Quotes

When a man is right he wants to get all that is coming to him for being right.

The game taught me the game.

I wasn’t thinking of anything except that I was right--100 per cent right--and that this was a heaven-sent opportunity.

I got so interested in my game and so anxious to anticipate advances and declines in all the active stocks that I got a little book. I put down my observations in it. It was not a record of imaginary transactions such as so many people keep merely to make or lose millions of dollars without getting the swelled head or going to the poorhouse. It was rather a sort of record of my hits and misses, and next to the determination of probable movements I was most interested in verifying whether I had observed accurately; in other words, whether I was right.

I was fifteen when I had my first thousand and laid the cash in front of my mother--all made in the bucket shops in a few months, besides what I had taken home. My mother carried on something awful. She wanted me to put it away in the savings bank out of reach of temptation. She said it was more money than she ever heard any boy of fifteen had made, starting with nothing. She didn’t quite believe it was real money. She used to worry and fret about it.

But I didn’t think of anything except that I could keep on proving my figuring was right. That’s all the fun there is--being right by using your head. If I was right when I tested my convictions with ten shares I would be ten times more right if I traded in a hundred shares. That is all that having more margin meant to me--I was right more emphatically. More courage? No! No difference! If all I have is ten dollars and I risk it, I am much braver than when I risk a million, if I have another million salted away.

I didn’t think of anything except that I could keep on proving my figuring was right. That’s all the fun there is--being right by using your head. If I was right when I tested my convictions with ten shares I would be ten times more right if I traded in a hundred shares. That is all that having more margin meant to me--I was right more emphatically.

I had come down to Florida on a fishing trip. I had been under a pretty severe strain and I needed my holiday. But the moment I saw how far the recovery in prices had gone I no longer felt the need of a vacation. I had not thought of just what I was going to do when I came ashore. But now I knew I must sell stocks. I was right, and I must prove it in my old and only way--by saying it with money. To sell the general list would be a proper, prudent, profitable and even patriotic action.

that was all the confirmation any man needed. My growing paper profit kept reminding me that I was right, hour by hour. Naturally I sold some more stocks. Everything! It was a bear market. They were all going down. The next day was Friday, Washington’s Birthday. I couldn’t stay in Florida and fish because I had put out a very fair short line, for me. I was needed in New York. Who needed me? I did! Palm Beach was too far, too remote. Too much valuable time was lost telegraphing back and forth.

In fact, I always made money when I was sure I was right before I began. What beat me was not having brains enough to stick to my own game--that is, to play the market only when I was satisfied that precedents favored my play. There is a time for all things, but I didn’t know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. No man can always have adequate reasons for buying or selling stocks daily--or sufficient knowledge to make his play an intelligent play.

I sold more stocks. As money got tighter call-money rates went higher and prices of stocks lower. I had foreseen it. At first, my foresight broke me. But now I was right and prospering. However, the real joy was in the consciousness that as a trader I was at last on the right track. I still had much to learn but I knew what to do. No more floundering, no more half-right methods. Tape reading was an important part of the game; so was beginning at the right time; so was sticking to your position. But my greatest discovery was that a man must study general conditions, to size them so as to be able to anticipate probabilities. In short, I had learned that I had to work for my money. I was no longer betting blindly or concerned with mastering the technic of the game, but with earning my successes by hard study and clear thinking. I also found out that nobody was immune from the danger of making sucker plays. And for a sucker play a man gets sucker pay; for the paymaster is on the job and never loses the pay envelope that is coming to you.

The market, you see, had been a fine trading market. I was right; I mean, I was reading it accurately. The opportunity to make millions was there. But I allowed my gratitude to interfere with my play. I tied my own hands. I had to do what Dan Williamson in his kindness wished done. Altogether it was more unsatisfactory than doing business with a relative. Bad business!

Then one day the entire market became quite weak and prices of all stocks began to fall. When I had a profit of at least four points in each and every one of the twelve stocks that I was short of, I knew that I was right. The tape told me it was now safe to be bearish, so I promptly doubled up.

Irrespective of peace or war, I was right in my position on the stock market and in wheat and that is why the unlooked-for event helped. In cotton I based my play on something that might happen outside of the market--that is, I bet on Mr. Wilson’s success in his peace negotiations. It was the German military leaders who made me lose the cotton bet.

It proved that I was right, to the minute.

I was right, to the minute.

With no buying power in the market, the price ought to go down. Thinking the way I did I must find whether I was right or not. As old Pat Hearne used to remark, “You can’t tell till you bet.” Between being bearish and selling there is no need to waste time.

I got so interested in my game and so anxious to anticipate advances and declines in all the active stocks that I got a little book. I put down my observations in it. It was not a record of imaginary transactions such as so many people keep merely to make or lose millions of dollars without getting the swelled head or going to the poorhouse. It was rather a sort of record of my hits and misses, and next to the determination of probable movements I was most interested in verifying whether I had observed accurately; in other words, whether I was right.

always made money when I was sure I was right before I began. What beat me was not having brains enough to stick to my own game--that is, to play the market only when I was satisfied that precedents favored my play.

There I was, short five thousand shares of U.P. on a hunch.

There I was--right and busted!

There I was, back in New York...

There I was, waiting to go on my joyously planned fishing trip and that loss in corn holding me back.

There I was, with more than nine-tenths of my stake, gone where the woodbine twineth--up the spout.

There I was, with more than nine-tenths of my stake, as Jim Fisk used to say, gone where the woodbine twineth--up the spout. I had been a millionaire rather less than a year. My millions I had made by using brains, helped by luck. I had lost them by reversing the process. I sold my two yachts and was decidedly less extravagant in my manner of living.

There I was, once more broke, which was bad, and dead wrong in my trading, which was a sight worse.

I saw Bethlehem Steel climb, every day, higher and higher, as I was sure it would, and yet there I was checking my impulse to run over to Williamson & Brown’s office and buy five hundred shares. I knew I simply had to make my initial operation as nearly a cinch as was humanly possible.

Well, there I was, engaged in doing something against my own judgment.

There I was, a mere kid, who had never before been away from home, flat broke; but I knew there wasn’t anything wrong with me; only with my play. I don’t know whether I make myself plain, but I never lose my temper over the stock market. I never argue with the tape. Getting sore at the market doesn’t get you anywhere.

There I was on the morning of May ninth with nearly fifty thousand dollars in cash and no stocks.

I bought a yacht...

I bought a yacht and made all preparations to leave New York for a cruise in Southern waters. I am really daffy about fishing and this was the time when I was going to fish to my heart’s content from my own yacht, going wherever I wished whenever I felt like it. Everything was ready. I had made a killing in stocks, but at the last moment corn held me back.

After I cleaned up in stocks and was ready to go South on my yacht I found that wheat showed me a handsome profit, but in corn Stratton had run up the price and I had quite a loss.

To get back to myself. After I closed my trade in wheat and corn I went South in my yacht. I cruised about in Florida waters, having a grand old time. The fishing was great. Everything was lovely. I didn’t have a care in the world and I wasn’t looking for any.

I sold my two yachts and was decidedly less extravagant in my manner of living.

I have always considered this the most interesting and most unfortunate of all my experiences as a stock operator. As a lesson it cost me a disproportionately high price. It put off the time of my recovery several years. I was young enough to wait with patience for the strayed millions to come back. But five years is a long time for a man to be poor. Young or old, it is not to be relished. I could do without the yachts a great deal easier than I could without a market to come back on. The greatest opportunity of a lifetime was holding before my very nose the purse I had lost. I could not put out my hand and reach for it.

I did not go about bewailing the descent from millions and yachts to debts and the simple life. I didn’t enjoy the situation, but I did not fill up with self-pity.

I had lived very comfortably, bought an automobile and didn’t limit myself about my expenses. I had to make a stake, but I also had to live while I was doing it. If my position on the market was right I couldn’t spend as much as I made, so that I’d always be saving some. If I was wrong I didn’t make any money and therefore couldn’t spend. As I said, I had saved up a fair-sized roll, and there wasn’t so much money to be made in the five wire houses; so I decided to return to New York.

I had my own automobile and I invited a friend of mine who also was a trader to motor to New York with me.

He saw us come up in the sporty-looking automobile, and as both of us were young and careless--I don’t suppose I looked twenty--he naturally concluded we were a couple of Yale boys. I didn’t tell him we weren’t.

I did not deprive myself of many of the things that a fellow of my age and tastes would want. I had my own automobile and I could not see any sense in skimping on living when I was taking it out of the market. The ticker only stopped Sundays and holidays, which was as it should be.

In the spring of 1906 I was in Atlantic City for a short vacation. I was out of stocks and was thinking only of having a change of air and a nice rest.

Thomas, I always thought, went about his business scientifically. He was a true speculator, a thinker with the vision of a dreamer and the courage of a fighting man--an unusually well-informed man, who knew both the theory and the practice of trading in cotton. He loved to hear and to express ideas and theories and abstractions, and at the same time there was mighty little about the practical side of the cotton market or the psychology of cotton traders that he did not know, for he had been trading for years and had made and lost vast sums.

I do not know when or by whom the word “manipulation” was first used in connection with what really are no more than common merchandising processes applied to the sale in bulk of securities on the Stock Exchange. Rigging the market to facilitate cheap purchases of a stock which it is desired to accumulate is also manipulation. But it is different. It may not be necessary to stoop to illegal practices, but it would be difficult to avoid doing what some would think illegitimate. How are you going to buy a big block of a stock in a bull market without putting up the price on yourself? That would be the problem. How can it be solved? It depends upon so many things that you can’t give a general solution unless you say: possibly by means of very adroit manipulation. For instance? Well, it would depend upon conditions. You can’t give any closer answer than that.

I am profoundly interested in all phases of my business, and of course I learn from the experience of others as well as from my own. But it is very difficult to learn how to manipulate stocks to-day from such yarns as are told of an afternoon in the brokers’ offices after the close. Most of the tricks, devices and expedients of bygone days are obsolete and futile; or illegal and impracticable. Stock Exchange rules and conditions have changed, and the story--even the accurately detailed story--of what Daniel Drew or Jacob Little or Jay Gould could do fifty or seventy-five years ago is scarcely worth listening to. The manipulator to-day has no more need to consider what they did and how they did it than a cadet at West Point need study archery as practiced by the ancients in order to increase his working knowledge of ballistics. On the other hand there is profit in studying the human factors--the ease with which human beings believe what it pleases them to believe; and how they allow themselves--indeed, urge themselves--to be influenced by their cupidity or by the dollar-cost of the average man’s carelessness. Fear and hope remain the same; therefore the study of the psychology of speculators is as valuable as it ever was. Weapons change, but strategy remains strategy, on the New York Stock Exchange as on the battlefield. I think the clearest summing up of the whole thing was expressed by Thomas F. Woodlock when he declared: “The principles of successful stock speculation are based on the supposition that people will continue in the future to make the mistakes that they have made in the past.” In booms, which is when the public is in the market in the greatest numbers, there is never any need of subtlety, so there is no sense of wasting time discussing either manipulation or speculation during such times; it would be like trying to find the difference in raindrops that are falling synchronously on the same roof across the street. The sucker has always tried to get something for nothing, and the appeal in all booms is always frankly to the gambling instinct aroused by cupidity and spurred by a pervasive prosperity. People who look for easy money invariably pay for the privilege of proving conclusively that it cannot be found on this sordid earth. At first, when I listened to the accounts of old-time deals and devices I used to think that people were more gullible in the 1860’s and ’70’s than in the 1900’s. But I was sure to read in the newspapers that very day or the next something about the latest Ponzi or the bust-up of some bucketing broker and about the millions of sucker money gone to join the silent majority of vanished savings.

It took me five years to learn to play the game intelligently enough to make big money when I was right.

There is nothing new in Wall Street. There can't be because speculation is as old as the hills. Whatever happens in the stock market to-day has happened before and will happen again.

The tape does not concern itself with the why and wherefore. It doesn't go into explanations. I didn't ask the tape why when I was fourteen, and I don't ask it to-day, at forty. The reason for what a certain stock does today may not be known for two or three days, or weeks, or months. But what the dickens does that matter? Your business with the tape is now—not tomorrow. The reason can wait.

I always made money when I was sure I was right before I began. What beat me was not having brains enough to stick to my own game—that is, to play the market only when I was satisfied that precedents favored my play.

There is a time for all things, but I didn't know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. No man can always have adequate reasons for buying or selling stocks daily—or sufficient knowledge to make his play an intelligent play.

The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals.

A stock operator has to fight a lot of expensive enemies within himself.

I don't know whether I make myself plain, but I never lose my temper over the stock market. I never argue with the tape. Getting sore at the market doesn't get you anywhere.

It takes a man a long time to learn all the lessons of all his mistakes. They say there are two sides to everything. But there is only one side to the stock market; and it is not the bull side or the bear side, but the right side.

I have been flat broke several times, but my loss has never been a total loss. Otherwise, I wouldn't be here now. I always knew I would have another chance and that I would not make the same mistake a second time. I believed in myself.

Speculation is a hard and trying business, and a speculator must be on the job all the time or he'll soon have no job to be on.

I owe my early success as a trader … not to brains or knowledge, because my mind was untrained and my ignorance was colossal. The game taught me the game. And it didn't spare the rod while teaching.

If somebody had told me my method would not work I nevertheless would have tried it out to make sure for myself, for when I am wrong only one thing convinces me of it, and that is, to lose money. And I am only right when I make money. That is speculating.

Ignorance at twenty-two isn't a structural defect.

If the unusual never happened there would be no difference in people and then there wouldn't be any fun in life. The game would become merely a matter of addition and subtraction. It would make of us a race of bookkeepers with plodding minds. It's the guessing that develops a man's brain power.

When a man is right he wants to get all that is coming to him for being right.

[Brokers] always had the hope of getting away from me what I had taken from them. They regarded my winnings as temporary loans.

The first change I made in my play was in the matter of time. I couldn't wait for the sure thing to come along and then take a point or two out of it. … I had to start much earlier.…In other words, I had to study what was going to happen; to anticipate stock movements…the essential difference between betting on fluctuation and anticipating inevitable advances and declines, between gambling and speculating.

I discovered that although I often was 100 percent right on the market—that is, in my diagnosis of conditions and general trend—I was not making as much money as my market "rightness" entitled me to.

They say you never grow poor taking profits. No, you don't. But neither do you grow rich taking a four-point profit in a bull market. Where I should have made twenty thousand dollars I made two thousand. That was what my conservatism did for me.

Suckers differ among themselves according to the degree of experience. The tyro knows nothing, and everybody, including himself, knows it. … The second-grade sucker knows how to keep from losing his money in some of the ways that get the raw beginner. It is this semisucker rather than the 100 per cent article who is the real all-the-year-round support of the commission houses. He lasts about three and a half years on an average, as compared with a single season of from three to thirty weeks, which is the usual Wall Street life of a first offender. It is naturally the semisucker who is always quoting the famous trading aphorisms and the various rules of the game. He knows all the don'ts that ever fell from the oracular lips of the old stagers—excepting the principal one, which is: Don't be a sucker!

The customer would finish the tale of his perplexity and then ask: "What do you think I ought to do?" Old Turkey would cock his head to one side, contemplate his fellow customer with a fatherly smile, and finally he would say very impressively, "You know, it's a bull market!" Time and again I heard him say, "Well, this is a bull market, you know!" as though he were giving to you a priceless talisman wrapped up in a million-dollar accident insurance policy. And of course I did not get his meaning....

What old Mr. Partridge said did not mean much to me until I began to think about my own numerous failures to make as much money as I ought to when I was so right on the general market. The more I studied the more I realized how wise that old chap was. He had evidently suffered from the same defect in his young days and knew his own human weaknesses. He would not lay himself open to a temptation that experience had taught him was hard to resist and had always proved expensive to him, as it was to me.

I think it was a long step forward in my trading education when I realized at last that when old Mr. Partridge kept on telling the other customers, "Well, you know this is a bull market!" he really meant to tell them that the big money was not in the individual fluctuations but in the main movements—that is, not in reading the tape but in sizing up the entire market and its trend.

After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine—that is, they made no real money out of it. Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance.

A man may see straight and clearly and yet become impatient or doubtful when the market takes its time about doing as he figured it must do. That is why so many men in Wall Street, who are not at all in the sucker class, not even in the third grade, nevertheless lose money. The market does not beat them. They beat themselves, because though they have brains they cannot sit tight.

Disregarding the big swing and trying to jump in and out was fatal to me. Nobody can catch all the fluctuations. In a bull market your game is to buy and hold until you believe that the bull market is near its end. To do this you must study general conditions and not tips or special factors affecting individual stocks.

One of the most helpful things that anybody can learn is to give up trying to catch the last eighth—or the first. These two are the most expensive eighths in the world. They have cost stock traders, in the aggregate, enough millions of dollars to build a concrete highway across the continent.

Without faith in his own judgment no man can go very far in this game. That is about all I have learned—to study general conditions, to take a position and stick to it. I can wait without a twinge of impatience. I can see a setback without being shaken, knowing that it is only temporary.

If I learned all this so slowly it was because I learned by my mistakes, and some time always elapses between making a mistake and realizing it, and more time between realizing it and exactly determining it.

It isn't a hunch but the subconscious mind, which is the creative mind, at work. That is the mind which makes artists do things without their knowing how they came to do them. Perhaps with me it was the cumulative effect of a lot of little things individually insignificant but collectively powerful.

I began to think of basic conditions instead of individual stocks. I promoted myself to a higher grade in the hard school of speculation. It was a long and difficult step to take.

People don't seem to grasp easily the fundamentals of stock trading.… When I am bearish and I sell a stock, each sale must be at a lower level than the previous sale. When I am buying, the reverse is true. I must buy on a rising scale. I don't buy long stock on a scale down, I buy on a scale up.

Remember that stocks are never too high for you to begin buying or too low to begin selling. But after the initial transaction, don't make a second unless the first shows you a profit. Wait and watch.

I was utterly free of speculative prejudices. The bear side doesn't appeal to me any more than the bull side, or vice versa. My one steadfast prejudice is against being wrong.

I never argue with the tape. To be angry at the market because it unexpectedly or even illogically goes against you is like getting mad at your lungs because you have pneumonia.

I have always played a lone hand. … It is the way my mind works. I have to do my own seeing and my own thinking. But I can tell you after the market began to go my way I felt for the first time in my life that I had allies—the strongest and truest in the world: underlying conditions. They were helping me with all their might.

It was an old trading theory of mine that when a stock crosses 100 or 200 or 300 for the first time the price does not stop at the even figure but goes a good deal higher, so that if you buy it as soon as it crosses the line it is almost certain to show you a profit. Timid people don't like to buy a stock at a new high record. But I had the history of such movements to guide me.

The only thing to do when a man is wrong is to be right by ceasing to be wrong.

My greatest discovery was that a man must study general conditions, to size them so as to be able to anticipate probabilities. In short I had learned that I had to work for my money. I was no longer betting blindly or concerned with mastering the technique of the game, but with earning my successes by hard study and clear thinking.

My biggest winnings were not in dollars but in the intangibles: I had learned what a man must do in order to make big money; I was permanently out of the gambler class; I had at last learned to trade intelligently in a big way. It as a day of days for me.

If a man is both wise and lucky, he will not make the same mistake twice. But he will make any one of the ten thousand brothers or cousins of the original. The Mistake family is so large that there is always one of them around when you want to see what you can do in the fool-play line.

Losing money is the least of my troubles. A loss never bothers me after I take it. I forget it overnight. But being wrong—not taking the loss—that is what does the damage to the pocketbook and to the soul.

Money creates needs or encourages their multiplication. I mean that after a man makes money in the stock market he very quickly loses the habit of not spending. But after he loses his money it takes him a long time to lose the habit of spending.

I would rather play commodities than stocks. There is no question about their greater legitimacy. … It partakes more of the nature of a commercial venture than trading in stocks does. A man can approach it as he might any mercantile problem. It may be possible to use fictitious arguments for or against a certain trend in a commodity market; but success will be only temporary, for in the end the facts are bound to prevail, so that a trader gets dividends on study and observation, as he does in a regular business.

In the long run commodity prices are governed but by one law—the economic law of demand and supply. The business of the trader in commodities is simply to get facts about the demand and the supply, present and prospective. He does not indulge in guesses about a dozen things as he does in stocks.

Prices, like everything else, move along the line of least resistance. They will do whatever comes easiest.

The trend has been established before the news is published, and in bull markets bear items are ignored and bull news exaggerated, and vice versa.

A man has to guard against many things, and most of all against himself—that is, against human nature. That is the reason why I say that the man who is right always has two forces working in his favor—basic conditions and the men who are wrong.

In a narrow market, when prices are not getting anywhere to speak of but move within a narrow range, there is no sense in trying to anticipate what the next big movement is going to be—up or down. The thing to do is to watch the market, read the tape to determine the limits of the get-nowhere prices, and make up your mind that you will not take an interest until the price breaks through the limit in either direction. A speculator must concern himself with making money out of the market and not with insisting that the tape must agree with him. Never argue with it or ask it for reasons or explanations. Stock-market post-mortems don't pay dividends.

It is surprising how many experienced traders there are who look incredulous when I tell them that when I buy stocks for a rise I like to pay top prices and when I sell I must sell low or not at all. … [A trader] should accumulate his line on the way up. Let him buy one-fifth of his full line. If that does not show him a profit he must not increase his holdings because he has obviously begun wrong; he is wrong temporarily and there is no profit in being wrong at any time.

It is simple arithmetic to prove that it is a wise thing to have the big bet down only when you win, and when you lose to lose only a small exploratory bet.…If a man trades in the way I have described, he will always be in the profitable position of being able to cash in on the big bet.

The average speculator has arrayed against him his own nature. The weaknesses that all men are prone to are fatal to success in speculation—usually those very weaknesses that make him likable to his fellows or that he himself particularly guards against in those other ventures of his where they are not nearly so dangerous as when he is trading.

The speculator's chief enemies are always boring from within. It is inseparable from human nature to hope and to fear. In speculation when the market goes against you hope that every day will be the last day—and you lose more than you should had you not listened to hope—the same ally that is so potent a success-bringer to empire builders and pioneers, big and little. And when the market goes your way you become fearful that the next day will take away your profit, and you get out—too soon. Fear keeps you from making as much money as you ought to. The successful trader has to fight these two deep-seated instincts. He has to reverse what you might call his natural impulses. Instead of hoping he must fear; instead of fearing he must hope. He must fear that his loss may develop into a much bigger loss, and hope that his profit may become a big profit. It is absolutely wrong to gamble in stocks the way the average man does.

I have been in the speculative game ever since I was fourteen. It is all I have ever done. I think I know what I am talking about. And the conclusion that I have reached after nearly thirty years of constant trading, both on a shoestring and with millions of dollars back of me, is this: A man may beat a stock or a group at a certain time, but no man living can beat the stock market!

A trader gets to play the game as the professional billiard player does—that is, he looks far ahead instead of considering the particular shot before him. It gets to be an instinct to play for position.

That is one trouble about trading on a large scale. You cannot sneak out as you can when you pike along. You cannot always sell out when you wish or when you think it wise. You have to get out when you can; when you have a market that will absorb your entire line. Failure to grasp the opportunity to get out may cost you millions. You cannot hesitate. If you do you are lost.

A man cannot be convinced against his own convictions, but he can be talked into a state of uncertainty and indecision, which is even worse, for that means that he cannot trade with confidence and comfort.

I have done nothing in my life but trade in stocks and commodities. I naturally think that if it is wrong to be bearish it must be right to be a bull. And if it is right to be a bull it is imperative to buy. As my old Palm Beach friend said Pat Hearne used to say, "You can't tell till you bet!"

I did precisely the wrong thing. The cotton showed me a loss and I kept it. The wheat showed me a profit and I sold it out. It was an utterly foolish play….Of all speculative blunders there are few greater than trying to average a losing game.…Always sell what shows you a loss and keep what shows you a profit.

It cost me millions to learn that another dangerous enemy to a trader is his susceptibility to the urgings of a magnetic personality when plausibly expressed by a brilliant mind. It has always seemed to me, however, that I might have learned my lesson quite as well if the cost had been only one million. But Fate does not always let you fix the tuition fee. She delivers the educational wallop and presents her own bill, knowing you have to pay it, no matter what the amount might be.

The hope of making the stock market pay your bill is one of the most prolific sources of loss in Wall Street. … There isn't a man in Wall Street who has not lost money trying to make the market pay for an automobile or a bracelet or a motor boat or a painting. I could build a huge hospital with the birthday presents that the tight-fisted stock market has refused to pay for. In fact, of all hoodoos in Wall Street I think the resolve to induce the stock market to act as a fairy godmother is the busiest and the most persistent.

It was improper and unwise for me as a speculator to allow myself to be influenced by any consideration to act against my own judgment. Noblesse oblige—but not in the stock market, because the tape is not chivalrous and moreover does not reward loyalty.

I was very lucky. I was rampantly bullish in a wild bull market [in 1916]. Things were certainly coming my way so that there wasn't anything to do but to make money. It made me remember a saying of the late H. H. Rogers of the Standard Oil Company, to the effect that there were times when a man could no more help making money than he could help getting wet if he went out in a rainstorm without an umbrella.

Nowhere does history indulge in repetitions so often or so uniformly as in Wall Street. When you read contemporary accounts of booms or panics the one thing that strikes you most forcibly is how little either stock speculation or stock speculators to-day differ from yesterday. The game does not change and neither does human nature.

A market does not culminate in one grand blaze of glory. Neither does it end with a sudden reversal of form. A market can and does often cease to be a bull market long before prices generally begin to break. My long expected warning came to me when I noticed that, one after another, those stocks which had been the leaders of the market reacted several points from the top and—for the first time in many months—did not come back. Their race evidently was run.

It is enough for the experienced trader to perceive that something is wrong. He must not expect the tape to become a lecturer. His job is to listen for it to say "Get out!" and not wait for it to submit a legal brief for approval.

One day the entire market became quite weak and prices of all stocks began to fall. When I had a profit of at least four points in each and every one of the twelve stocks that I was short of, I knew that I was right. The tape told me it was now safe to be bearish, so I promptly doubled up.... After I doubled up, I didn't make another trade for a long time.

Never try to sell at the top. It isn't wise. Sell after a reaction if there is no rally.

In a bear market it is always wise to cover if complete demoralization suddenly develops. That is the only way, if you swing a good-sized line, of turning a big paper profit into real money.

We ran smack into a long moneyless period; four mighty lean years....As Billy Henriquez once said, "It was the kind of market in which not even a skunk could make a scent."

I have come to feel that it is as necessary to know how to read myself as to know how to read the tape.

It has always seemed to me the height of damfoolishness to trade on tips.… I sometimes think that tip-takers are like drunkards. There are some who can't resist the craving and always look forward to those jags which they consider indispensable to their happiness. It is so easy to open your ears and let the tip in. To be told precisely what to do to be happy and in such a manner that you can easily obey is the next nicest thing to being happy.... It is not so much greed made blind by eagerness as it is hope bandaged by the unwillingness to do any thinking.

Old Baron Rothschild's recipe for wealth winning applies with greater force than ever to speculation. Somebody asked him if making money in the Bourse was not a very difficult matter and he replied that, on the contrary, he thought it was very easy. … "I will tell you my secret if you wish. It is this: I never buy at the bottom and I always sell too soon."

The training of a stock trader is like a medical education. The physician has to spend long years learning anatomy, physiology, materia medica and collateral subjects by the dozen. He learns the theory and then proceeds to devote his life to the practice. He observes and classifies all sorts of pathological phenomena. He learns to diagnose. If his diagnosis is correct—and that depends upon the accuracy of his observation—he ought to do pretty well in his prognosis, always keeping in mind, of course, that human fallibility and the utterly unforeseen will keep him from scoring one-hundred per cent of bull's-eyes. And then, as he gains in experience he learns not only to do the right thing but to do it instantly, so that many people will think he does it instinctively. It really isn't automatism. It is that he has diagnosed the case according to his observations of such cases during a period of many years; and, naturally, after he has diagnosed it, he can only treat it in the way that experience has taught him is the proper treatment. You can transmit knowledge—that is, your particular collection of card-indexed facts—but not your experience. A man may know what to do and lose money—if he doesn't do it quickly enough.

Observation, experience, memory and mathematics—these are what the successful trader must depend on. … He must bet always on probabilities—that is, try to anticipate them.

I have found that experience is apt to be a steady dividend payer in this game and that observation gives you the best tips of all. The behavior of a certain stock is all you need at times.

I never buy a stock even in a bull market, if it doesn't act as it ought to act in that kind of market.

An old broker once said to me: "If I am walking along a railroad track and I see a train coming toward me at sixty miles an hour, do I keep walking on the ties? Friend, I side-step. And I do not even pat myself on the back for being so wise and prudent."

Experiences had taught me to beware of buying a stock that refuses to follow the group-leader.

It was not difficult to be both fearless and patient. A speculator must have faith in himself and in his judgment. The late Dickson G. Watts…says that courage in a speculator is merely confidence to act on the decision of his mind. With me, I cannot fear to be wrong because I never think I'm wrong until I am proven wrong. In fact, I am uncomfortable unless I am capitalizing my experience.

The study of the psychology of speculators is as valuable as it ever was. I think the clearest summing up of the whole thing was expressed by Thomas F. Woodlock when he declared: "The principles of successful stock speculation are based on the supposition that people will continue in the future to make the mistakes that they have made in the past."

In booms, which is when the public is in the market in the greatest numbers, there is never any need of subtlety, so there is no sense of wasting time discussing either manipulation or speculation during such times; it would be like trying to find the differences in raindrops that are falling synchronously on the same roof across the street.

People who look for easy money invariably pay for the privilege of proving conclusively that it cannot be found on this sordid earth. At first, when I listened to the accounts of old-time deals and devices I used to think that people were more gullible in the 1860s and 70's than in the 1900's. But I was sure to read in the newspapers that very day or the next something about the latest Ponzi or the bust-up of some bucketing broker and about the millions of sucker money gone to join the silent majority of vanished savings.

A brilliant operator, James R. Keene!…That he did not argue with the tape is plain. He was utterly fearless but never reckless. He could and did turn in a twinkling, if he found he was wrong.

There is no question that advertising is an art, and manipulation is the art of advertising through the medium of the tape. The tape should tell the story the manipulator wishes its readers to see.

It is well to remember a rule of manipulation, a rule that Keene and his able predecessors well knew. It is this: Stocks are manipulated to the highest point possible and then sold to the public on the way down.

The first step in a bull movement in a stock is to advertise the fact that there is a bull movement on ... to make the stock active and strong. After all is said and done, the greatest publicity agent in the wide world is the ticker, and by far the best advertising medium is the tape.

It is always well to make it plain to the traders—and to the public also—that there is a demand for the stock on the way down. That tends to check both reckless short selling by the professionals and liquidation by frightened holders—which is the selling you usually see when a stock gets weaker and weaker.

The big money in booms is always made first by the public—on paper. And it remains on paper.

[In the boom of 1915] it got so that all a man had to do was to say that he had a friend who was a friend of a member of one of the Allied commissions and he would be offered all the capital needed to carry out the contracts he had not yet secured. I used to hear incredible stories of clerks becoming presidents of companies doing a business of millions of dollars on money borrowed from trusting trust companies, and of contracts that left a trail of profits as they passed from man to man. A flood of gold was pouring into this country from Europe and the banks had to find ways of impounding it.

The way business was done might have been regarded with misgivings by the old, but there didn't seem to be so many of them about. The fashion for gray-haired presidents of banks was all very well in tranquil times, but youth was the chief qualification in these strenuous times. The banks certainly did make enormous profits.

Manipulation of some sort enters into practically all advances in individual stocks and ... such advances are engineered by insiders with one object in view and one only and that is to sell at the best profit possible.

The public ought always to keep in mind the elementals of stock trading. When a stock is going up no elaborate explanation is needed as to why it is going up. It takes continuous buying to make a stock keep on going up. As long as it does so, with only small and natural reactions from time to time, it is a pretty safe proposition to trail along with it. But if after a long steady rise a stock turns and gradually begins to go down, with only occasional small rallies, it is obvious that the line of least resistance has changed from upward to downward. Such being the case why should any one ask for explanations? There are probably very good reasons why it should go down, but these reasons are known only to a few people who either keep those reasons to themselves, or else actually tell the public that the stock is cheap. The nature of the game as it is played is such that the public should realize that the truth cannot be told by the few who know.

I have told you this story in such detail because it concerned a remarkable man who made me buy what I did not wish to buy. He was the first man who did that to me. There never should have been a second, but there was. You can never bank on there being but one remarkable salesman in the world or on complete immunization from the influence of personality. (chapter 12)

Wall Street professionals know that acting on "inside" tips will break a man more quickly than famine, pestilence, crop failures, political readjustments or what might be called normal accidents.

If a man in position to know wishes to make the public accept his statements of fact or even his opinions, let him sign his name.

A man in that part of the country measured his respectability and standing in the community by his holdings of it.

But today, a man is trading in everything; almost every industry in the world is represented.

Getting angry doesn't get a man anywhere.

But a man could do a great deal to arouse interest in any stock with four millions in cash.

It got so that all a man had to do was to say that he had a friend who was a friend of a member of one of the Allied commissions and he would be offered all the capital needed to carry out the contracts he had not yet secured.

A manipulator disposes of a block of stock to the public--that is, to speculators.

It isn't good business for a man to act against the teachings of experience and against common sense.

I suppose Prentiss shares the delusion of thousands of outsiders who think a manipulator can do anything.

I constitutionally dislike to identify myself with enterprises in the success of which I cannot feel confidence, but I also think a man owes something to his friends and acquaintances.

After I began my operations in it there never was a time when a man could not buy or sell the stock freely; I mean by this, buy or sell a reasonable amount without causing over-violent fluctuations in the price.

My problems as a manipulator, after all, are the same that confront me as an operator.

It is perfectly astonishing how much stock a man can get rid of on a decline.

The selling pressure is not apt to be strong where a man has as much speculatively held stock sewed up--in calls--as I insist on having.

Suppose he has heard of me as a man who knows the game.

The negotiations for the sale are in charge of a man.

So it is not alone the sale at a good price but the character of the distribution that a manipulator must consider.

The traders to a man laughed--at his stupidity in thinking them so simple--and they cheerfully sold him all the stock he wanted to buy.

But when he loses money the other fellow was a crook; a manipulator!

There is little question that a manipulator necessarily seeks his buyers among speculators.

A manipulator to-day, for instance, has not only to make a stock look strong but also to make it be strong.

He was too shrewd a man not to know that Keene was no bleating lamb.

It is not difficult for a manipulator to be misunderstood by his associates.

I remember Jacob Little's name because I thought it was a funny name for a man to have.

When the traders--and the customers of the commission houses who had listened to the uncontradicted bull dope on TT--saw that the rise in Tropical synchronised with heavy selling and a sharp break in Equatorial, they naturally concluded that the strength of TT was merely a smoke-screen--a manipulated advance obviously designed to facilitate inside liquidation in Equatorial Commercial, which was largest holder of TT stock.

That they were bound to fail was as certain as that a man is bound to smash himself if he jumps from the roof of a twenty-story building without a parachute.

Now, ordinarily a man ought to be able to buy or sell a million bushels of wheat within a range of ¼ cent.

A man can have great mathematical ability and an unusual power of accurate observation and yet fail in speculation unless he also possesses the experience and the memory.

A man may know what to do and lose money--if he doesn't do it quickly enough.

Experience has taught me that a man can always find an opportunity to make his profits real and that this opportunity usually comes at the end of the move.

I could sell any amount of stock in that market; and, of course, when a man is carrying his full line of stocks, he must be on the watch for an opportunity to change his paper profit into actual cash.

It struck me that if the president was that kind of a man he would scarcely be likely to insist upon having or rewarding economical assistants.

But the wisest investor I ever knew was a man who began by being a Pennsylvania Dutchman and followed it up by coming to Wall Street and seeing a great deal of Russell Sage.

To be told precisely what to do to be happy in such a manner that you can easily obey is the next nicest thing to being happy--which is a mighty long first step toward the fulfilment of your heart's desire.

I've never before told a woman--or a man, for that matter--to buy anything in my life.

I have in mind certain hazards of speculation that from time to time remind a man that no profit should be counted safe until it is deposited in your bank to your credit.

Normal business hazards are no worse than the risks a man runs when he goes out of his house into the street or sets out on a railroad journey.

The reason I did this was not alone the fear that the stock market might take it away from me, but because I knew that a man will spend anything he can lay his hands on.

It shows you how quickly a man may lose big money on a moderate line.

As I said before, a man does not have to marry one side of the market till death do them part.

Even in a bear market a man cannot always cover one hundred and twenty thousand shares of stock without putting up the price on himself.

A man does not swear eternal allegiance to either the bull or the bear side.

Rogers, of the Standard Oil Company, to the effect that there were times when a man could no more help making money than he could help getting wet if he went out in a rainstorm without an umbrella.

Every once in a while a man gets a crack like that in the solar plexus, probably that he may be reminded of the sad fact that no human being can be so uniformly right on the market as to be beyond the reach of unprofitable accidents.

But it all wore off presently and I cannot tell you how intense was my feeling of relief to know that I wasn't going to be harried any more by people who didn't understand how a man must give his entire mind to his business--if he wishes to succeed in stock speculation.

But by far the worst thing about it was the tendency it had to make a man a little less inclined to permit himself human feelings in the ticker district.

But five years is a long time for a man to be poor.

It was proper for me as a man to act the way I did in Dan Williamson's office, but it was improper and unwise for me as a speculator to allow myself to be influenced by any consideration to act against my own judgment.

The money a man loses is nothing; he can make it up.

A man has to have experience and he has to pay for it.

When a man does for you what Dan Williamson did for me you can't say anything but "Thank you"--no matter what your market views may be.

It was a good active market, broad enough for a man not to have to stick to one or two specialties.

By letting a man have his say in full you are able to decide at once.

A man must know himself thoroughly if he is going to make a good job out of trading in the speculative markets.

What does a man do when he sets out to make the stock market pay for a sudden need?

There isn't a man in Wall Street who has not lost money trying to make the market pay for an automobile or a bracelet or a motor boat or a painting.

I found out that a man from Chicago had bought it the week before.

"It would look particularly well on a man of my inches," replied Bob, drawing himself up.

To learn that a man can make foolish plays for no reason whatever was a valuable lesson.

A man cannot be convinced against his own convictions, but he can be talked into a state of uncertainty and indecision, which is even worse, for that means that he cannot trade with confidence and comfort.

A man can excuse his mistakes only by capitalising them to his subsequent profit.

I ought to have been on my guard at this particular time because not long before that I had had an experience that proved how easily a man may be talked into doing something against his judgment and even against his wishes.

I have learned that a man may possess an original mind and a lifelong habit of independent thinking and withal be vulnerable to attacks by a persuasive personality.

In Wall Street, and, for that matter, everywhere else, any accident that makes big money for a man is regarded with suspicion.

A man must be on the lookout so alertly that when his chance sticks in its head at his door he must grab it.

I suppose it is the contagion of example that makes a man do something because everybody around him is doing the same thing.

It is the way a man looks at things that makes or loses money for him in the speculative markets.

A man can't spend years at one thing and not acquire a habitual attitude towards it quite unlike that of the average beginner.

A man may beat a horse race, but he cannot beat horse racing.

A man may make money out of individual deals in cotton or grain, but no man can beat the cotton market or the grain market.

And the conclusion that I have reached after nearly thirty years of constant trading, both on a shoestring and with millions of dollars back of me, is this: A man may beat a stock or a group at a certain time, but no man living can beat the stock market!

If a man trades in the way I have described, he will always be in the profitable position of being able to cash in on the big bet.

It always pays a man to be right at the right time.

When a man makes his play in a commodity market he must not permit himself set opinions.

But in actual practice a man has to guard against many things, and most of all against himself--that is, against human nature.

A man ought not to be led into trading by tokens.

It is therefore at the very inception of the movement that a man needs to know whether to buy or to sell.

Such a man will, or ought to, know whether it is a bull or a bear market, and if he knows that he knows whether to buy or to sell.

The trend is evident to a man who has an open mind and reasonably clear sight, for it is never wise for a speculator to fit his facts to his theories.

A man can approach it as he might any mercantile problem.

I mean that after a man makes money in the stock market he very quickly loses the habit of not spending.

As a rule a man adapts himself to conditions so quickly that he loses the perspective.

Of course, if a man is both wise and lucky, he will not make the same mistake twice.

I had learned what a man must do in order to make big money; I was permanently out of the gambler class; I had at last learned to trade intelligently in a big way.

This is a case where a man has to work for the benefit of all.

He was a man, J.

And for a sucker play a man gets sucker pay; for the paymaster is on the job and never loses the pay envelope that is coming to you.

But my greatest discovery was that a man must study general conditions, to size them so as to be able to anticipate probabilities.

Perhaps a manufacturer of securities or a promoter of new enterprises can afford to indulge in hope-jags.

In this business a man has to think of both theory and practice.

I was now playing safe--because after being down a man enjoys being up, even if he doesn't quite make the top.

If instead it reacted it meant that precedents had failed me and I was wrong; and the only thing to do when a man is wrong is to be right by ceasing to be wrong.

If a man didn't make mistakes he'd own the world in a month.

In certain stocks a short line is dangerous after a man sells more than a certain percentage of the capital stock, the amount depending on how, where and by whom the stock is held.

Also, by thinking of the swing a man was not limited in his trading.

Old man Partridge's insistence on the vital importance of being continuously bullish in a bull market doubtless made my mind dwell on the need above all other things of determining the kind of market a man is trading in.

But what I meant to say was this: Suppose a man's line is five hundred shares of stock.

A man can pyramid and make big money that he couldn't make if he didn't pyramid; of course.

A man studies conditions, plans his operations carefully and proceeds to act.

After a man has been in Wall Street as long as I have he is grateful for anybody who feels sorry for him.

One day a man who knew Deacon White rushed into the office all excited and said, "Deacon, you told me if I ever got any good information to come to you at once with it and if you used it you'd carry me for a few hundred shares." He paused for breath and for confirmation.

I never hesitate to tell a man that I am bullish or bearish.

A low price for a man to pay for not having the courage of his own convictions!

A man was talking to Jim Fisk a little before Black Friday, giving ten good reasons why gold ought to go down for keeps.

The reason is that a man may see straight and clearly and yet become impatient or doubtful when the market takes its time about doing as he figured it must do.

I was acquiring the confidence that comes to a man from a professionally dispassionate attitude toward his own method of providing bread and butter for himself.

And all a man needs to know to make money is to appraise conditions.

He talked pretty big for a man in his position.

By the time a man gets the quotation here and he hands in an order and it's telegraphed to New York, some valuable time has gone.

It isn't that they are crooked or careless, but when a man gives an order to buy at the market he never knows what that stock is going to cost him until he gets a report from the brokers.

When a man is right he wants to get all that is coming to him for being right.

It's the guessing that develops a man's brain power.

A man must believe in himself and his judgment if he expects to make a living at this game.

I do not mean by this that a man should not limit his losses when he is wrong.

It takes a man a long time to learn all the lessons of all his mistakes.

A man could bet on Bryan and buy stocks and make sure money.

He began to tell me how much safer the stock-market game was, and how much some of their customers made--you'd have sworn it was a regular broker who actually bought and sold your stocks on the Exchange--and how if a man only traded heavy he could make enough to satisfy anybody.

"That's only hearsay," I said. "Can you find out positively if it's running, and also how heavy they'll really let a man trade?"

Don't Be A Sucker, Larry

The Main Sucker Class:

"There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. That is precisely what beats so many men in Wall Street who are very far from being in the main sucker class."

Three Hundred Suckers (Dolan's Warning):

"I make my money coppering suckers' bets, and yeh don't belong here."

"But more of that would make me a sucker, now that I know who yeh are."

Chapter 4 - The Permanent Sucker

The Ticker-Hound Sucker:

"He figured that I was a permanent sucker, the ticker-hound kind that always plays and always loses"

Trimming Suckers:

"Their specialty was trimming suckers who wanted to get rich quick."

"Since suckers always lose money when they gamble in stocks--they never really speculate"

Catching Suckers Both Ways:

"There is nothing so nice as catching the suckers both ways"

Chapter 5 - THE SUCKER TAXONOMY (Complete Classification System)

Introduction:

"suckers differ among themselves according to the degree of experience"

The Tyro Sucker (Grade 1):

"The tyro knows nothing, and everybody, including himself, knows it."

The Second-Grade Sucker:

"He is the experienced sucker, who has studied--not the market itself but a few remarks about the market made by a still higher grade of suckers."

"The second-grade sucker knows how to keep from losing his money in some of the ways that get the raw beginner."

The Semisucker:

"It is this semisucker rather than the 100 per cent article who is the real all-the-year-round support of the commission houses."

"It is naturally the semisucker who is always quoting the famous trading aphorisms and the various rules of the game."

"He knows all the don'ts that ever fell from the oracular lips of the old stagers--excepting the principal one, which is: Don't be a sucker!"

"This semisucker is the type that thinks he has cut his wisdom teeth because he loves to buy on declines."

"In big bull markets the plain unadulterated sucker, utterly ignorant of rules and precedents, buys blindly because he hopes blindly."

"Then there is the semisucker public that thinks it is sophisticated."

"And now here is the cream of the whole thing: The semisucker bears in mind his own or somebody else's losses through reckless plunging."

"Of course, every now and then, like every class of sucker, he makes money."

"It is one of his protective measures against being a sucker."

The Careful Mike Sucker:

"But the Careful Mike sucker does what I did when I thought I was playing the game intelligently--according to the intelligence of others."

The Third Grade Sucker:

"For instance, there are three kinds of suckers: the tyro, the semisucker and the experienced sucker--the last being the most hopeless of the three."

"That is why so many men in Wall Street, who are not at all in the sucker class, not even in the third grade, nevertheless lose money."

Chapter 6 - Ed Harding's Warning

Don't Be a Sucker:

"For the love of Mike, don't be a sucker."

"It isn't a case of margin, but of being a plain sucker."

Chapter 16 - Sucker Tip-Takers

On Tip-Takers:

"Now what's the use of talking about sucker tip-takers?"

"The suckers had swallowed other hooks."

Later Chapters - Various Sucker Observations

Sucker Play & Sucker Pay:

"And for a sucker play a man gets sucker pay; for the paymaster is on the job and never loses the pay envelope that is coming to you."

"I was not guilty of a typical sucker play."

"If that isn't a supersucker play, what is?"

Wishful Thinking:

"The big men of the Street are as prone to be wishful thinkers as the politicians or the plain suckers."

The Sucker Appeal:

"The sucker has always tried to get something for nothing, and the appeal in all booms is always frankly to the gambling instinct aroused by cupidity and spurred by a pervasive prosperity."

Sucker Money:

"But I was sure to read in the newspapers that very day or the next something about the latest Ponzi or the bust-up of some bucketing broker and about the millions of sucker money gone to join the silent majority of vanished savings."

Wall Street Insiders as Suckers:

"But the suckers in Wall Street are not all outsiders."

Tip Propagation:

"Well, your intimate friends to whom you gave the tip passed it on to their friends after they had bought their lines, and the third stratum of tip-takers planned to supply the fourth, fifth and possibly sixth strata of suckers, so that when I finally came to do some selling I'd find myself anticipated by a few thousands of wise speculators."

The Bull Market Suckers:

"But from that time on to the very outbreak of war in Europe I never was on the right side long enough to make any real money out of that wonderful bull market--that historic bull market that made so many sucker millionaires and elevator-boy capitalists."

"I sure was a sucker not to use the four millions to make money for them, wasn't I?"

If a stock doesn’t act right don’t touch it; because, being unable to tell precisely what is wrong, you cannot tell which way it is going. No diagnosis, no prognosis. No prognosis, no profit.

It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine--that is, they made no real money out of it. Men who can both be right and sit tight are uncommon.

The game taught me the game.

The speculators deadly enemies are: Ignorance, greed, fear and hope. All the statute books in the world and all the rules of all the Exchanges on earth cannot eliminate these from the human animal.

Fear and hope remain the same; therefore the study of the psychology of speculators is as valuable as it ever was. Weapons change, but strategy remains strategy, on the New York Stock Exchange as on the battlefield. I think the clearest summing up of the whole thing was expressed by Thomas F. Woodlock when he declared: “The principles of successful stock speculation are based on the supposition that people will continue in the future to make the mistakes that they have made in the past.”

Being broke is a very efficient educational agency.

It takes a man a long time to learn all the lessons of all of his mistakes. They say there are two sides to everything. But there is only one side to the stock market; and it is not the bull side or the bear side, but the right side. It took me longer to get that general principle fixed firmly in my mind than it did most of the more technical phases of the game of stock speculation.

One of the most helpful things that any body can learn is to give up trying to catch the last eighth - or the first. These two are the most expensive eighths in the world.

The public always wants to be told.

It never was my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight!

The principles of successful stock speculation are based on the supposition that people will continue in the future to make the mistakes that they have made in the past.

The big money in booms is always made first by the public - on paper. And it remains on paper.

A stock operator has to fight a lot of expensive enemies within himself.

If a man didn't make mistakes he'd own the world in a month.But if he didn't profit by his mistakes he wouldn't own a blessed thing.

Nowhere does history indulge in repetitions so often or so uniformly as in Wall Street. When you read contemporary accounts of booms or panics, the one thing that strikes you most forcibly is how little either stock speculation or stock speculators today differ from yesterday. The game does not change and neither does human nature.

When you find that it fails to respond adequately to your buying you don't need any better tip to sell.

When it comes to selling stocks, it is plain that nobody can sell unless somebody wants those stocks.If you operate on a large scale you will have to bear that in mind all the time.

Nowhere does history indulge in repetitions so often or so uniformly as in Wall Street.

The speculator is not an investor.

TIPS! How people want tips! They crave not only to get them but to give them.

Edwin Lefevre

People, Giving, Want

That is one trouble about trading on a large scale.You cannot sneak out as you can when you pike along.

As I have said a thousand times, no manipulation can put stocks down and keep them down.

A battle goes on in the stock market and the tape is your telescope. You can depend upon it seven out of ten cases.

There is no question that advertising is an art, and manipulation is the art of advertising through the medium of the tape.

In fact, of all hoodoos in Wall Street I think the resolve to induce the stock market to act as a fairy godmother is the busiest and most persistent.

battle or not?

I have heard of people who amuse themselves conducting imaginary operations in the stock market to prove with imaginary dollars how right they are. Sometimes these ghost gamblers make millions. It is very easy to be a plunger that way. It is like the old story of the man who was going to fight a duel the next day. His second asked him, “Are you a good shot?” “Well,” said the duelist, “I can snap the stem of a wineglass at twenty paces,” and he looked modest. “That’s all very well,” said the unimpressed second. “But can you snap the stem of the wineglass while the wineglass is pointing a loaded pistol straight at your heart?” With me I must back my opinions with my money. My losses have taught me that I must not begin to advance until I am sure I shall not have to retreat. But if I cannot advance I do not move at all. I do not mean by this that a man should not limit his losses when he is wrong. He should. But that should not breed indecision. All my life I have made mistakes, but in losing money I have gained experience and accumulated a lot of valuable don’ts. I have been flat broke several times, but my loss has never been a total loss. Otherwise, I wouldn’t be here now. I always knew I would have another chance and that I would not make the same mistake a second time. I believed in myself. A man must believe in himself and his judgment if he expects to make a living at this game.

But, of course, the moment I started to buy in my corn Stratton would be on the job as squeezer in chief, and I no more relished running up the price on myself by reason of my own purchases than cutting my own throat with my own knife.

I didn’t keep on trading the way I did through stubbornness. I simply wasn’t able to state my own problem to myself, and, of course, it was utterly hopeless to try to solve it. I harp on this topic so much to show what I had to go through before I got to where I could really make money. My old shotgun and BB shot could not do the work of a high-power repeating rifle against big game.

To learn that a man can make foolish plays for no reason whatever was a valuable lesson. It cost me millions to learn that another dangerous enemy to a trader is his susceptibility to the urgings of a magnetic personality when plausibly expressed by a brilliant mind.

Early that fall I not only was cleaned out again but I was so sick of the game I could no longer beat that I decided to leave New York and try something else some other place. I had been trading since my fourteenth year. I had made my first thousand dollars when I was a kid of fifteen, and my first ten thousand before I was twenty-one. I had made and lost a ten-thousand-dollar stake more than once. In New York I had made thousands and lost them. I got up to fifty thousand dollars and two days later that went. I had no other business and knew no other game. After several years I was back where I began. No--worse, for I had acquired habits and a style of living that required money; though that part didn’t bother me as much as being wrong so consistently.

They tried to double-cross me. They didn’t get me. I escaped because of one of my hunches.

.

I was so sick of the game I could no longer beat.

Fiction writers, clergymen and women are fond of alluding to the floor of the Stock Exchange as a boodlers’ battlefield and to Wall Street’s daily business as a fight. It is quite dramatic but utterly misleading. I do not think that my business is strife and contest. I never fight either individuals or speculative cliques. I merely differ in opinion--that is, in my reading of basic conditions. What playwrights call battles of business are not fights between human beings. They are merely tests of business vision. I try to stick to facts and facts only, and govern my actions accordingly. That is Bernard M. Baruch’s recipe for success in wealth-winning. Sometimes I do not see the facts--all the facts--clearly enough or early enough; or else I do not reason logically. Whenever any of these things happen I lose. I am wrong. And it always costs me money to be wrong.

I am profoundly interested in all phases of my business, and of course I learn from the experience of others as well as from my own. But it is very difficult to learn how to manipulate stocks to-day from such yarns as are told of an afternoon in the brokers’ offices after the close. Most of the tricks, devices and expedients of bygone days are obsolete and futile; or illegal and impracticable. Stock Exchange rules and conditions have changed, and the story--even the accurately detailed story--of what Daniel Drew or Jacob Little or Jay Gould could do fifty or seventy-five years ago is scarcely worth listening to. The manipulator to-day has no more need to consider what they did and how they did it than a cadet at West Point need study archery as practiced by the ancients in order to increase his working knowledge of ballistics.

On the other hand there is profit in studying the human factors--the ease with which human beings believe what it pleases them to believe; and how they allow themselves--indeed, urge themselves--to be influenced by their cupidity or by the dollar-cost of the average man’s carelessness. Fear and hope remain the same; therefore the study of the psychology of speculators is as valuable as it ever was. Weapons change, but strategy remains strategy, on the New York Stock Exchange as on the battlefield. I think the clearest summing up of the whole thing was expressed by Thomas F. Woodlock when he declared: “The principles of successful stock speculation are based on the supposition that people will continue in the future to make the mistakes that they have made in the past.”

To learn that a man can make foolish plays for no reason whatever was a valuable lesson. It cost me millions to learn that another dangerous enemy to a trader is his susceptibility to the urgings of a magnetic personality when plausibly expressed by a brilliant mind. It has always seemed to me, however, that I might have learned my lesson quite as well if the cost had been only one million. But Fate does not always let you fix the tuition fee. She delivers the educational wallop and presents her own bill, knowing you have to pay it, no matter what the amount may be. Having learned what folly I was capable of I closed that particular incident. Percy Thomas went out of my life.

the Cosmopolitan was the finest in New England. It had thousands of patrons and I really think I was the only man they were afraid of. Neither the killing premium nor the three-point margin they made me put up reduced my trading much. I kept on buying and selling as much as they’d let me. I sometimes had a line of 5000 shares.

They really were not sporty, being in the business to make money by hook or by crook instead of being content with the house percentage. Since suckers always lose money when they gamble in stocks--they never really speculate--you’d think these fellows would run what you might call a legitimate illegitimate business. But they didn’t. “Copper your customers and grow rich” is an old and true adage, but they did not seem ever to have heard of it and didn’t stop at plain bucketing.

Several times they tried to double-cross me with the old tricks. They caught me a couple of times because I wasn’t looking. They always did that when I had taken no more than my usual line. I accused them of being short sports or worse, but they denied it and it ended by my going back to trading as usual. The beauty of doing business with a crook is that he always forgives you for catching him, so long as you don’t stop doing business with him. It’s all right as far as he is concerned. He is willing to meet you more than half-way. Magnanimous souls!

Well, I made up my mind that I couldn’t afford to have the normal rate of increase of my stake impaired by crooks’ tricks, so I decided to teach them a lesson. I picked out some stock that after having been a speculative favorite had become inactive. Water-logged.

The game of beating the market exclusively interested me from ten to three every day, and after three, the game of living my life. Don’t misunderstand me. I never allowed pleasure to interfere with business. When I lost it was because I was wrong and not because I was suffering from dissipation or excesses. There never were any shattered nerves or rum-shaken limbs to spoil my game. I couldn’t afford anything that kept me from feeling physically and mentally fit. Even now I am usually in bed by ten. As a young man I never kept late hours, because I could not do business properly on insufficient sleep. I was doing better than breaking even and that is why I didn’t think there was any need to deprive myself of the good things of life. The market was always there to supply them. I was acquiring the confidence that comes to a man from a professionally dispassionate attitude toward his own method of providing bread and butter for himself.

I studied my disaster in detail.

“If I fool myself,” I told him, “I alone suffer and I pay the bill at once. There are no drawn-out payments or unexpected annoyances. I play a lone hand by choice and also because it is the wisest and cheapest way to trade. I get my pleasure out of matching my brains against the brains of other traders--men whom I have never seen and never talked to and never advised to buy or sell and never expect to meet or know. When I make money I make it backing my own opinions. I don’t sell them or capitalise them. If I made money in any other way I would imagine I had not earned it. Your proposition does not interest me because I am interested in the game only as I play it for myself and in my own way.”

When I said to you some time ago that a speculator has a host of enemies, many of whom successfully bore from within, I had in mind my many mistakes. I have learned that a man may possess an original mind and a lifelong habit of independent thinking and withal be vulnerable to attacks by a persuasive personality. I am fairly immune from the commoner speculative ailments, such as greed and fear and hope. But being an ordinary man I find I can err with great ease.

A brilliant operator, James R. Keene! His private secretary told me that when the market was going his way Mr. Keene was irascible; and those who knew him say his irascibility was expressed in sardonic phrases that lingered long in the memory of his hearers. But when he was losing he was in the best of humour, a polished man of the world, agreeable, epigrammatic, interesting. He had in superlative degree the qualities of mind that are associated with successful speculators anywhere. That he did not argue with the tape is plain.

He was utterly fearless but never reckless. He could and did turn in a twinkling, if he found he was wrong.

He could and did turn in a twinkling, if he found he was wrong.

There is no question that advertising is an art, and manipulation is the art of advertising through the medium of the tape. The tape should tell the story the manipulator wishes its readers to see. The truer the story the more convincing it is bound to be, and the more convincing it is the better the advertising is. A manipulator to-day, for instance, has not only to make a stock look strong but also to make it be strong. Manipulation therefore must be based on sound trading principles. That is what made Keene such a marvellous manipulator; he was a consummate trader to begin with.

Instead of sitting tight I went to Florida. I love fishing and I needed a rest. I could get both down there. And besides, there are direct wires between Wall Street and Palm Beach.

I cruised off the coast of Florida. The fishing was good. I was out of stocks. My mind was easy. I was having a fine time. One day off Palm Beach some friends came alongside in a motor boat.

I had come down to Florida on a fishing trip. I had been under a pretty severe strain and I needed my holiday.

After I took in my shorts and went long in October, 1907, I decided to take it easy for a while. I bought a yacht and planned to go off on a cruise in Southern waters. I am crazy about fishing and I was due to have the time of my life. I looked forward to it and expected to go any day. But I did not. The market wouldn’t let me.

And now I’ll get back to October, 1907. I bought a yacht and made all preparations to leave New York for a cruise in Southern waters. I am really daffy about fishing and this was the time when I was going to fish to my heart’s content from my own yacht, going wherever I wished whenever I felt like it. Everything was ready. I had made a killing in stocks, but at the last moment corn held me back.

I am really daffy about fishing.

Strong though corn was, my desire to go fishing was even stronger, so it was up to me to find a way out at once. I must conduct a strategic retreat. I must buy back the ten million bushels I was short of and in so doing keep down my loss as much as I possibly could.