VOObyM

Reminiscences of a Stock Operator
for the first time in many months did not come back. Their race evidently was run, and
that clearly necessitated a change in my trading tactics.
It was simple enough. In a bull market the trend of prices, of course, is decidedly and
definitely upward. Therefore whenever a stock goes against the general trend you are
justified in assuming that there is something wrong with that particular stock. It is
enough for the experienced trader to perceive that something is wrong. He must not
expect the tape to become a lecturer. His job is to listen for it to say "Get out!" and not
wait for it to submit a legal brief for approval.
As I said before, I noticed that stocks which had been the leaders of the wonderful
advance had ceased to advance. They dropped six or seven points and stayed there. At
the same time the rest of the market kept on advancing under new standard bearers.
Since nothing wrong had developed with the companies themselves, the reason had to be
sought elsewhere. Those stocks had gone with the current for months. When they ceased
to do so, though the bull tide was still running strong, it meant that for those particular
stocks the bull market was over. For the rest of the list the tendency was still decidedly
upward.
There was no need to be perplexed into inactivity, for there were really no cross
currents. I did not turn bearish on the market then, because the tape didn't tell me to do
so. The end of the bull market had not come, though it was within hailing distance.
Pending its arrival there was still bull money to be made. Such being the case, I merely
turned bearish on the stocks which had stopped advancing and as the rest of the market
had rising power behind it I both bought and sold.
The leaders that had ceased to lead I sold. I put out a short line of five thousand shares in
each of them; and then I went long of the new leaders. The stocks I was short of didn't
do much, but my long stocks kept on rising. When finally these in turn ceased to
advance I sold them out and went short five thousand shares of each. By this time I was
more bearish than bullish, because obviously the next big money was going to be made
on the down side. 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 so too soon.
The tape merely said that patrolling parties from the main bear army had dashed by.
Time to get ready.
- 154 -