Reminiscences of a Stock Operator

always truthful. Their specialty was trimming suckers who wanted to get rich quick. But they always asked their customers’ permission, in writing, to take their rolls away from them. One chap I met did tell me a story about seeing six hundred telegrams go out one day advising customers to get aboard a certain stock and six hundred telegrams to other customers strongly urging them to sell that same stock, at once. “Yes, I know the trick,” I said to the chap who was telling me. “Yes,” he said. “But the next day they sent telegrams to the same people advising them to close out their interest in everything and buy--or sell--another stock. I asked the senior partner, who was in the office, ‘Why do you do that? The first part I understand. Some of your customers are bound to make money on paper for a while, even if they and the others eventually lose. But by sending out telegrams like this you simply kill them all. What’s the big idea?’ “‘Well,’ he said, ‘the customers are bound to lose their money anyhow, no matter what they buy, or how or where or when. When they lose their money I lose the customers. Well, I might as well get as much of their money as I can--and then look for a new crop.’” Well, I admit frankly that I wasn’t concerned with the business ethics of the firm. I told you I felt sore on the Teller concern and how it tickled me to get even with them. But I didn’t have any such feeling about this firm. They might be crooks or they might not be as black as they were painted. I did not propose to let them do any trading for me, or follow their tips or believe their lies. My one concern was with getting together a stake and returning to New York to trade in fair amounts in an office where you did not have to be afraid the police would raid the joint, as they did the bucket shops, or see the postal authorities swoop down and tie up your money so that you’d be lucky to get eight cents on the dollar a year and a half later. Anyhow, I made up my mind that I would see what trading advantages of this firm offered over what you might call the legitimate brokers. I didn’t have much money to put up as margin, and firms that bucketed orders were naturally much more liberal in that respect, so that a few hundred dollars went much further in their offices. I went down to their place and had a talk with the manager himself. When he found out that I was an old trader and had formerly had accounts in New York with Stock Exchange houses and that I had lost all I took with me he stopped promising to make a million a minute for me if I let them invest my savings. He figured that I was a permanent sucker, the ticker-hound kind that always plays and always loses; a steady-income provider for brokers, whether they were the kind that bucket your orders or modestly content themselves with the commissions. I just told the manager that what I was looking for was decent execution, because I always traded at the market and I didn’t want to get reports that showed a difference of a half or a whole point from the ticker price. He assured me on his word of honor that they would do whatever I thought was right. They wanted my business because they wanted to show me what high-class brokering was. They had in their employ the best talent in the business. In fact, they were famous for their execution. If there was any difference between the ticker price and the report it was always in favor of the customer, though of course they didn’t guarantee that. If I opened an account with them I could buy and sell at the price which came over the wire, they were so confident of their brokers. Naturally that meant that I could trade there to all intents and purposes as though I were in a bucket shop--that is, they’d let me trade at the next quotation. I didn’t want to appear too anxious, so I shook my head and told him I guessed I wouldn’t open an account that day, but I’d let him know. He urged me strongly to begin right way as it was a good market to make money in. It was--for them; a dull market with prices seesawing slightly, just the kind to get customers in and then wipe them out with a sharp drive in the tipped stock. I had some trouble in getting away. I had given him my name and address, and that very same day I began to get prepaid telegrams and letters urging me to get aboard of some stock or other in which they said they knew an inside pool was operating for a fifty-point rise. I was busy going around and finding out all I could about several other brokerage concerns of the same bucketing kind. It seemed to me that if I could be sure of getting my winnings out of their clutches the only way of my getting together some real money was to trade in these near bucket shops. When I had learned all I could I opened accounts with three firms. I had taken a small office and had direct wires run to the three brokers. I traded in a small way so they wouldn’t get frightened off at the very start. I made money on balance and they were not slow in telling me that they expected real business from customers who had direct wires to their offices. They did not hanker for pikers. They figured that the more I did the more I’d lose, and the more quickly I was wiped out the more they’d make. It was a sound enough theory when you consider that these people necessarily dealt with averages and the average customer was never long-lived, financially speaking. A busted customer can’t trade. A half-crippled customer can whine and insinuate things and make trouble of one or another kind that hurts business. I also established a connection with a local firm that had a direct wire to its New York correspondent, who were also members of the New York Stock Exchange. I had a stock ticker put in and I began to trade conservatively. As I told you, it was pretty much like trading in bucket shops, only it was a little slower. It was a game that I could beat, and I did. I never got it down to such a fine point that I could win ten times out of ten; but I won on balance, taking it week in and week out. I was again living pretty well, but always saving something, to increase the stake that I was to take back to Wall Street. I got a couple of wires into two more of these bucketing brokerage houses, making five in all--and, of course, my good firm. There were times when my plans went wrong and my stocks did not run true to form, but they did the opposite of what they should have done if they had kept up their regard for precedent. But they did not hit me very hard--they couldn’t, with my shoestring margins. My relations with my brokers were friendly enough. Their accounts and records did not always agree with mine, and the differences uniformly happened to be against me. Curious coincidence--not! But I fought for my own and usually had my way in the end. They always had the hope of getting away from me what I had taken from them. They regarded my winnings as temporary loans, I think. 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. If I had taken one that never had been active they would have suspected my play. I gave out buying orders on this stock to my five bucketeering brokers. When the orders were taken and they were waiting for the next quotation to come out on the tape I sent in an order through my Stock Exchange house to sell a hundred shares of that particular stock at the market. I urgently asked for quick action. Well, you can imagine what happened when the selling order got to the floor of the Exchange; a dull inactive stock that a commission house with out-of-town connections wanted to sell in a hurry. Somebody got cheap stock. But the transaction as it would be printed on the tape was the price that I would pay on my five buying orders. I was long on balance four hundred shares of that stock at a low figure. The wire house asked me what I’d heard, and I said I had a tip on it. Just before the close of the market I sent an order to my reputable house to buy back that hundred shares, and not waste any time; that I didn’t want to be short under any circumstances; and I didn’t care what they paid. So they wired to New York and the order to buy that hundred quick resulted in a sharp advance. I of course had put in selling orders for the five hundred shares that my friends had bucketed. It worked very satisfactorily. Still, they didn’t mend their ways, and so I worked that trick on them several times. I did not dare punish them as severely as they deserved, seldom more than a point or two on a hundred shares. But it helped to swell my little hoard that I was saving for my next Wall Street venture. I sometimes varied the process by selling some stock short, without overdoing it. I was satisfied with my six or eight hundred clear for each crack. One day the stunt worked so well that it went far beyond all calculations for a ten-point swing. I wasn’t looking for it. As a matter of fact it so happened that I had two hundred shares instead of my usual hundred at one broker’s, though only a hundred in the four other shops. That was too much of a good thing--for them. They were sore as pups about it and they began to say things over the wires. So I went and saw the manager, the same man who had been so anxious to get my account, and so forgiving every time I caught him trying to put something over on me. He talked pretty big for a man in his position. “That was a fictitious market for that stock, and we won’t pay you a damned cent!” he swore. “It wasn’t a fictitious market when you accepted my order to buy. You let me in then, all right, and now you’ve got to let me out. You can’t get around that for fairness, can you?” “Yes, I can!” he yelled. “I can prove that somebody put up a job.” “Who put up a job?” I asked. “Somebody!” “Who did they put it up on?” I asked. “Some friends of yours were in it as sure as pop,” he said. But I told him, “You know very well that I play a lone hand. Everybody in this town knows that. They’ve known it ever since I started trading in stocks. Now I want to give you some friendly advice: you just send and get that money for me. I don’t want to be disagreeable. Just do what I tell you.” “I won’t pay it. It was a rigged-up transaction,” he yelled. I got tired of his talk. So I told him: “You’ll pay it to me right now and here.” Well, he blustered a little more and accused me flatly of being the guilty thimblerigger; but he finally forked over the cash. The others were not so rambunctious. In one office the manager had been