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Reminiscences of a Stock Operator
I proceeded to protect myself as thoroughly as I could. The syndicate owned or
controlled about 70 per cent of the outstanding stock. I had them deposit their 70 per
cent under a trust agreement. I didn't propose to be used as a dumping ground for the big
holders. With the majority holdings thus securely tied up, I still had 30 per cent of
scattered holdings to consider, but that was a risk I had to take. Experienced speculators
do not expect ever to engage in utterly riskless ventures. As a matter of fact, it was not
much more likely that all the untrusteed stock would be thrown on the market at one fell
swoop than that all the policyholders of a life-insurance company would die at the same
hour, the same day. There are unprinted actuarial tables of stock-market risks as well as
of human mortality.
Having protected myself from some of the avoidable dangers of a stock-market deal of
that sort, I was ready to begin my campaign. Its objective was to make my calls
valuable. To do this I must put up the price and develop a market in which I could sell
one hundred thousand shares the stock in which I held options.
The first thing I did was to find out how much stock was likely to come on the market
on an advance. This was easily done through my brokers, who had no trouble in
ascertaining what stock was for sale at or a little above the market. I don't know whether
the specialists told them what orders they had on their books or not. The price was
nominally 70, but I could not have sold one thousand shares at that price. I had no
evidence of even a moderate demand at that figure or even a few points lower. I had to
go by what my brokers found out. But it was enough to show me how much stock there
was for sale and how little was wanted.
As soon as I had a line on these points I quietly took all the stock that was for sale at 70
and higher. When I say "I" you will understand that I mean my brokers. The sales were
for account of some of the minority holders because my clients naturally had cancelled
whatever selling orders they might have given out before they tied up their stock.
I didn't have to buy very much stock. Moreover, I knew that the right kind of advance
would bring in other buying orders and, of course, selling orders also.
I didn't give bull tips on Imperial Steel to anybody. I didn't have to. My job was to seek
directly to influence sentiment by the best possible kind of publicity. I do not say that
there should never be bull propaganda. It is as legitimate and indeed as desirable to
advertise the value of a new stock as to advertise the value of woolens or shoes or
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