Reminiscences of a Stock Operator


If you don't trade your premium setup where probability is in your favor, you will lose. When you don't play according to your system, based on study and experience, you will lose. Whenever you FOMO, impulse trade, emotionally trade, or euphorically trade ... you will lose.


When you play without a plan, you are gambling. When you hope to win instead of knowing you will win, you will lose.


When you play highly leveraged, you don't play for long moves, be quick and nimble, or you will be wiped.


You don't need to consistently play, be in the market all the time, or need to trade all the time.


You don't need to make money every day.


You can beat the game when you only trade your strategy and have discipline to follow your system.


Price action is king. Arguing at the market doesn't get you anywhere.


Trade your premium setup, trade your game.


There is only one side to the stock market, it is not the bull side or the bear side but the right side.


Do not enter a trade until you are sure you have a high probability setup. If you don't see a setup, don't play at all.


Only when you lose money do you learn the lesson of your mistakes and gain experience on what not to do next time.


You must believe in yourself and your own judgement. No tips.


If you make a mistake and lose money, identify the root of the problem and understand how to fix it.


Constantly evaluate yourself for any problems in your trading and address it by learning, adapting, and changing.


When you lose, take some time off to step back and calmly reflect on your play from a distance, you can see the whole situation better then come back stronger. Keep trying to identify and locate the problem with your system, find out how and why.


There is nothing like losing all you have in the world for teaching you what not to do. When you know what not to do in order to not lose money, you begin to learn what to do in order to win.


Trading isn't always permanent rules, the rules may change and adapt.


Analyze the behavior of a stock to judge whether or not it is moving as anticipated based on your past experience. If a stock doesn't move as predicted or doesn't act right, don't touch it. If you can't identify exactly what is wrong, you cannot tell which way it is going. No diagnosis, no profit.


The chart doesn't lie. A chart helps those who can interpret what they need. But don't 100% rely on it. All a man needs to know to make money is to interpret market conditions. Need to be flexible, can't 100% rely on a fixed set of rules. The chart is always right but if you push your confidence to its logical limit, you will lose.


The market does what it wants. Not even a large news event can stop the market from being a bull market when conditions are bullish or a bear market when conditions are bearish. Not even the most negative news can stop a bull market from being bullish or the most positive news stopping a bear market from being bearish. Price action is always right, the market does whatever it wants to do, follow it.


Trading is a business.


Taking care of yourself is equally important. Being physically and mentally fit is important. Do not trade on insufficient sleep. You can't trade properly on lack of sleep.


Always do your research to anticipate stock movements.


Understand the difference between gambling and trading. Transition from betting on fluctuations to anticipating inevitable advances and declines.


Always try to trade more intelligently, iterate your system. Always continuously study to identify mistakes and test out improvements in your trading system.


Study both winning and losing plays. There is much to learn from partial victory and defeat.


Don't listen to other people. Believe in yourself. Don't always need to play conservatively, sometimes you need to take the risk. Understand why you are getting a small percentage of what you should have made. This is being too conservative and letting others influence your decisions.


You don't grow poor taking profits but neither do you grow rich.


Suckers differ among themselves according to their degree of experience. Don't be a sucker!


Don't listen to other people, ignore the intelligence of others. Play the game according to yourself. Believe in yourself and only yourself.


Ignore tips, don't blindly follow them. Do your own research.


"Before I can solve a problem I must state it to myself. When I think I have found the solution I must prove I am right with my own money."


"Studying winning plays, I discovered I was often right in my diagnosis of market conditions and general trend but I was not making much money. Why?"


Never blame your failures on others, you can only blame yourself.


"I myself can only trade in accordance with the experience of many years. I paid a high price for it and I don't feel like throwing away a second tuition fee."


Think about all the numerous failures to make as much money when you were so right on the general market. You suffered from the same defeat and human weakness. Do not give into temptation to sell even though it is hard to resist. Past experience has shown it was an expensive lesson. "Well, you know this is a bull market."


"If I sold that stock now I would lose my position; and then where would I be?" The worst thing you can do is lose your position. To lose your position is something nobody can afford."


★★★ The big money is not in the individual fluctuations but in the main movements, that is, not capturing the small moves but sizing up the entire market and its trend.


★★★★ "It was never my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. Men who can be both right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money."


★★★ Why you can't sit tight? "A man may see straight and clearly, yet become impatient or doubtful when the market takes it time about doing as he figured it must do." You may have the best entry/setup but you can't be impatient or doubtful when the market doesn't immediately move. You have to give it some time, the market doesn't move all in one direction, it takes time. The reason why you can't hold (sit tight) is because you get impatient or doubtful when the market takes its time to move as anticipated. You need to give it time to move, the market doesn't move in a straight line. That is why so many men on Wall Street nevertheless lose money. The market does not beat them. They beat themselves, because though they have the brains they cannot sit tight."


★★ The market does not beat you, you beat yourself because you cannot sit tight. You need to have the courage of your convictions and the intelligent patience to sit tight.


"If you begin right you will not see your profitable position seriously menaced; and then you will find no trouble in sitting tight."


★★ "Disregarding the big swing and trying to jump in and out was fatal." Focus on capturing the big swing instead of jumping in and out. It is the big swing that makes the big money for you.


"One of the most helpful things that anyone can learn is to give up trying to catch the last eighth or the first." Stop trying to time the top or bottom.


"Without faith in his own judgement no man can go very far in this game."


"That is about all I have learned - to study general conditions, to take a position and stick to it. I can wait without a twinge of impatience. I can see a setback without being shaken, knowing that it is only temporary."


"Some time always elapses between making a mistake and realizing it, and more time between realizing it and exactly determining it."


★★ "Every time you find out the reason for a loss or the why and how of another mistake, add a new lesson to your knowledge of the game."


You need to have the courage of your convictions and the patience to sit tight.


Stop trying to milk every last bit of profit.


Always follow your gut impulse feeling, follow your hunches.


"On previous occasions when I had the same urge to sell and didn't do it I always had reasons to regret it."


Don't get impatient when you feel you are right.


The market's response to news is all in the state of sentiment at the time.


Slowly build up a position, no need to start big.


When an opportunity arrives, it's up to you to take advantage of it.


Believe in your experience in the behavior of the market and your perception of market behavior.


"I got what I deserved for disregarding the voice of experience and listening to the voice of a tipster." Always believe in the voice of experience and ignore the voice of a tipster.


★★ "Believe in the courage of your own convictions, have confidence in yourself."


Always account for the general market and sector conditions.


Don't rush to act on anything, slowdown be calm.


Stocks are never too high for you to begin buying or too low to begin selling.


"The bear side doesn't appeal to me any more than the bull side."


Do not allow your positions to do the thinking for you.


Never argue with the tape.


Be continuously bullish in a bull market.


Always live to trade another day.


Always read the charts to determine the best time to enter.


Hopes do not play any part in trading.


You can’t just look at the potential gain; you always have to consider what you can lose.


Do not trade against the trend unless you are completely sure it will not backfire, wait for the right time.


Only trade when market conditions are right for your strategy.


Your only true ally is general market conditions. "I had allies - the strongest and truest in the world: underlying conditions."


"The only thing to do when a man is wrong is to be right by ceasing to be wrong."


"When you want to get out, get out."


In trading, having a wishful thinking or hoping that something will happen is fatal.


"The thing is to be right, to know it, and to act accordingly."


"Tape reading is an important part of the game; so is beginning at the right time; so is sticking to your position."


"My greatest discovery was that a man must study general market conditions, to size them so as to be able to anticipate probabilities."


"Nobody is immune from the danger of making sucker plays."


"My biggest winnings were not in dollars but in the intangibles: I had been right, I had looked ahead and followed a clear cut plan."


"The recognition of our own mistakes should not benefit us any more than the study of our successes."


"If a man is both wise a lucky, he will not make the same mistake twice. But he will make any one of the ten thousand brothers or cousins of the original."


"Losing money is the least of my troubles. A loss never bothers me after I take it. I forget it overnight. But being wrong - not taking the loss- that is what does the damage to the pocketbook and to the soul."


"I am carrying so much cotton that I can't sleep thinking about it. It is wearing me out. What can I do? Sell down to the sleeping point."


The objective of reading the tape is to determine when to trade - that is, whether it is wise to buy than to sell.


Watch the market with one objective: to determine the direction.


Prices move along the line of least resistance. They will do whatever comes easiest, therefore the will go up if there is less resistance to an advance than to a decline.


"The trader is not an investor. His objective is not to secure a steady return on his money but to profit by either a rise of a fall in the price of whatever he may be speculating in. Therefore, the thing to determine is the speculative line of least resistance at the moment of trading and he should wait for when that line defines itself."


"Stocks are never too high to buy or too low to sell. The price has nothing to do with establishing the line of least resistance."


"The trend has been established before the news is published, and in bull markets bear items are ignored and bull news exaggerated, and vice versa."


"A man has to guard against many things, and most of all against himself - that is against human nature."


"Any important piece of news given out between the closing of one market and the opening of another is usually in harmony with the line of least resistance."


"The man who is right always has two forces working in his favor - basic conditions and the men who are wrong."


"It is not wise to disregard the message of the tape."


Don't be in such a great hurry, wait for the setup to define itself.
"In a channel, there is no sense in trying to anticipate what the next big movement is going to be - up or down. The thing to do is to watch the market, read the tape to determine the limits of prices, and make up your mind that you will not take an interest until the price breaks through the limit in either direction."


"A trader must concern himself with making money and not insisting that the tape must agree with him. Never argue with it or ask it for reasons or explanations."


"It doesn't pay to start wrong in anything."


Stick to your own proven system.


"Fear keeps you from making as much money as you ought to."


"Instead of hoping he must fear: instead of fearing he must hope. He must fear that his loss will develop into a much bigger loss, and hope that his profit may become a big profit."


"I was no longer betting blindly or concerned with mastering the technique of the game, but with earning my successes by hard study and clear thinking."


"For a sucker play, a man gets sucker pay."


"He will find that if he asks himself questions and considers conditions, that the answers will supply themselves directly."


"It is the way a man looks at things that makes or loses money for him in the speculative markets. The professional concerns himself with doing the right thing rather than with marking 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."


"Do not play prejudices but conditions."


"Seize the opportunity, no matter when or how it comes."


"I am so accustomed to losing money that I never think first of that phase of my mistakes. It is always the play itself, the reason why. In the first place I wish to know my limitations and habits of thought. Another reason is that I do not wish to make the same mistake a second time. A man can excuse his mistakes only by catapulting them to his subsequent profit."


"I have learned that a man may possess an original mind and a lifelong habit of independent thinking and still be vulnerable to attacks by a persuasive personality." Don't let others influence you. You need to see the market with your own eyes.


"A man cannot be convinced against his own convictions, but he can be talked into a state of uncertainty and indecision, which is even worse, for that means that he cannot trade with confidence and comfort."


"The cotton showed me a loss and I kept it. The wheat showed me a profit and I sold it. Of all speculative blunders there are few greater than trying to average a losing game. Always sell what shows you a loss and keep what shows a profit."
"A man can make foolish plays for no reason."


"A dangerous enemy to the trader is his susceptibility to the urgings of a magnetic personality when plausibly expressed by a brilliant mind."


"The hope of making the stock market pay your bill is one of the most prolific sources of loss in Wall Street."


"There isn't a man in Wall Street who has not lost money trying to make the market pay for an automobile of a bracelet or a motor boat or a painting."


"Stand by your own observations and deductions, do not play another man's game."


"If you are sick, nervous, upset, or unable to reason calmly, you are in the frame of mind in which no speculator should be in when he is trading."


"There is no mind so machine like that you can depend upon it to function with equal efficiency at all times."


"A man must know himself thoroughly if he is going to make a good job out of trading in the speculative markets."


"No price is too high for a speculator to pay to learn which will keep him from getting the swelled head. A great many smashes by brilliant men can be traced directly to the swelled head - an expensive disease everywhere to everybody, but particularly in Wall Street to a speculator."


★★ "The loss of the money didn't bother me. Whenever I have lost money in the stock market I have always considered that I have learned something; that if I have lost money I have gained experience, so that the money really went to a tuition fee. A man has to have experience and he has to pay for it. The money a man loses is nothing; he can make it up. But opportunities do not come every day."


“It is unwise and improper for a speculator to allow himself to be influenced by any consideration to act against his own judgement. Your business as a speculator is to always back your own judgement."


★★ "I convinced myself that whatever was wrong was wrong with me and not with the market. As I studied the problem, I saw that it wasn't a case that called for reading the tape but for reading my own self. I reached the conclusion that I would never be able to accomplish anything useful so long as I was worried."


"A man must give his entire mind to his business - if he wishes to succeed in stock market speculation."


"I know that unless I had sufficient trading capital, I would not be able to use good judgement. Without adequate margins it would be impossible to take the cold-blooded, dispassionate attitude towards that game that comes from the ability to afford a few minor losses in testing the market before putting down the big bet."


★★ "A trader, in addition to studying basic conditions, remembering market precedents and keep in mind the psychology of the outside public as well as the limitations of his brokers, must also know himself and provide against his own weakness. I have come to feel that it is as necessary to know how to read myself as to know how to read the tape. I have studied and reckoned on my own reactions to given impulses or to the inevitable temptations of an active market."


"Nowhere does history indulge in repetitions so often or so uniformly as in Wall Street. The game does not change and neither does human nature."


"I was not, and I never have felt that I was, wedded to one or the other side of the market. That a bull market has added to my bank account or a bear market has been particularly generous I do not consider sufficient reason for sticking to the bull or the bear side after I receive the get-out warning. A man does not swear eternal allegiance to either the bull or the bear side. His concern lies with being right."
"When something happens on which you did not count when you made your plans it behooves you to utilize the opportunity that a kindly fate offers you."


★★★ "In a bear market, it is always wise to cover if complete demoralization suddenly develops."


"Every once in a while a man gets a crack so that he may be reminded of the sad fact that no human being can be so uniformly right on the market as to be beyond the reach of unprofitable accidents."


"While I felt certain that the bear market had really begun before the bull market had really ended, I knew the time for being a rampant bear was not yet. There was no sense in being more royalist than the king; especially in being too soon. The tape merely said that patrolling parties from the main bear army had dashed by. Time to get ready."


"Another thing to bear in mind is this: Never try to sell at the top. It isn't wise. Sell after a reaction if there is no rally."


★★ "When I lose money by reason of some development which nobody could foresee I think no more vindictively of it then I do of an inconveniently timed storm."


"No profit should be counted safe until it is deposited in your bank to your credit."


"The reward for being right is to make money. The punishment for being wrong is to lose money. What happened? The unexpectable! What had never happened in anybody; experience; what I therefore had no reason to guard against. I added a new one to the long list of hazards of speculation that I must always keep before me."


★★★ A speculator must have faith in himself and in his judgment. Courage in a speculator is merely confidence to act on the decision of his mind. With me, I cannot fear to be wrong because I never think I am wrong until I am proven wrong. In fact, I am uncomfortable unless I am capitalizing my experience. The course of the market at a given time does not necessarily prove me wrong. It is the character of the advance or of the decline that determines for me the correctness or the fallacy of my market position. I can only rise by knowledge. If I fall it must be by my own blunders.


"Post-mortems in speculation are a waste of time. They get you nowhere. But this particular coffee deal has a certain educational value. It was as pretty as any I have ever gone into. The risk was so sure, so logical, that I figured that I simply couldn't help making several millions of dollars. But I didn't. You cannot be dead sure of anything in a speculative operation. It was the experience I have just told you that made me add the unexpected to the unexpected in my list of hazards."


★★★ "The raid excuse for losses that unfortunate speculators so often receive from brokers and financial gossipers is really an inverted tip. The difference lies in this: A bear tip is distinct, positive advice to sell short. But the inverted tip that is, the explanation that does not explain serves merely to keep you from wisely selling short. The natural tendency when a stock breaks badly is to sell it. There is a reason an unknown reason but a good reason; therefore, get out. But it is not wise to get out when the break is the result of a raid by an operator, because the moment he stops the price must rebound. Inverted tips!"


★★★ "As I have said a thousand times, no manipulation can put stocks down and keep them down. There is nothing mysterious about this. The reason is plain to everybody who will take the trouble to think about it half a minute. Suppose an operator raided a stock that is, put the price down to a level below its real value what would inevitably happen? Why, the raider would at once be up against the best kind of inside buying. The people who know what a stock is worth will always buy it when it is selling at bargain prices. If the insiders are not able to buy; it will be because general conditions are against their free command of their own resources, and such conditions are not bull conditions. When people speak about raids the inference is that the raids are unjustified; almost criminal. But selling a stock down to a price much below what it is worth is mighty dangerous business. It is well to bear in mind that a raided stock that fails to rally is not getting much inside buying and where there is a raid that is, unjustified short selling there is usually apt to be inside buying; and when there is that, the price does not stay down. I should say that in ninety-nine cases out of a hundred, so-called raids are really legitimate declines, accelerated at times but not primarily caused by the operations of a professional trader, however big a line he may be able to swing."
★★ "The theory that most of the sudden declines or particular sharp breaks are the results of some plunger's operations probably was invented as an easy way of supplying reasons to those speculators who, being nothing but blind gamblers, will believe anything that is told them rather than do a little thinking."


"It has always seemed to me the height of damfoolishness to trade on tips. It is not so much greed made blind by eagerness as it is hope bandaged by the unwillingness to do any thinking."


"The belief in miracles that all men cherish is born of immoderate indulgence in hope."


"I have found an easy way and I stick to it. I simply cannot help making money. I will tell you my secret if you wish. It is this: I never buy at the bottom and I always sell too soon."


"Investors are a different breed of cats. Most of them go in strong for inventories and statistics of earnings and all sorts of mathematical data, as though that meant facts and certainties."


★★★★ "The training of a stock trader is like a medical education. The physician has to spend long years learning anatomy, physiology, materia medica and collateral subjects by the dozen. He learns the theory and then proceeds to devote his life to the practice. He observes and classifies all sorts of pathological phenomena. He learns to diagnose. If his diagnosis is correct and that depends upon the accuracy of his observation he ought to do pretty well in his prognosis, always keeping in mind, of course, that human fallibility and the utterly unforeseen will keep him from scoring 100 per cent of bull's-eyes. And then, as he gains in experience, he learns not only to do the right thing but to do it instantly, so that many people will think he does it instinctively. It really isn't automatism. It is that he has diagnosed the case according to his observations of such cases during a period of many years; and, naturally, after he has diagnosed it, he can only treat it in the way that experience has taught him is the proper treatment. You can transmit knowledge that is, your particular collection of card-indexed facts but not your experience. A man may know what to do and lose money if he doesn't do it quickly enough.

Observation, experience, memory and mathematics these are what the successful trader must depend on. He must not only observe accurately but remember at all times what he has observed. He cannot bet on the unreasonable or on the unexpected, however strong his personal convictions may be about man's unreasonableness or however certain he may feel that the unexpected happens very frequently. He must bet always on probabilities that is, try to anticipate them. Years of practice at the game, of constant study, of always remembering, enable the trader to act on the instant when the unexpected happens as well as when the expected comes to pass.

A man can have great mathematical ability and an unusual power of accurate observation and yet fail in speculation unless he also possesses the experience and the memory. And then, like the physician who keeps up with the advances of science, the wise trader never ceases to study general conditions, to keep track of developments everywhere that are likely to affect or influence the course of the various markets. After years at the game it becomes a habit to keep posted. He acts almost automatically. He acquires the invaluable professional attitude and that enables him to beat the game at times! This difference between the professional and the amateur or occasional trader cannot be over emphasised. I find, for instance, that memory and mathematics help me very much. Wall Street makes its money on a mathematical basis. I mean, it makes its money by dealing with facts and figures.

When I said that a trader has to keep posted to the minute and that he must take a purely professional attitude toward all markets and all developments, I merely meant to emphasise again that hunches and the mysterious ticker-sense haven't so very much to do with success. Of course, it often happens that an experienced trader acts so quickly that he hasn't time to give all his reasons in advance but nevertheless they are good and sufficient reasons, because they are based on facts collected by him in his years of working and thinking and seeing things from the angle of the professional, to whom everything that comes to his mill is grist."


"Experience has taught me that the way a market behaves is an excellent guide for an operator to follow."


"Following the dictates of experience may possibly fool you now and then. But not following them invariably makes an ass of you."


"Experience has taught me to beware of buying a stock that refuses to follow the group-leader."


"I have found that experience is apt to be steady dividend payer in this game and that observation gives you the best tips of all. The behavior of a certain stock is all you need at times. You observe it. Then experience shows you how to profit by variations from the usual, that is, from the probable."


★★ "I never buy a stock even in a bull market, if it doesn't act as it ought to act in that kind of market. I have sometimes bought a stock during an undoubted bull market and found out that other stocks in the same group were not acting bullishly and I have sold out my stock. Why? Experience tells me that it is not wise to buck against what I may call the manifest group-tendency. I cannot expect to play certainties only. I must reckon on probabilities and anticipate them. An old broker once said to me: "If I am walking along a railroad track and I see a train coming toward me at sixty miles an hour, do I keep on walking on the ties? Friend, I sidestep. And I do not even pat myself on the back for being so wise and prudent."


"I don't look out for the breaks; I look out for the warnings."


"No matter how great the previous mistake, if you get an impulse from the conviction that the time is now, take the trade."


"Years of practice at the game, of constant study, of always remembering, enable the trader to act on the instant when the unexpected happens as well as when the expected comes to pass."


"My business is to trade - that is, to stick to the facts before me and not to what I think other people ought to do."


"Fear and hope remain the same; therefore, the study of the psychology of speculators is as valuable as it ever was. Weapons change, but strategy remains strategy, on the New York Stock Exchange as on the battlefield."


"The principles of successful stock speculation are based on the supposition that people will continue to make the mistakes that they have made in the past."


"People who look for easy money invariable pay for the privilege of proving conclusively that it cannot be found."


"I have managed to escape being squeezed more than once, not because of the possession of a mysterious ticker-sense but because I can generally tell the moment the character of the buying in the stock makes it imprudent for me to be short of it."


"It is well to remember a rule of manipulation. It is this: Stocks are manipulated to the highest point possible and then sold to the public on the way down."


"When the stock you are manipulating doesn't act as it should, quit. Don't argue with the tape. Do not seek to lure the profit back. Quit while the quitting is good and cheap."
"The greatest publicity agent in the world is the ticker, and by far the best advertising medium is the tape."


"Experienced speculators do not expect ever to engage in utterly riskless ventures."


"The best of all tipsters, the more persuasive of all salesman is the tape."


"There is absolutely no use in trying to force matters. You are bound to lose if you do. It isn't good business for a man to act against the teachings of experience and against common sense."


"After a boom the public is positive that nothing is going up. It isn't that buyers become more discriminating, but that the blind buying is over. It is the state of mind that has changed. Prices don't even have to go down to make people pessimistic. It is enough if the market gets dull and stays dull for a time."


"General wisdom is less valuable than specific savvy."


"If insiders don't buy their own stock on recessions, who should? The absence of inside support is generally accepted as a pretty good bear tip."


"The only way I know of making a stock go up is to buy it."


"You cannot prevent people from guessing wrong no matter how able or how experienced they may be. Carefully laid plans will miscarry because the unexpected and even the unexpectable will happen."


★★ "There are many thousands of people who buy and sell stocks speculatively but the number of those who speculate profitably is small. As the public always is "in" the market to some extent, it follows that there are losses by the public all the time. The speculator's deadly enemies are: Ignorance, greed, fear and hope. All the statute books in the world and all the rules of all the Exchanges on earth cannot eliminate these from the human animal. Accidents which knock carefully conceived plans skyhigh also are beyond regulation by bodies of coldblooded economists or warm-hearted philanthropists. There remains another source of loss and that is, deliberate misinformation as distinguished from straight tips. And because it is apt to come to a stock trader variously disguised and camouflaged, it is the more insidious and dangerous.

The average outsider, of course, trades either on tips or on rumors, spoken or printed, direct or implied. Against ordinary tips you cannot guard. For instance, a lifelong friend sincerely desires to make you rich by telling you what he has done, that is, to buy or sell some stock. His intent is good. If the tip goes wrong what can you do? Also against the professional or crooked tipster the public is protected to about the same extent that he is against gold-bricks or wood-alcohol.

But against the typical Wall Street rumors, the speculating public has neither protection nor redress. Wholesale dealers in securities, manipulators, pools and individuals resort to various devices to aid them in disposing of their surplus holdings at the best possible prices. The circulation of bullish items by the newspapers and the tickers is the most pernicious of all.

Get the slips of the financial news-agencies any day and it will surprise you to see how many statements of an implied semi-official nature they print. The authority is some "leading insider" or "a prominent director" or "a high official" or someone "in authority" who presumably knows what he is talking about. Here are today's slips. I pick an item at random. Listen to this: "A leading banker says it is too early yet to expect a declining market."

Did a leading banker really say that and if he said it why did he say it? Why does he not allow his name to be printed? Is he afraid that people will believe him if he does? Here is another one about a company the stock of which has been active this week. This time the man who makes the statement is a "prominent director." Now which if any of the company's dozen directors is doing the talking? It is plain that by remaining anonymous nobody can be blamed for any damage that may be done by the statement.


★★ "In addition to trying to determine how to make money one must also try to keep from losing money. It is almost as important to know what not to do as to know what should be done. It is therefore well to remember that manipulation of some sort enters into practically all advances in individual stocks and that such advances are engineered by insiders with one object in view and one only and that is to sell at the best profit possible. However, the average broker's customer believes himself to be a business man from Missouri if he insists upon being told why a certain stock goes up. Naturally, the manipulators "explain" the advance in a way calculated to facilitate distribution."


★★ "The overwhelming majority of the bullish articles printed on the authority of unnamed directors or insiders convey unreliable and misleading impressions to the public. The public loses many millions of dollars every year by accepting such statements as semiofficial and therefore trustworthy."


"In addition to the losses sustained by the public through believing bullish statements and buying stocks, there are the losses that come through being dissuaded from selling out. The next best thing to having people buy the stock the "prominent insider" wishes to sell is to prevent people from selling the same stock when he does not wish to support or accumulate it."


★★ "I do not recall an instance when a bear raid caused a stock to decline extensively. What was called bear raiding was nothing but selling based on accurate knowledge of real conditions. The public ought to grasp firmly this one point: That the real reason for a protracted decline is never bear raiding. When a stock keeps on going down you can bet there is something wrong with it, either with the market for it or with the company. If the decline were unjustified the stock would soon sell below its real value and that would bring in buying that would check the decline. As a matter of fact, the only time a bear can make big money selling a stock is when that stock is too high. And you can gamble your last cent on the certainty that insiders will not proclaim that fact to the world."


"The stocks which have had the worst breaks in the past 20 years did not decline on bear raiding. But the easy acceptance of that form of explanation has been responsible for losses by the public amounting to millions upon millions of dollars. It has kept people from selling who did not like the way his stock was acting and would have liquidated if they had not expected the price to go right back after the bears stopped their raiding."


★★ "In a bull market and particular in booms the public at first makes money which it later loses simply by overstaying the bull market. This talk of "bear raids" helps them to overstay. The public should beware of explanations that explain only what unnamed insiders wish the public to believe."


"The public always wants to be told. That is what makes tip-giving and tip-taking universal practices."
"The trader must look far ahead, but the broker is concerned with getting commissions now; hence the inescapable fallacy of the average market letter. Brokers make their living out of commissions from the public and yet they will try to induce the public through their market letters or by word of mouth to buy the same stocks in which they have received selling orders from insiders or manipulators."


"Another common selling device that costs the unthinking public many millions of dollars and sends nobody to jail because it is perfectly legal, is that of increasing the capital stock exclusively by reason of market exigencies. The process does not really amount to much more than changing the color of the stock certificates."


"The law punishes whoever originates or circulates rumors calculated to affect adversely the credit or business of individuals or corporations, that is, that tend to depress the values of securities by influencing the public to sell. Originally, the chief intention may have been to reduce the danger of panic by punishing anyone who doubted aloud the solvency of banks in times of stress. But of course, it serves also to protect the public against selling stocks below their real value. In other words the law of the land punishes the disseminator of bearish items of that nature."


"The public ought always to keep in mind the elementals of stock trading. When a stock is going up no elaborate explanation is needed as to why it is going up. It takes continuous buying to make a stock keep on going up. As long as it does so, with only small and natural reactions from time to time, it is a pretty safe proposition to trail along with it. But if after a long steady rise a stock turns and gradually begins to go down, with only occasional small rallies, it is obvious that the line of least resistance has changed from upward to downward. Such being the case why should any one ask for explanations? There are probably very good reasons why it should go down, but these reasons are known only to a few people who either keep those reasons to themselves, or else actually tell the public that the stock is cheap. The nature of the game as it is played is such that the public should realize that the truth cannot be told by the few who know.

Many of the so-called statements attributed to "insiders" or officials have no basis in fact. Sometimes the insiders are not even asked to make a statement, anonymous or signed. These stories are invented by somebody or other who has a large interest in the market. At a certain stage of an advance in the market-price of a security the big insiders are not averse to getting the help of the professional element to trade in that stock. But while the insider might tell the big plunger the right time to buy, you can bet he will never tell when is the time to sell. That puts the big professional in the same position as the public, only he has to have a market big enough for him to get out on. Then is when you get the most misleading "information." Of course, there are certain insiders who cannot be trusted at any stage of the game. As a rule the men who are at the head of big corporations may act in the market upon their inside knowledge, but they don't actually tell lies. They merely say nothing, for they have discovered that there are times when silence is golden. I have said many times and cannot say it too often that the experience of years as a stock operator has convinced me that no man can consistently and continuously beat the stock market though he may make money in individual stocks on certain occasions. No matter how experienced a trader is the possibility of his making losing plays is always present because speculation cannot be made 100 per cent safe. Wall Street professionals know that acting on "inside" tips will break a man more quickly than famine, pestilence, crop failures, political readjustments or what might be called normal accidents. There is no asphalt boulevard to success in Wall Street or anywhere else.