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Reminiscences of a Stock Operator
Chapter XXI
I am well aware that all these generalities do not sound especially impressive.
Generalities seldom do. Possibly I may succeed better if I give a concrete example. I'll
tell you how I marked up the price of a stock 30 points, and in so doing accumulated
only seven thousand shares and developed a market that would absorb almost any
amount of stock.
It was Imperial Steel. The stock had been brought out by reputable people and it had
been fairly well tipped as a property of value. About 30 per cent of the capital stock was
placed with the general public through various Wall Street houses, but there had been no
significant activity in the shares after they were listed. From time to time somebody
would ask about it and one or another insider members of the original underwriting
syndicate would say that the company's earnings were better than expected and the
prospects more than encouraging. This was true enough and very good as far as it went,
but not exactly thrilling. The speculative appeal was absent, and from the investor's
point of view the price stability and dividend permanency of the stock were not yet
demonstrated. It was a stock that never behaved sensationally. It was so gentlemanly
that no corroborative rise ever followed the insiders' eminently truthful reports. On the
other hand, neither did the price decline.
Imperial Steel remained unhonoured and unsung and un-tipped, content to be one of
those stocks that don't go down because nobody sells and that nobody sells because
nobody likes to go short of a stock that is not well distributed; the seller is too much at
the mercy of the loaded-up inside clique. Similarly, there is no inducement to buy such a
stock. To the investor Imperial Steel therefore remained a speculation. To the speculator
it was a dead one the kind that makes an investor of you against your will by the simple
expedient of falling into a trance the moment you go long of it. The chap who is
compelled to lug a corpse a year or two always loses more than the original cost of the
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