Reminiscences of a Stock Operator

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. He must have thought I was headed for some pool room and he wanted a whack at my roll before the ponies nibbled it away, for he said I ought to hurry up as the market closed at twelve o’clock on Saturdays. That would leave me free to devote the entire afternoon to other pursuits. I might have a bigger roll to carry to the track with me--if I picked the right stocks. I looked as if I didn’t believe him, and he kept on buzzing me. I was watching the clock. At 11:15 I said, “All right,” and I began to give him selling orders in various stocks. I put up two thousand dollars in cash, and he was very glad to get it. He told me he thought I’d make a lot of money and hoped I’d come in often. It happened just as I figured. _The traders hammered the stocks in which they figured they would uncover the most stops, and, sure enough, prices slid off. I closed out my trades just before the rally of the last five minutes on the usual traders’ covering._ There was fifty-one hundred dollars coming to me. I went to cash in. “I’m glad I dropped in,” I said to the manager, and gave him my tickets. “Say,” he says to me, “I can’t give you all of it. I wasn’t looking for such a run. I’ll have it here for you Monday morning, sure as blazes.” “All right. But first I’ll take all you have in the house,” I said. “You’ve got to let me pay off the little fellows,” he said. “I’ll give you back what you put up, and anything that’s left. Wait till I cash the other tickets.” So I waited while he paid off the winners. Oh, I knew my money was safe. Teller wouldn’t welsh with the office doing such a good business. And if he did, what else could I do better than to take all he had then and there? I got my own two thousand dollars and about eight hundred dollars besides, which was all he had in the office. I told him I’d be there Monday morning. He swore the money would be waiting for me. I got to Hoboken a little before twelve on Monday. I saw a fellow talking to the manager that I had seen in the St. Louis office the day Teller told me to go back to Dolan. I knew at once that the manager had telegraphed to the home office and they’d sent up one of their men to investigate the story. Crooks don’t trust anybody. “I came for the balance of my money,” I said to the manager. “Is this the man?” asked the St. Louis chap. “Yes,” said the manager, and took a bunch of yellow backs from his pocket. “Hold on!” said the St. Louis fellow to him and then turns to me, “Say, Livingston, didn’t we tell you we didn’t want your business?” “Give me my money first,” I said to the manager, and he forked over two thousands, four five-hundreds and three hundreds. “What did you say?” I said to St. Louis. “We told you we didn’t want you to trade in our place.” “Yes,” I said; “that’s why I came.” “Well, don’t come any more. Keep away!” he snarled at me. The private policeman in gray came over, casual-like. St. Louis shook his fist at the manager and yelled: “You ought to’ve known better, you poor boob, than to let this guy get into you. He’s Livingston. You had your orders.” “Listen, you,” I said to the St. Louis man. “This isn’t St. Louis. You can’t pull off any trick here, like your boss did with Belfast Boy.” “You keep away from this office! You can’t trade here!” he yells. “If I can’t trade here nobody else is going to,” I told him. “You can’t get away with that sort of stuff here.” Well, St. Louis changed his tune at once. “Look here, old boy,” he said, all fussed up, “do us a favor. Be reasonable! You know we can’t stand this every day. The old man’s going to hit the ceiling when he hears who it was. Have a heart, Livingston!” “I’ll go easy,” I promised. “Listen to reason, won’t you? For the love of Pete, keep away! Give us a chance to get a good start. We’re new here. Will you?” “I don’t want any of this high-and-mighty business the next time I come,” I said, and left him talking to the manager at the rate of a million a minute. I’d got some money out of them for the way they treated me in St. Louis. There wasn’t any sense in my getting hot or trying to close them up. I went back to Fullerton’s office and told McDevitt what had happened. Then I told him that if it was agreeable to him I’d like to have him go to Teller’s place and begin trading in twenty or thirty share lots, to get them used to him. Then, the moment I saw a good chance to clean up big, I’d telephone him and he could plunge. I gave McDevitt a thousand dollars and he went to Hoboken and did as I told him. He got to be one of the regulars. Then one day when I thought I saw a break impending I slipped Mac the word and he sold all they’d let him. I cleared twenty-eight hundred dollars that day, after giving Mac his rake-off and paying expenses, and I suspect Mac put down a little bet of his own besides. Less than a month after that, Teller closed his Hoboken branch. The police got busy. And, anyhow, it didn’t pay, though I only traded twice. We ran into a crazy bull market when stocks didn’t react enough to wipe out even the one-point margins, and, of course, all the customers were bulls and winning and pyramiding. No end of bucket shops busted all over the country. Their game has changed. Trading in the old-fashioned bucket shop had some decided advantages over speculating in a reputable broker’s office. For one thing the automatic closing out of your trade when the margin reached the exhaustion point was the best kind of stop-loss order. You couldn’t get stung for more than you had put up and there was no danger of rotten execution of orders, and so on. In New York the shops never were as liberal with their patrons as I’ve heard they were in the West. Here they used to limit the possible profit on certain stocks of the football order to two points. Sugar and Tennessee Coal and Iron were among these. No matter if they moved ten points in ten minutes you could only make two on one ticket. They figured that otherwise the customer was getting too big odds; he stood to lose one dollar and to make ten. And then there were times when all the shops, including the biggest, refused to take orders on certain stocks. In 1900, on the day before Election Day, when it was foregone conclusion that McKinley would win, not a shop in the land let its customers buy stocks. The election odds were 3 to 1 on McKinley. By buying stocks on Monday you stood to make from three to six points or more. A man could bet on Bryan and buy stocks and make sure money. The bucket shops refused orders all that day. If it hadn’t been for their refusing to take my business I never would have stopped trading with them. And then I never would have learned that there was much more to the game of stock speculation than to play for fluctuations of a few points. _III_ 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. 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. 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. That is why I don’t believe in tips. If I buy stocks on Smith’s tip I must sell those same stocks on Smith’s tip. I am depending on him. Suppose Smith is away on a holiday when the selling time comes around? No, sir, nobody can make big money on what someone else tells him to do. _I know from experience that nobody can give me a tip or a series of tips that will make more money for me than my own judgment. It took me five years to learn to play the game intelligently enough to make big money when I was right._ I didn’t have as many interesting experiences as you might imagine. I mean, the process of learning how to speculate does not seem very dramatic at this distance. I went broke several times, and that is never pleasant, but the way I lost money is the way everybody loses money who loses money in Wall Street. 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. My task, as I should have known after my early reverses at Fullerton’s, was very simple: To look at speculation from another angle. But I didn’t know that there was much more to the game than I could possibly learn in the bucket shops. There I thought I was beating the game when in reality I was only beating the shop. At the same time the tape-reading ability that trading in bucket-shops developed in me and the training of my memory have been extremely valuable. Both of these things came easy to me. I owe my early success as a trader to them and not to my 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. I remember my very first day in New York. I told you how the bucket shops, by refusing to take my business, drove me to seek a reputable commission house. One of the boys in the office where I got my first job was working for Harding Brothers, members of the New York Stock Exchange. I arrived in this city in the morning, and before one o’clock that same day I had opened an account with the firm and was ready to trade. I didn’t explain to you how natural it was for me to trade there exactly as I had done in the bucket shops, where all I did was to bet on fluctuations and catch small but sure changes in prices. Nobody offered to point out the essential differences or set me right. 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. They were having some pretty lively times those days and the market was very active. That always cheers up a fellow. I felt at home right away. There was the old familiar quotation board in front of me, talking a language that I had learned before I was fifteen years old. There was