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Reminiscences of a Stock Operator
am wrong until I am proven wrong. In fact, I am uncomfortable unless I am capitalising
my experience. The course of the market at a given time does not necessarily prove me
wrong. It is the character of the advance or of the decline that determines for me the
correctness or the fallacy of my market position. I can only rise by knowledge. If I fall it
must be by my own blunders.
There was nothing in the character of the rally from 133 to 150 to frighten me into
covering and presently the stock, as was to be expected, started down again. It broke 140
before the inside clique began to give it support. Their buying was coincident with a
flood of bull rumors about the stock. The company, we heard, was making perfectly
fabulous profits, and the earnings justified an increase in the regular dividend rate. Also,
the short interest was said to be perfectly huge and the squeeze of the century was about
to be inflicted on the bear party in general and in particular on a certain operator who
was more than over-extended. I couldn't begin to tell you all I heard as they ran the price
up ten points.
The manipulation did not seem particularly dangerous to me but when the price touched
149 I decided that it was not wise to let the Street accept as true all the bull statements
that were floating around. Of course, there was nothing that I or any other rank outsider
could say that would carry conviction either to the frightened shorts or to those
credulous customers of commission houses that trade on hearsay tips. The most effective
retort courteous is that which the tape alone can print. People will believe that when they
will not believe an affidavit from any living man, much less one from a chap who is
short 30,000 shares. So I used the same tactics that I did at the time of the Stratton
corner in corn, when I sold oats to make the traders bearish on corn. Experience and
memory again.
When the insiders jacked up the price of Tropical Trading with a view to frightening the
shorts I didn't try to check the rise by selling that stock. I was already short 30,000
shares of it which was as big a percentage of the floating supply as I thought wise to be
short of. I did not propose to put my head into the noose so obligingly held open for me
the second rally was really an urgent invitation. What I did when TT touched 149 was to
sell about 10,000 shares of Equatorial Commercial Corporation. This company owned a
large block of Tropical Trading.
Equatorial Commercial, which was not as active a stock as TT, broke badly on my
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