Reminiscences of a Stock Operator
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.
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.
It so happened that Stratton at that time was also running a deal in
oats and had the market pretty well sewed up. I had kept track of all
the grain markets in the way of crop news and pit gossip, and I heard
that the powerful Armour interests were not friendly, marketwise, to
Stratton. Of course I knew that Stratton would not let me have the
corn I needed except at his own price, but the moment I heard the
rumors about Armour being against Stratton it occurred to me that I
might look to the Chicago traders for aid. The only way in which they
could possibly help me was for them to sell me the corn that Stratton
wouldn’t. The rest was easy.
First, I put in orders to buy five hundred thousand bushels of corn
every eighth of a cent down. After these orders were in I gave to each
of four houses an order to sell simultaneously fifty thousand bushels
of oats at the market. That, I figured, ought to make a quick break in
oats. Knowing how the traders’ minds worked, it was a cinch that they
would instantly think that Armour was gunning for Stratton. Seeing the
attack opened in oats they would logically conclude that the next break
would be in corn and they would start to sell it. If that corner in
corn was busted, the pickings would be fabulous.
My dope on the psychology of the Chicago traders was absolutely
correct. When they saw oats breaking on the scattered selling they
promptly jumped on corn and sold it with great enthusiasm. I was
able to buy six million bushels of corn in the next ten minutes. The
moment I found that their selling of corn ceased I simply bought in
the other four million bushels at the market. Of course that made
the price go up again, but the net result of my manœuvre was that I
covered the entire line of ten million bushels within one-half cent of
the price prevailing at the time I started to cover on the traders’
selling. The two hundred thousand bushels of oats that I sold short
to start the traders’ selling of corn I covered at a loss of only
three thousand dollars. That was pretty cheap bear bait. The profits I
had made in wheat offset so much of my deficit in corn that my total
loss on all my grain trades that time was only twenty-five thousand
dollars. Afterwards corn went up twenty-five cents a bushel. Stratton
undoubtedly had me at his mercy. If I had set about buying my ten
million bushels of corn without bothering to think of the price there
is no telling what I would have had to pay.
A man can’t spend years at one thing and not acquire a habitual
attitude towards it quite unlike that of the average beginner. The
difference distinguishes the professional from the amateur. It is the
way a man looks at things that makes or loses money for him in the
speculative markets. The public has the dilettante’s point of view
toward his own effort. The ego obtrudes itself unduly and the thinking
therefore is not deep or exhaustive. The professional concerns himself
with doing the right thing rather than with making money, knowing that
the profit takes care of itself if the other things are attended to.
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.
I remember hearing a story about Addison Cammack that illustrates very
nicely what I wish to point out. From all I have heard, I am inclined
to think that _Cammack_ was one of the ablest stock traders the Street
ever saw. He was not a chronic bear as many believe, but he felt the
greater appeal of trading on the bear side, of utilizing in his behalf
the two great human factors of hope and fear. He is credited with
coining the warning: “Don’t sell stocks when the sap is running up the
trees!” and the old-timers tell me that his biggest winnings were made
on the bull side, so that it is plain he did not play prejudices but
conditions. At all events, he was a consummate trader. It seems that
once--this was way back at the tag end of a bull market--Cammack was
bearish, and J. Arthur Joseph, the financial writer and raconteur,
knew it. The market, however, was not only strong but still rising,
in response to prodding by the bull leaders and optimistic reports by
the newspapers. Knowing what use a trader like Cammack could make of
bearish information, Joseph rushed to Cammack’s office one day with
glad tidings.
“Mr. Cammack, I have a very good friend who is a transfer clerk in the
St. Paul office and he has just told me something which I think you
ought to know.”
“What is it?” asked Cammack listlessly.
“You’ve turned, haven’t you? You are bearish now?” asked Joseph,
to make sure. If Cammack wasn’t interested he wasn’t going to waste
precious ammunition.
“Yes. What’s the wonderful information?”
“I went around to the St. Paul office to-day, as I do in my
news-gathering rounds two or three times a week, and my friend
there said to me: ‘The Old Man is selling stock.’ He meant William
Rockefeller. ‘Is he really, Jimmy?’ I said to him, and he answered,
‘Yes; he is selling fifteen hundred shares every three-eighths of a
point up. I’ve been transferring the stock for two or three days now.’
I didn’t lose any time, but came right over to tell you.”
Cammack was not easily excited, and, moreover, was so accustomed to
having all manner of people rush madly into his office with all manner
of news, gossip, rumors, tips and lies that he had grown distrustful of
them all. He merely said now, “Are you sure you heard right, Joseph?”
“Am I sure? Certainly I am sure! Do you think I am deaf?” said Joseph.
“Are you sure of your man?”
“Absolutely!” declared Joseph. “I’ve known him for years. He has never
lied to me. He wouldn’t! No object! I know he is absolutely reliable
and I’d stake my life on what he tells me. I know him as well as I know
anybody in this world--a great deal better than you seem to know me,
after all these years.”
“Sure of him, eh?” And Cammack again looked at Joseph. Then he said,
“Well, you ought to know.” He called his broker, W. B. Wheeler. Joseph
expected to hear him give an order to sell at least fifty thousand
shares of St. Paul. William Rockefeller was disposing of his holdings
in St. Paul, taking advantage of the strength of the market. Whether it
was investment stock or speculative holdings was irrelevant. The one
important fact was that the best stock trader of the Standard Oil crowd
was getting out of St. Paul. What would the average man have done if he
had received the news from a trustworthy source? No need to ask.
But Cammack, the ablest bear operator of his day, who was bearish on
the market just then, said to his broker, “Billy, go over to the board
and buy fifteen hundred St. Paul every three-eighths up.” The stock was
then in the nineties.
“Don’t you mean sell?” interjected Joseph hastily. He was no novice in
Wall Street, but he was thinking of the market from the point of view
of the newspaper man and, incidentally, of the general public. The
price certainly ought to go down on the news of inside selling. And
there was no better inside selling than Mr. William Rockefeller’s. The
Standard Oil getting out and Cammack buying! It couldn’t be!
“No,” said Cammack; “I mean buy!”
“Don’t you believe me?”
“Yes!”
“Don’t you believe my information?”
“Yes.”
“Aren’t you bearish?”
“Yes.”
“Well, then?”
“That’s why I’m buying. Listen to me now: You keep in touch with that
reliable friend of yours and the moment the scaled selling stops, let
me know. Instantly! Do you understand?”
“Yes,” said Joseph, and went away, not quite sure he could fathom
Cammack’s motives in buying William Rockefeller’s stock. It was the
knowledge that Cammack was bearish on the entire market that made his
manœuvre so difficult to explain. However, Joseph saw his friend the
transfer clerk and told him he wanted to be tipped off when the Old Man
got through selling. Regularly twice a day Joseph called on his friend
to inquire.
One day the transfer clerk told him, “There isn’t any more stock coming
from the Old Man.” Joseph thanked him and ran to Cammack’s office with
the information.
Cammack listened attentively, turned to Wheeler and asked, “Billy,
how much St. Paul have we got in the office?” Wheeler looked it up and
reported that they had accumulated about sixty thousand shares.
Cammack, being bearish, had been putting out short lines in the other
Grangers as well as in various other stocks, even before he began to
buy St. Paul. He was now heavily short of the market. He promptly
ordered Wheeler to sell the sixty thousand shares of St. Paul that
they were long of, and more besides. He used his long holdings of St.
Paul as a lever to depress the general list and greatly benefit his
operations for a decline.
St. Paul didn’t stop on that move until it reached forty-four and
Cammack made a killing in it. He played his cards with consummate
skill and profited accordingly. The point I would make is his habitual
attitude toward trading. He didn’t have to reflect. He saw instantly
what was far more important to him than his profit on that one stock.
He saw that he had providentially been offered an opportunity to begin
his big bear operations not only at the proper time but with a proper
initial push. The St. Paul tip made him buy instead of sell because he
saw at once that it gave him a vast supply of the best ammunition for
his bear campaign.
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.
One day I went ashore at Palm Beach. I met a lot of Wall Street friends
and others. They were all talking about the most picturesque cotton
speculator of the day. A report from New York had it that Percy Thomas
had lost every cent. It wasn’t a commercial bankruptcy; merely the
rumor of the world-famous operator’s second Waterloo in the cotton
market.
I had always felt a great admiration for him. The first I ever heard of
him was through the newspapers at the time of the failure of the Stock
Exchange house of Sheldon & Thomas, when Thomas tried to corner cotton.
Sheldon, who did not have the vision or the courage of his partner, got
cold feet on the very verge of success. At least, so the Street said
at the time. At all events, instead of making a killing they made one
of the most sensational failures in years. I forget how many millions.
The firm was wound up and Thomas went to work alone. He devoted himself
exclusively to cotton and it was not long before he was on his feet
again. He paid off his creditors in full with interest--debts he was
not legally obliged to discharge--and withal had a million dollars
left to himself. His comeback in the cotton market was in its way as
remarkable as Deacon S. V. White’s famous stock-market exploit of
paying off one million dollars in one year. Thomas’ pluck and brains
made me admire him immensely.
Everybody in Palm Beach was talking about the collapse of Thomas’ deal
in March cotton. You know how the talk goes--and grows; the amount of
misinformation and exaggeration and improvements that you hear. Why,
I’ve seen a rumor about myself grow so that the fellow who started it