双语·股票大作手回忆录 第六章

IN the spring of 1906 I was in Atlantic City for a short vacation．I was out of stocks and was thinking only of having a change of air and a nice rest．By the way，I had gone back to my first brokers，Harding Brothers，and my account had got to be pretty active．I could swing three or four thousand shares．That wasn't much more than I had done in the old Cosmopolitan shop when I was barely twenty years of age．But there was some difference between my one-point margin in the bucket shop and the margin required by brokers who actually bought or sold stocks for my account on the New York Stock Exchange．

You may remember the story I told you about that time when I was short thirty-five hundred Sugar in the Cosmopolitan and I had a hunch something was wrong and I'd better close the trade？Well，I have often had that curious feeling．As a rule，I yield to it．But at times I have pooh-poohed the idea and have told myself that it was simply asinine to follow any of these sudden blind impulses to reverse my position．I have ascribed my hunch to a state of nerves resulting from too many cigars or insufficient sleep or a torpid liver or something of that kind．When I have argued myself into disregarding my impulse and have stood pat I have always had cause to regret it．A dozen instances occur to me when I did not sell as per hunch，and the next day I'd go downtown and the market would be strong，or perhaps even advance，and I'd tell myself how silly it would have been to obey the blind impulse to sell．But on the following day there would be a pretty bad drop．Something had broken loose somewhere and I'd have made money by not being so wise and logical．The reason plainly was not physiological but psychological．

I want to tell you only about one of them because of what it did for me．It happened when I was having that little vacation in Atlantic City in the spring of 1906．I had a friend with me who also was a customer of Harding Brothers．I had no interest in the market one way or another and was enjoying my rest．I can always give up trading to play，unless of course it is an exceptionally active market in which my commitments are rather heavy．It was a bull market，as I remember it．The outlook was favorable for general business and the stock market had slowed down but the tone was firm and all indications pointed to higher prices．

One morning after we had breakfasted and had finished reading all the New York morning papers，and had got tired of watching the sea gulls picking up clams and flying up with them twenty feet in the air and dropping them on the hard wet sand to open them for their breakfast，my friend and I started up the Boardwalk．That was the most exciting thing we did in the daytime．

It was not noon yet，and we walked up slowly to kill time and breathe the salt air．Harding Brothers had a branch office on the Boardwalk and we used to drop in every morning and see how they'd opened．It was more force of habit than anything else，for I wasn't doing anything．

The market，we found，was strong and active．My friend，who was quite bullish，was carrying a moderate line purchased several points lower．He began to tell me what an obviously wise thing it was to hold stocks for much higher prices．I wasn't paying enough attention to him to take the trouble to agree with him．I was looking over the quotation board，noting the changes—they were mostly advances—until I came to Union Pacific．I got a feeling that I ought to sell it．I can't tell you more．I just felt like selling it．I asked myself why I should feel like that，and I couldn't find any reason whatever for going short of UP．

I stared at the last price on the board until I couldn't see any figures or any board or anything else，for that matter．All I knew was that I wanted to sell Union Pacific and I couldn't find out why I wanted to．

I must have looked queer，for my friend，who was standing alongside of me，suddenly nudged me and asked，“Hey，what's the matter？”

“I don't know，”I answered．

“Going to sleep？”he said．

“No，”I said．“I am not going to sleep．What I am going to do is to sell that stock．”I had always made money following my hunches．

I walked over to a table where there were some blank order pads．My friend followed me．I wrote out an order to sell a thousand Union Pacific at the market and handed it to the manager．He was smiling when I wrote it and when he took it．But when he read the order he stopped smiling and looked at me．

“Is this right？”he asked me．But I just looked at him and he rushed it over to the operator．

“What are you doing？”asked my friend．

“I'm selling it！”I told him．

“Selling what？”he yelled at me．If he was a bull how could I be a bear？Something was wrong．

“A thousand UP，”I said．

“Why？”he asked me in great excitement．

I shook my head，meaning I had no reason．But he must have thought I'd got a tip，because he took me by the arm and led me outside into the hall，where we could be out of sight and hearing of the other customers and rubbering chairwarmers．

“What did you bear？”he asked me．

He was quite excited．UP．was one of his pets and he was bullish on it because of its earnings and its prospects．But he was willing to take a bear tip on it at second hand．

“Nothing ！”I said．

“You didn't？”He was skeptical and showed it plainly．

“I didn't hear a thing．”

“Then why in blazes are you selling？”

“I don't know，”I told him．I spoke gospel truth．

“Oh，come across，Larry，”he said．

He knew it was my habit to know why I traded．I had sold a thousand shares of Union Pacific．I must have a very good reason to sell that much stock in the face of the strong market．

“I don't know，”I repeated．“I just feel that something is going to happen．”

“What's going to happen？”

“I don't know．I can't give you any reason．All I know is that I want to sell that stock．And I'm going to let 'em have another thousand．”

I walked back into the office and gave an order to sell a second thousand．If I was right in selling the first thousand I ought to have out a little more．

“What could possibly happen？”persisted my friend，who couldn't make up his mind to follow my lead．If I'd told him that I had heard UP．was going down he'd have sold it without asking me from whom I'd heard it or why．“What could possibly happen？”he asked again．

“A million things could happen．But I can't promise you that any of them will．I can't give you any reasons and I can't tell fortunes，”I told him．

“Then you're crazy，”he said．“Stark crazy，selling that stock without rime or reason．You don't know why you want to sell it？”

“I don't know why I want to sell it．I only know I do want to，”I said．“I want to，like everything．”The urge was so strong that I sold another thousand．

That was too much for my friend．He grabbed me by the arm and said，“Here！Let's get out of this place before you sell the entire capital stock．”

I had sold as much as I needed to satisfy my feeling，so I followed him without waiting for a report on the last two thousand shares．It was a pretty good jag of stock for me to sell even with the best of reasons．It seemed more than enough to be short of without any reason whatever，particularly when the entire market was so strong and there was nothing in sight to make anybody think of the bear side．But I remembered that on previous occasions when I had the same urge to sell and didn't do it I always had reasons to regret it．

I have told some of these stories to friends，and some of them tell me it isn't a hunch but the subconscious mind，which is the creative mind，at work．That is the mind which makes artists do things without their knowing how they came to do them．Perhaps with me it was the cumulative effect of a lot of little things individually insignificant but collectively powerful．Possibly my friend's unintelligent bullishness aroused a spirit of contradiction and I picked on UP．because it had been touted so much．I can't tell you what the cause or motive for hunches may be．All I know is that I went out of the Atlantic City branch office of Harding Brothers short three thousand Union Pacific in a rising market，and I wasn't worried a bit．

I wanted to know what price they'd got for my last two thousand shares．So after luncheon we walked up to the office．I had the pleasure of seeing that the general market was strong and Union Pacific higher．

“I see your finish，”said my friend．You could see he was glad he hadn't sold any．

The next day the general market went up some more and I heard nothing but cheerful remarks from my friend．But I felt sure I had done right to sell UP.，and I never get impatient when I feel I am right．What's the sense？That afternoon Union Pacific stopped climbing，and toward the end of the day it began to go off．Pretty soon it got down to a point below the level of the average of my three thousand shares．I felt more positive than ever that I was on the right side，and since I felt that way I naturally had to sell some more．So，toward the close，I sold an additional two thousand shares．

There I was，short five thousand shares of UP．on a hunch．That was as much as I could sell in Harding's office with the margin I had up．It was too much stock for me to be short of，on a vacation；so I gave up the vacation and returned to New York that very night．There was no telling what might happen and I thought I'd better be Johnny-on-the-spot．There I could move quickly if I had to．

The next day we got the news of the San Francisco earthquake．It was an awful disaster．But the market opened down only a couple of points．The bull forces were at work，and the public never is independently responsive to news．You see that all the time．If there is a solid bull foundation，for instance，whether or not what the papers call bull manipulation is going on at the same time，certain news items fail to have the effect they would have if the Street was bearish．It is all in the state of sentiment at the time．In this case the Street did not appraise the extent of the catastrophe because it didn't wish to．Before the day was over prices came back．

I was short five thousand shares．The blow had fallen，but my stock hadn't．My hunch was of the first water，but my bank account wasn't growing；not even on paper．The friend who had been in Atlantic City with me when I put out my short line in UP．was glad and sad about it．

He told me：“That was some hunch，kid．But，say，when the talent and the money are all on the bull side what's the use of bucking against them？They are bound to win out．”

“Give them time，”I said．I meant prices．I wouldn't cover because I knew the damage was enormous and the Union Pacific would be one of the worst sufferers．But it was exasperating to see the blindness of the Street．

“Give 'em time and your skin will be where all the other bear hides are stretched out in the sun，drying，”he assured me．

“What would you do？”I asked him．“Buy UP．on the strength of the millions of dollars of damage suffered by the Southern Pacific and other lines？Where are the earnings for dividends going to come from after they pay for all they've lost？The best you can say is that the trouble may not be as bad as it is painted．But is that a reason for buying the stocks of the roads chiefly affected？Answer me that．”

But all my friend said was：“Yes，that listens fine．But I tell you，the market doesn't agree with you．The tape doesn't lie，does it？”

“It doesn't always tell the truth on the instant，”I said．

“Listen．A man was talking to Jim Fisk a little before Black Friday，giving ten good reasons why gold ought to go down for keeps．He got so encouraged by his own words that he ended by telling Fisk that he was going to sell a few million．And Jim Fisk just looked at him and said，“Go ahead！Do！Sell it short and invite me to your funeral．’”

“Yes，”I said；“and if that chap had sold it short，look at the killing he would have made！Sell some UP．yourself．”

“Not I！I'm the kind that thrives best on not rowing against wind and tide．”

On the following day，when fuller reports came in，the market began to slide off，but even then not as violently as it should．Knowing that nothing under the sun could stave off a substantial break I doubled up and sold five thousand shares．Oh，by that time it was plain to most people，and my brokers were willing enough．It wasn't reckless of them or of me，not the way I sized up the market．On the day following，the market began to go for fair．There was the dickens to pay．Of course I pushed my luck for all it was worth．I doubled up again and sold ten thousand shares more．It was the only play possible．

I wasn't thinking of anything except that I was right—100 per cent right—and that this was a heaven-sent opportunity．It was up to me to take advantage of it．I sold more．Did I think that with such a big line of shorts out，it wouldn't take much of a rally to wipe out my paper profits and possibly my principal？I don't know whether I thought of that or not，but if I did it didn't carry much weight with me．I wasn't plunging recklessly．I was really playing conservatively．There was nothing that anybody could do to undo the earthquake，was there？They couldn't restore the crumpled buildings overnight，free，gratis，for nothing，could they？All the money in the world couldn't help much in the next few hours，could it？

I was not betting blindly．I wasn't a crazy bear．I wasn't drunk with success or thinking that because Frisco was pretty well wiped off the map the entire country was headed for the scrap heap．No，indeed！I didn't look for a panic．Well，the next day I cleaned up．I made two hundred and fifty thousand dollars．It was my biggest winnings up to that time．It was all made in a few days．The Street paid no attention to the earthquake the first day or two．They'll tell you that it was because the first dispatches were not so alarmring，but I think it was because it took so long to change the point of view of the public toward the securities markets．Even the professional traders for the most part were slow and shortsighted．

I have no explanation to give you，either scientific or childish．I am telling you what I did，and why，and what came of it．I was much less concerned with the mystery of the hunch than with the fact that I got a quarter of a million out of it．It meant that I could now swing a much bigger line than ever，if or when the time came for it．

That summer I went to Saratoga Springs．It was supposed to be a vacation for me，but I kept an eye on the market．To begin with，I wasn't so tired that it bothered me to think about it．And then，everybody I knew up there had or had had an active interest in it．We naturally talked about it．I have noticed that there is quite a difference between talking and trading．Some of these chaps remind you of the bold clerk who talks to his cantankerous employer as to a yellow dog—when he tells you about it．

Harding Brothers had a branch office in Saratoga．Many of their customers were there．But the real reason，I suppose，was the advertising value．Having a branch office in a resort is simply high-class billboard advertising．I used to drop in and sit around with the rest of the crowd．The manager was a very nice chap from the New York office who was there to give the glad hand to friends and strangers and，if possible，to get business．It was a wonderful place for tips—all kinds of tips，horse-race，stock-market，and waiters'．The office knew I didn't take any，so the manager didn't come and whisper confidentially in my ear what he'd just got on the q．t．from the New York office．He simply passed over the telegrams，saying，“This is what they're sending out，”or something of the kind．

Of course I watched the market．With me，to look at the quotation board and to read the signs is one process．My good friend Union Pacific，I noticed，looked like going up．The price was high，but the stock acted as if it were being accumulated．I watched it a couple of days without trading in it，and the more I watched it the more convinced I became that it was being bought on balance by somebody who was no piker，somebody who not only had a big bank roll but knew what was what．Very clever accumulation，I thought．

As soon as I was sure of this I naturally began to buy it，at about 160．It kept on acting all hunky，and so I kept on buying it，five hundred shares at a clip．The more I bought the stronger it got，without any spurt，and I was feeling very comfortable．I couldn't see any reason why that stock shouldn't go up a great deal more；not with what I read on the tape．

All of a sudden the manager came to me and said they'd got a message from New York—they had a direct wire of course—asking if I was in the office，and when they answered yes，another came saying：“Keep him there．Tell him Mr．Harding wants to speak to him．”

I said I'd wait，and bought five hundred shares more of UP．I couldn't imagine what Harding could have to say to me．I didn't think it was anything about business．My margin was more than ample for what I was buying．Pretty soon the manager came and told me that Mr．Ed Harding wanted me on the long-distance telephone．

“Hello，Ed，”I said．

But he said，“What the devil's the matter with you？Are you crazy？”

“Are you？”I said．

“What are you doing？”he asked．

“What do you mean？”

“Buying all that stock．”‘

“Why，isn't my margin all right？”

“It isn't a case of margin，but of being a plain sucker．”

“I don't get you．”

“Why are you buying all that Union Pacific？”

“It's going up，”I said．

“Going up，hell！Don't you know that the insiders are feeding it out to you？You're just about the easiest mark up there．You'd have more fun losing it on the ponies．Don't let them kid you．”

“Nobody is kidding me，”I told him．“I haven't talked to a soul about it．”

But he came back at me：“You can't expect a miracle to save you every time you plunge in that stock．Get out while you've still got a & chance，”he said．“It's a crime to be long of that stock at this level—when these highbinders are shoveling it out by the ton．”

“The tape says they're buying it，”I insisted．

“Larry，I got heart disease when your orders began to come in．For the love of Mike，don't be a sucker．Get out！Right away．It's liable to bust wide open any minute．I've done my duty．Good-by！”And he hung up．

Ed Harding was a very clever chap，unusually well-informed and a real friend，disinterested and kind-hearted．And what was even more，I knew he was in position to hear things．All I had to go by，in my purchases of UP.，was my years of studying the behaviour of stocks and my perception of certain symptoms which experience had taught me usually accompanied a substantial rise．I don't know what happened to me，but I suppose I must have concluded that my tape reading told me the stock was being absorbed simply because very clever manipulation by the insiders made the tape tell a story that wasn't true．Possibly I was impressed by the pains Ed Harding took to stop me from making what he was so sure would be a colossal mistake on my part．Neither his brains nor his motives were to be questioned．Whatever it was that made me decide to follow his advice，I cannot tell you；but follow it，I did．

I sold out all my Union Pacific．Of course if it was unwise to be long of it it was equally unwise not to be short of it．So after I got rid of my long stock I sold four thousand shares short．I put out most of it around 162．

The next day the directors of the Union Pacific Company declared a 10 per cent dividend on the stock．At first nobody in Wall Street believed it．It was too much like the desperate manoeuvre of cornered gamblers．All the newspapers jumped on the directors．But while the Wall Street talent hesitated to act the market boiled over．Union Pacific led，and on huge transactions made a hew high-record price．Some of the room traders made fortunes in an hour and I remember later hearing about a rather dull-witted specialist who made a mistake that put three hundred and fifty thousand dollars in his pocket．He sold his seat the following week and became a gentleman farmer the following month．

Of course I realised，the moment I heard the news of the declaration of that unprecedented 10 per cent dividend，that I got what I deserved for disregarding the voice of experience and listening to the voice of a tipster．My own convictions I had set aside for the suspicions of a friend，simply because he was disinterested and as a rule knew what he was doing．

As soon as I saw Union Pacific making new high records I said to myself，“This is no stock for me to be short of．”

All I had in the world was up as margin in Harding's office．I was neither cheered nor made stubborn by the knowledge of that fact．What was plain was that I had read the tape accurately and that I had been a ninny to let Ed Harding shake my own resolution．There was no sense in recriminations，because I had no time to lose；and besides，what's done is done．So I gave an order to take in my shorts．The stock was around 165 when I sent in that order to buy in the four thousand UP．at the market．I had a three-point loss on it at that figure．Well，my brokers paid 172 and 174 for some of it before they were through．I found when I got my reports that Ed Harding's kindly intentioned interference cost me forty thousand dollars．A low price for a man to pay for not having the courage of his own convictions！It was a cheap lesson．

I wasn't worried，because the tape said still higher prices．It was an unusual move and there were no precedents for the action of the directors，but I did this time what I thought I ought to do．As soon as I had given the first order to buy four thousand shares to cover my shorts I decided to profit by what the tape indicated and so I went along．I bought four thousand shares and held that stock until the next morning．Then I got out．I not only made up the forty thousand dollars I had lost but about fifteen thousand besides．If Ed Harding hadn't tried to save me money I'd have made a killing．But he did me a very great service，for it was the lesson of that episode that，I firmly believe，completed my education as a trader．

It was not that all I needed to learn was not to take tips but follow my own inclination．It was that I gained confidence in myself and I was able finally to shake off the old method of trading．That Saratoga experience was my last haphazard，hit-or-miss operation．From then on I began to think of basic conditions instead of individual stocks．I promoted myself to a higher grade in the hard school of speculation．It was a long and difficult step to take．