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Reminiscences of a Stock Operator
consumption the surplus stocks must be absorbed, and when that happened the price of
coffee must do what the prices of all other commodities had done, which was, go way
up.
It didn't require a Sherlock Holmes to size up the situation. Why everybody did not buy
coffee I cannot tell you. When I decided to buy it I did not consider it a speculation. It
was much more of an investment. I knew it would take time to cash in, but I knew also
that it was bound to yield a good profit. That made it a conservative investment
operation a banker's act rather than a gambler's play.
I started my buying operations in the winter of 1917. I took quite a lot of coffee. The
market, however, did nothing to speak of. It continued inactive and as for the price, it
did not go up as I had expected. The outcome of it all was that I simply carried my line
to no purpose for nine long months. My contracts expired then and I sold out all my
options. I took a whopping big loss on that deal and yet I was sure my views were
sound. I had been clearly wrong in the matter of time, but I was confident that coffee
must advance as all commodities had done, so that no sooner had I sold out my line than
I started in to buy again. I bought three times as much coffee as I had so unprofitably
carried during those nine disappointing months. Of course I bought deferred options for
as long a time as I could get.
I was not so wrong now. As soon as I had taken on my trebled line the market began to
go up. People everywhere seemed to realise all of a sudden what was bound to happen in
the coffee market. It began to look as if my investment was going to return me a mighty
good rate of interest.
The sellers of the contracts I held were roasters, mostly of German names and
affiliations, who had bought the coffee in Brazil confidently expecting to bring it to this
country. But there were no ships to bring it, and presently they found themselves in the
uncomfortable position of having no end of coffee down there and being heavily short of
it to me up here. Please bear in mind that I first became bullish on coffee while the price
was practically at a pre-war level, and don't forget that after I bought it I carried it the
greater part of a year and then took a big loss on it. The punishment for being wrong is
to lose money. The reward for being right is to make money. Being clearly right and
carrying a big line, I was justified in expecting to make a killing. It would not take much
of an advance to make my profit satisfactory to me, for I was carrying several hundred
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