VOObyM

Reminiscences of a Stock Operator
another nobody talks about it or does anything.
The turn comes in the line of business the company is engaged in. Who are the first to
know it, the insiders or the public? You can bet it isn't the public. What happens next?
Why, if the improvement continues the earnings will increase and the company will be
in position to resume dividends on the stock; or, if dividends were not discontinued, to
pay a higher tate. That is, the value of the stock will increase.
Say that the improvement keeps up. Does the management make public that glad fact?
Does the president tell the stockholders? Does a philanthropic director come out with a
signed statement for the benefit of that part of the public that reads the financial page in
the newspapers and the slips of the news agencies? Does some modest insider pursuing
his usual policy of anonymity come out with an unsigned statement to the effect that the
company's future is most promising? Not this time. Not a word is said by anyone and no
statement whatever is printed by newspapers or tickers.
The value-making information is carefully kept from the public while the now taciturn
"prominent insiders" go into the market and buy all the cheap stock they can lay their
hands on. As this well-informed but unostentatious buying keeps on, the stock rises. The
financial reporters, knowing that the insiders ought to know the reason for the rise, ask
questions. The unanimously anonymous insiders unanimously declare that they have no
news to give out. They do not know that there is any warrant for the rise. Sometimes
they even state that they are not particularly concerned with the vagaries of the stock
market or the actions of stock speculators.
The rise continues and there comes a happy day when those who know have all the stock
they want or can carry. The Street at once begins to hear all kinds of bullish rumours.
The tickers tell the traders "on good authority" that the company has definitely turned
the corner. The same modest director who did not wish his name used when he said he
knew no warrant for the rise in the stock is now quoted of course not by name as saying
that the stockholders have every reason to feel greatly encouraged over the outlook.
Urged by the deluge of bullish news items the public begins to buy the stock. These
purchases help to put the price still higher. In due course the predictions of the uniformly
unnamed directors come true and the company resumes dividend payments; or increases
the rate, as the case may be. With that the bullish items multiply. They not only are more
numerous than ever but much more enthusiastic. A "leading director," asked point blank
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