaky raft under tattered sail by people who know the subject better than I do. But this one seems to me to be leak-proof.

I had hope to include in today's entry our adventure with the cricket(s) that got into the house, but that will have to wait until tomorrow. I might even have ready some thoughts on comparing the New York Stock Exchange with a racetrack.