Reminiscences of a Stock Operator
glad to do it because you know exactly what it means.” He stopped and
looked at Mrs. Livingston anxiously, to make sure she was not only
wise but discreet. She could read it on his face, plain as print. But
all she said was, “Yes.”
“Yes, Mrs. Livingston. It has been a very great pleasure to meet you
and your husband, and I want to prove that I am sincere in saying this
because I hope to see a great deal of both of you. I am sure I don’t
have to tell you that what I am going to say is strictly confidential!”
Then he whispered, “If you will buy some Borneo Tin you will make a
great deal of money.”
“Do you think so?” she asked.
“Just before I left the hotel,” he said, “I received some cables with
news that won’t be known to the public for several days at least. I am
going to gather in as much of the stock as I can. If you get some at
the opening to-morrow you will be buying it at the same time and at
the same price as I. I give you my word that Borneo Tin will surely
advance. You are the only person that I have told this to. Absolutely
the only one!”
She thanked him and then she told him that she didn’t know anything
about speculating in stocks. But he assured her it wasn’t necessary for
her to know any more than he had told her. To make sure she heard it
correctly he repeated his advice to her:
“All you have to do is to buy as much Borneo Tin as you wish. I can
give you my word that if you do you will not lose a cent. I’ve never
before told a woman--or a man, for that matter--to buy anything in my
life. But I am so sure the stock won’t stop this side of 200 that I’d
like you to make some money. I can’t buy all the stock myself, you
know, and if somebody besides myself is going to benefit by the rise
I’d rather it was you than some stranger. Much rather! I’ve told you in
confidence because I know you won’t talk about it. Take my word for it,
Mrs. Livingston, and buy Borneo Tin!”
He was very earnest about it and succeeded in so impressing her that
she began to think she had found an excellent use for the five hundred
dollars I had given her that afternoon. That money hadn’t cost me
anything and was outside of her allowance. In other words, it was easy
money to lose if the luck went against her. But he had said she would
surely win. It would be nice to make money on her own hook--and tell me
all about it afterwards.
Well, sir, the very next morning before the market opened she went into
Harding’s office and said to the manager:
“Mr. Haley, I want to buy some stock, but I don’t want it to go in my
regular account because I don’t wish my husband to know anything about
it until I’ve made some money. Can you fix it for me?”
Haley, the manager, said, “Oh, yes. We can make it a special account.
What’s the stock and how much of it do you want to buy?”
She gave him the five hundred dollars and told him, “Listen, please.
I do not wish to lose more than this money. If that goes I don’t want
to owe you anything; and remember, I don’t want Mr. Livingston to know
anything about this. Buy me as much Borneo Tin as you can for the
money, at the opening.”
Haley took the money and told her he’d never say a word to a soul, and
bought her a hundred shares at the opening. I think she got it at 108.
The stock was very active that day and closed at an advance of three
points. Mrs. Livingston was so delighted with her exploit that it was
all she could do to keep from telling me all about it.
It so happened that I had been getting more and more bearish on the
general market. The unusual activity in Borneo Tin drew my attention to
it. I didn’t think the time was right for any stock to advance, much
less one like that. I had decided to begin my bear operations that very
day, and I started by selling about ten thousand shares of Borneo. If I
had not I rather think the stock would have gone up five or six points
instead of three.
On the very next day I sold two thousand shares at the opening and two
thousand shares just before the close, and the stock broke to 102.
Haley, the manager of Harding Brothers’ Palm Beach Branch, was waiting
for Mrs. Livingston to call there on the third morning. She usually
strolled in about eleven to see how things were, if I was doing
anything.
Haley took her aside and said, “Mrs. Livingston, if you want me to
carry that hundred shares of Borneo Tin for you you will have to give
me more margin.”
“But I haven’t any more,” she told him.
“I can transfer it to your regular account,” he said.
“No,” she objected, “because that way L.L. would learn about it.”
“But the account already shows a loss of--” he began.
“But I told you distinctly I didn’t want to lose more than the five
hundred dollars. I didn’t even want to lose that,” she said.
“I know, Mrs. Livingston, but I didn’t want to sell it without
consulting you, and now unless you authorise me to hold it I’ll have to
let it go.”
“But it did so nicely the day I bought it,” she said, “that I didn’t
believe it would act this way so soon. Did you?”
“No,” answered Haley, “I didn’t.” They have to be diplomatic in
brokers’ offices.
“What’s gone wrong with it, Mr. Haley?”
Haley knew, but he could not tell her without giving me away, and a
customer’s business is sacred. So he said, “I don’t hear anything
special about it, one way or the other. There she goes! That’s low for
the move!” and he pointed to the quotation board.
Mrs. Livingston gazed at the sinking stock and cried: “Oh, Mr. Haley! I
don’t want to lose my five hundred dollars! What shall I do?”
“I don’t know, Mrs. Livingston, but if I were you I’d ask Mr.
Livingston.”
“Oh, no! He doesn’t want me to speculate on my own hook. He told me
so. He’ll buy or sell stock for me, if I ask him, but I’ve never before
done trading that he did not know all about. I wouldn’t dare tell him.”
“That’s all right,” said Haley soothingly. “He is a wonderful trader
and he’ll know just what to do.” Seeing her shake her head violently he
added devilishly: “Or else you put up a thousand or two to take care of
your Borneo.”
The alternative decided her then and there. She hung about the office,
but as the market got weaker and weaker she came over to where I sat
watching the board and told me she wanted to speak to me. We went into
the private office and she told me the whole story. So I just said to
her: “You foolish little girl, you keep your hands off this deal.”
She promised that she would, and so I gave her back her five hundred
dollars and she went away happy. The stock was par by that time.
I saw what had happened. Wisenstein was an astute person. He figured
that Mrs. Livingston would tell me what he had told her and I’d study
the stock. He knew that activity always attracted me and I was known to
swing a pretty fair line. I suppose he thought I’d buy ten or twenty
thousand shares.
It was one of the most cleverly planned and artistically propelled
tips I’ve ever heard of. But it went wrong. It had to. In the first
place, the lady had that very day received an unearned five hundred
dollars and was therefore in a much more venturesome mood than usual.
She wished to make some money all by herself, and womanlike dramatised
the temptation so attractively that it was irresistible. She knew how I
felt about stock speculation as practised by outsiders, and she didn’t
dare mention the matter to me. Wisenstein didn’t size up her psychology
right.
He also was utterly wrong in his guess about the kind of trader I
was. I never take tips and I was bearish on the entire market. The
tactics that he thought would prove effective in inducing me to buy
Borneo--that is, the activity and the three-point rise--were precisely
what made me pick Borneo as a starter when I decided to sell the entire
market.
After I heard Mrs. Livingston’s story I was keener than ever to sell
Borneo. Every morning at the opening and every afternoon just before
closing I let him have some stock regularly, until I saw a chance to
take in my shorts at a handsome profit.
It has always seemed to me the height of damfoolishness to trade on
tips. I suppose I am not built the way a tip-taker is. 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
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. It is not so much greed made blind by eagerness as
it is hope bandaged by the unwillingness to do any thinking.
And it is not only among the outside public that you find inveterate
tip-takers. The professional trader on the floor of the New York Stock
Exchange is quite as bad. I am definitely aware that no end of them
cherish mistaken notions of me because I never give anybody tips. If
I told the average man, “Sell yourself five thousand Steel!” he would
do it on the spot. But if I tell him I am quite bearish on the entire
market and give him my reasons in detail, he finds trouble in listening
and after I’m done talking he will glare at me for wasting his time
expressing my views on general conditions instead of giving him a
direct and specific tip, like a real philanthropist of the type that is
so abundant in Wall Street--the sort who loves to put millions into the
pockets of friends, acquaintances and utter strangers alike.
The belief in miracles that all men cherish is born of immoderate
indulgence in hope. There are people who go on hope sprees periodically
and we all know the chronic hope drunkard that is held up before us as
an exemplary optimist. Tip-takers are all they really are.
I have an acquaintance, a member of the New York Stock Exchange, who
was one of those who thought I was a selfish, cold-blooded pig because
I never gave tips or put friends into things. One day--this was some
years ago--he was talking to a newspaper man who casually mentioned
that he had had it from a good source that G.O.H. was going up. My
broker friend promptly bought a thousand shares and saw the price
decline so quickly that he was out thirty-five hundred dollars before
he could stop his loss. He met the newspaper man a day or two later,
while he was still sore.
“That was a hell of a tip you gave me,” he complained.
“What tip was that?” asked the reporter, who did not remember.
“About G.O.H. You said you had it from a good source.”
“So I did. A director of the company who is a member of the finance
committee told me.”
“Which of them was it?” asked the broker vindictively.
“If you must know,” answered the newspaper man, “it was your own
father-in-law, Mr. Westlake.”
“Why in Hades didn’t you tell me you meant him!” yelled the broker.
“You cost me thirty-five hundred dollars!” He didn’t believe in family
tips. The farther away the source the purer the tip.
Old Westlake was a rich and successful banker and promoter. He ran
across John W. Gates one day. Gates asked him what he knew. “If you
will act on it I’ll give you a tip. If you won’t I’ll save my breath,”
answered old Westlake grumpily.
“Of course I’ll act on it,” promised Gates cheerfully.
“Sell Reading! There is a sure twenty-five points in it, and possibly
more. But twenty-five absolutely certain,” said Westlake impressively.
“I’m much obliged to you,” and Bet-you-a-million Gates shook hands
warmly and went away in the direction of his broker’s office.
Westlake had specialized on Reading. He knew all about the company and
stood in with the insiders so that the market for the stock was an open
book to him and everybody knew it. Now he was advising the Western
plunger to go short of it.