Reminiscences of a Stock Operator

wow, thanks for the PDF Barry!

Hi, I know this is completely off the subject, but the passing of Gerald Ford has brought me right back to the 70’s. Check out this clip of Bobby Orr.

Thanks Barry!

Just reading the book for the first time. This blew my mind wide open. It is long but very insightful:

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 used it
you’d carry me for a few hundred shares.” He paused for breath
and for confirmation.
The deacon looked at him in that meditative way he had and
said, “I don’t know whether I ever told you exactly that or not,
but I am willing to pay for information that I can use.”
“Well, I’ve got it for you.”
“Now, that’s nice,” said the deacon, so mildly that the man
with the info swelled up and said, “Yes, sir, deacon.” Then he
came closer so nobody else would hear and said, “H. O. Havemeyer
is buying Sugar.”
“Is he?” asked the deacon quite calmly.
It peeved the informant, who said impressively: “Yes, sir.
Buying all he can get, deacon.”
“My friend, are you sure?” asked old S. V.
“Deacon, I know it for a positive fact. The old inside gang
are buying all they can lay their hands on. It’s got something
to do with the tariff and there’s going to be a killing in the
common. It will cross the preferred. And that means a sure
thirty points for a starter.”
“D’ you really think so?” And the old man looked at him
over the top of the old-fashioned silver-rimmed spectacles that
he had put on to look at the tape.
“Do I think so? No, I don’t think so; I know so. Absolutely!
Why, deacon, when H. O. Havemeyer and his friends buy
Sugar as they’re doing now they’re never satisfied with anything
less than forty points net. I shouldn’t be surprised to see the
market get away from them any minute and shoot up before they’ve
got their full lines. There ain’t as much of it kicking around
the brokers’ offices as there was a month ago.”
“He’s buying Sugar, eh?” repeated the deacon absently.
“Buying it? Why, he’s scooping it in as fast as he can
without putting up the price on himself.”
“So?” said the deacon. That was all.
But it was enough to nettle the tipster, and he said, “Yes,
sir-reel And I call that very good information. Why, it’s
absolutely straight.”
“Is it?”
“Yes; and it ought to be worth a whole lot. Are you going
to use it?”
“Oh, yes. I’m going to use it.”
“When?” asked the information bringer suspiciously.
“Right away.” And the deacon called:.”Frank!” It was the
first name of his shrewdest broker, who was then in the
adjoining room.
“Yes, sir,” said Frank.
“I wish you’d go over to the Board and sell ten thousand
Sugar.”
“Sell?” yelled the tipster. There was such suffering in his
voice that Frank, who had started out at a run, halted in his
tracks.
“Why, yes,” said the deacon mildly.
“But I told you H. O. Havemeyer was buying it!”
“I know you did, my friend,” said the deacon calmly; and
turning to the broker: “Make haste, Frank!”
The broker rushed out to execute the order and the tipster
turned red.
“I came in here,” he said furiously, “with the best
information I ever had. I brought it to you because I thought
you were my friend, and square. I expected you to act on it.”
“I am acting on it,” interrupted the deacon in a
tranquillizing voice.
“But I told you H. O. and his gang were buying!”
“That’s right. I heard you.”
“Buying! Buying! I said buying!” shrieked the tipster.
“Yes, buying! That is what I understood you to say,” the
deacon assured him. He was standing by the ticker, looking at
the tape.
“But you are selling it.”
“Yes; ten thousand shares.” And the deacon nodded. “Selling
it, of course.”
He stopped talking to concentrate on the tape and the
tipster approached to see what the deacon saw, for the old man
was very foxy. While he was looking over the deacon’s shoulder a
clerk came in with a slip, obviously the report from Frank. The
deacon barely glanced at it. He had seen on the tape how his
order had been executed.
It made him say to the clerk, “Tell him to sell another ten
thousand Sugar.”
“Deacon, I swear to you that they really are buying the
stock 1”
“Did Mr. Havemeyer tell you?” asked the deacon quietly.
“Of course not! He never tells anybody anything. He would not
bat an eyelid to help his best friend make a nickel. But I know
this is true.”
“Do not allow yourself to become excited, my friend.” And
the deacon held up a hand. He was looking at the tape. The
tip-bringer said, bitterly “If I had known you were going to do
the opposite of what I expected I’d never have wasted your time
or mine. But I am not going to feel glad when you cover that
stock at an awful loss. I’m sorry for you, deacon. Honest l if
you’ll excuse me I’ll go elsewhere and act on my own
information.”
“I’m acting on it. I think I know a little about the
market; not as much, perhaps, as you and your friend H. O. Havemeyer,
but still a little. What I am doing is what my experience
tells me is the wise thing to do with the information you
brought me. After a man has been in Wall Street as long as I
have he is grateful for anybody who feels sorry for him. Remain
calm, my friend.”
The man just stared at the deacon, for whose judgment and
nerve he had great respect.
Pretty soon the clerk came in again and handed a report to
the deacon, who looked at it and said: “Now tell him to buy
thirty thousand Sugar. Thirty thousand 1”
The clerk hurried away and the tipster just grunted and
looked at the old gray fox.
“My friend,” the deacon explained kindly, “I did not doubt
that you were telling me the truth as you saw it. But even if I
had heard H. O. Havemeyer tell you himself, I still would have
acted as I did. For there was only one way to find out if
anybody was buying the stock in the way you said H. O. Havemeyer
and his friends were buying it, and that was to do what I did.
The first ten thousand shares went fairly easily. It was not
quite conclusive. But the second ten thousand was absorbed by a
market that did not stop rising. The way the twenty thousand
shares were taken by somebody proved to me that somebody was in
truth willing to take all the stock that was offered. It doesn’t
particularly matter at this point who that particular somebody
may be. So I have covered my shorts and am long ten thousand
shares, and I think that your information was good as far as it
went.”
“And how far does it go?” asked the tipster.
“You have five hundred shares in this office at the average
price of the ten thousand shares,” said the deacon. “Good day,
my friend. Be calm the next time.”
“Say, deacon,” said the tipster, “won’t you please sell
mine when you sell yours? I don’t know as much as I thought I
did.”

Is it still possible to do that in the market? I guess on the smaller stocks it is with a whole lot more capital but those boys must have had a lot of fun gaming the markets in those early days. It also goes to show that when one elephant is in the room it doesn’t take long for others to show up on the same side

Thanks for the link to the free pdf, it’s just what I was looking for. I’ve posted a selection of my favourite quotes on my blog:

http://the3500.wordpress.com/2007/02/01/a-stock-operator/