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Reminiscences of a Stock Operator
will buy A. B. Steel because it has not advanced while C. D. Steel and X. Y. Steel have
gone up.
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."
Last year, after the general bull movement was well under way, I noticed that one stock
in a certain group was not going with the rest of the group, though the group with that
one exception was going with the rest of the market. I was long a very fair amount of
Blackwood Motors. Everybody knew that the company was doing a very big business.
The price was rising from one to three points a day and the public was coming in more
and more. This naturally centered attention on the group and all the various motor stocks
began to go up. One of them, however, persistently held back and that was Chester. It
lagged behind the others so that it was not long before it made people talk. The low price
of Chester and its apathy was contrasted with the strength and activity in Black-wood
and other motor stocks and the public logically enough listened to the touts and tipsters
and wiseacres and began to buy Chester on the theory that it must presently move up
with the rest of the group.
Instead of going up on this moderate public buying, Chester actually declined. Now, it
would have been no job to put it up in that bull market, considering that Blackwood, a
stock of the same group, was one of the sensational leaders of the general advance and
we were hearing nothing but the wonderful improvement in the demand for automobiles
of all kinds and the record output.
It was thus plain that the inside clique in Chester were not doing any of the things that
inside cliques invariably do in a bull market. For this failure to do the usual thing there
might be two reasons. Perhaps the insiders did not put it up because they wished to
accumulate more stock before advancing the price. But this was an untenable theory if
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