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Reminiscences of a Stock Operator
demand may be. I recall how I missed a big play just by trying to anticipate the starting
signal. I felt so sure of conditions that I thought it was not necessary to wait for the line
of least resistance to define itself. I even thought I might help it arrive, because it looked
as if it merely needed a little assistance.
I was very bullish on cotton. It was hanging around twelve cents, running up and down
within a moderate range. It was in one of those in-between places and I could see it. I
knew I really ought to wait. But I got to thinking that if I gave it a little push it would go
beyond the upper resistance point.
I bought fifty thousand bales. Sure enough, it moved up. And sure enough, as soon as I
stopped buying it stopped going up. Then it began to settle back to where it was when I
began buying it. I got out and it stopped going down. I thought I was now much nearer
the starting signal, and presently I thought I'd start it myself again. I did. The same thing
happened. I bid it up, only to see it go down when I stopped. I did this four or five times
until I finally quit in disgust. It cost me about two hundred thousand dollars. I was done
with it. It wasn't very long after that when it began to go up and never stopped till it got
to a price that would have meant a killing for me if I hadn't been in such a great hurry to
start.
This experience has been the experience of so many traders so many times that I can
give this rule: In a narrow market, when prices are not getting anywhere to speak of but
move within a narrow range, 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 the get-nowhere prices, and make up your mind that you
will not take an interest until the price breaks through the limit in either direction. A
speculator must concern himself with making money out of the market and not with
insisting that the tape must agree with him. Never argue with it or ask it for reasons or
explanations. Stock-market postmortems don't pay dividends.
Not so long ago I was with a party of friends. They got to talking wheat. Some of them
were bullish and others bearish. Finally they asked me what I thought. Well, I had been
studying the market for some time. I knew they did not want any statistics or analyses of
conditions. So I said: "If you want to make some money out of wheat I can tell you how
to do it."
They all said they did and I told them, "If you are sure you wish to make money in
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