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Reminiscences of a Stock Operator
have spurred me to more continuous study. I certainly would have had more mistakes to
spot. But I am not sure of the exact value of losing, for if I had lost more I would have
lacked the money to test out the improvements in my methods of trading.
Studying my winning plays in Fullerton's office I discovered that although I often was
100 per cent right on the market that is, in my diagnosis of conditions and general trend I
was not making as much money as my market "tightness" entitled me to. Why wasn't I?
There was as much to learn from partial victory as from defeat.
For instance, I had been bullish from the very start of a bull market, and I had backed
my opinion by buying stocks. An advance followed, as I had clearly foreseen. So far, all
very well. But what else did I do? Why, I listened to the elder statesmen and curbed my
youthful impetuousness. I made up my mind to be wise and play carefully,
conservatively. Everybody knew that the way to do that was to take profits and buy back
your stocks on reactions. And that is precisely what I did, or rather what I tried to do; for
I often took profits and waited for a reaction that never came. And I saw my stock go
kiting up ten points more and I sitting there with my four-point profit safe in my
conservative pocket. They say you never grow poor taking profits. No, you don't. But
neither do you grow rich taking a four-point profit in a bull market.
Where I should have made twenty thousand dollars I made two thousand. That was what
my conservatism did for me. About the time I discovered what a small percentage of
what I should have made I was getting I discovered something else, and that is that
suckers differ among themselves according to the degree of experience.
The tyro knows nothing, and everybody, including himself, knows it. But the next, or
second, grade thinks he knows a great deal and makes others feel that way too. He is the
experienced sucker, who has studied not the market itself but a few remarks about the
market made by a still higher grade of suckers. The second-grade sucker knows how to
keep from losing his money in some of the ways that get the raw beginner. It is this
semisucker rather than the 100 per cent article who is the real all-the-year-round support
of the commission houses. He lasts about three and a half years on an average, as
compared with a single season of from three to thirty weeks, which is the usual Wall
Street life of a first offender. It is naturally the semisucker who is always quoting the
famous trading aphorisms and the various rules of the game. He knows all the don'ts that
ever fell from the oracular lips of the old stagers excepting the principal one, which is:
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