VOObyM

Reminiscences of a Stock Operator
Chapter V
The average ticker hound or, as they used to call him, tape-worm goes wrong, I suspect,
as much from over-specialization as from anything else. It means a highly expensive
inelasticity. After all, the game of speculation isn't all mathematics or set rules, however
rigid the main laws may be. Even in my tape reading something enters that is more than
mere arithmetic. There is what I call the behavior of a stock, actions that enable you to
judge whether or not it is going to proceed in accordance with the precedents that your
observation has noted. If a stock doesn't act right don't touch it; because, being unable to
tell precisely what is wrong, you cannot tell which way it is going. No diagnosis, no
prognosis. No prognosis, no profit.
It is a very old thing, this of noting the behavior of a stock and studying its past
performances. When I first came to New York there was a broker's office where a
Frenchman used to talk about his chart. At first I thought he was a sort of pet freak kept
by the firm because they were good-natured. Then I learned that he was a persuasive and
most impressive talker. He said that the only thing that didn't lie because it simply
couldn't was mathematics. By means of his curves he could forecast market movements.
Also he could analyse them, and tell, for instance, why Keene did the right thing in his
famous Atchison preferred bull manipulation, and later why he went wrong in his
Southern Pacific pool. At various times one or another of the professional traders tried
the Frenchman's system and then went back to their old unscientific methods of making
a living. Their hit-or-miss system was cheaper, they said. I heard that the Frenchman
said Keene admitted that the chart was 100 per cent right but claimed that the method
was too slow for practical use in an active market.
Then there was one office where a chart of the daily movement of prices was kept. It
showed at a glance just what each stock had done for months. By comparing individual
curves with the general market curve and keeping in mind certain rules the customers
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