liquidity

I remember a story I heard about Deacon S. V. White when he was one of the big
operators of the Street. He was a very fine old man, clever as they make them, and
brave. He did some wonderful things in his day, from all I've heard.

It was in the old days when Sugar was one of the most continuous purveyors of
fireworks in the market.

H. O. Havemeyer, president of the company, was in the heyday of his power. I gather
from talks with the old-timers that H. O. and his following had all the resources of cash
and cleverness necessary to put through successfully any deal in their- own stock. They
tell me that Havemeyer trimmed more small professional traders in that stock than any
other insider in. any other stock. As a rule, the floor traders are more likely to thwart the
insiders' game than help it.

One day a man who knew Deacon White rushed into the office all excited and said,
"Deacon, you told me if I ever got any good information to come to you at once with it
and if you used it you'd carry me for a few hundred shares." He paused for breath and
for confirmation.

The deacon looked at him in that meditative way he had and said, "I don't know whether
I ever told you exactly that or not, but I am willing to pay for information that I can use."

"Well, I've got it for you."



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"Now, that's nice," said the deacon, so mildly that the man with the info swelled up and
said,

"Yes, sir, deacon." Then he came closer so nobody else would hear and said, "H. O.
Havemeyer is buying Sugar."

"Is he?" asked the deacon quite calmly.

It peeved the informant, who said impressively: "Yes, sir. Buying all he can get,
deacon."

"My friend, are you sure?" asked old S. V.

"Deacon, I know it for a positive fact. The old inside gang are buying all they can lay
their hands on. It's got something to do with the tariff and there's going to be a killing in
the common. It will cross the preferred. And that means a sure thirty points for a starter."

"Do you really think so?" And the old man looked at him over the top of the old-
fashioned silver-rimmed spectacles that he had put on to look at the tape.

"Do I think so? No, I don't think so; I know so. Absolutely! Why, deacon, when H. O.
Havemeyer and his friends buy Sugar as they're doing now they're never satisfied with
anything less than forty points net. I shouldn't be surprised to see the market get away
from them any minute and shoot up before they've got their full lines. There ain't as
much of it kicking around the brokers' offices as there was a month ago."

"He's buying Sugar, eh?" repeated the deacon absently.

"Buying it? Why, he's scooping it in as fast as he can without putting up the price on
himself."

"So?" said the deacon. That was all. But it was enough to nettle the tipster, and he said,
"Yes, sir-ree! And I call that very good information. Why, it's absolutely straight."

"Is it?"

"Yes; and it ought to be worth a whole lot. Are you going to use it?"



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Reminiscences of a Stock Operator


"Oh, yes. I'm going to use it."

"When?" asked the information bringer suspiciously.

"Right away." And the deacon called: -"Frank!" It was the first name of his shrewdest
broker, who was then in the adjoining room.

"Yes, sir," said Frank.

"I wish you'd go over to the Board and sell ten thousand Sugar."

"Sell?" yelled the tipster. There was such suffering in his voice that Frank, who had
started out at a run, halted in his tracks.

"Why, yes," said the deacon mildly.

"But I told you H. O. Havemeyer was buying it!"

"I know you did, my friend," said the deacon calmly; and turning to the broker: "Make
haste, Frank!"

The broker rushed out to execute the order and the tipster turned red.

"I came in here," he said furiously, "with the best information I ever had. I brought it to
you because I

thought you were my friend, and square. I expected you to act on it."
"I am acting on it," interrupted the deacon in a tranquillising voice.
"But I told you H. O. and his gang were buying!"
"That's right. I heard you."

"Buying! Buying! I said buying!" shrieked the tipster.

"Yes, buying! That is what I understood you to say," the deacon assured him. He was



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Reminiscences of a Stock Operator

standing by the ticker, looking at the tape.
"But you are selling it."

"Yes; ten thousand shares." And the deacon nodded. "Selling it, of course."

He stopped talking to concentrate on the tape and the tipster approached to see what the
deacon saw, for the old man was very foxy. While he was looking over the deacon's
shoulder a clerk came in with a slip, obviously the report from Frank. The deacon barely
glanced at it. He had seen on the tape "how his order had been executed.

It made him say to the clerk, "Tell him to sell another ten thousand Sugar."

"Deacon, I swear to you that they really are buying the stock!"

"Did Mr. Havemeyer tell you?" asked the deacon quietly.

"Of course not! He never tells anybody anything. He would not bat an eyelid to help his
best friend make a nickel. But I know this is true."

"Do not allow yourself to become excited, my friend." And the deacon held up a hand.
He was looking at the tape. The tip-bringer said, bitterly:

"If I had known you were going to do the opposite of what I expected I'd never have
wasted your time or mine. But I am not going to feel glad when you cover that stock at
an awful loss. I'm sorry for you, deacon. Honest! If you'll excuse me I'll go elsewhere
and act on my own information."

"I'm acting on it. I think I know a little about the market; not as much, perhaps, as you
and your friend H. O. Havemeyer, but still a little. What I am doing is what my
experience tells me is the wise thing to do with the information you brought me. After a
man has been in Wall Street as long as I have he is grateful for anybody who feels sorry
for him. Remain calm, my friend."

The man just stared at the deacon, for whose judgment and nerve he had great respect.

Pretty soon the clerk came in again and handed a report to the deacon, who looked at it
and said: "Now tell him to buy thirty thousand Sugar. Thirty thousand!"



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The clerk hurried away and the tipster just grunted and looked at the old gray fox.

"My friend," the deacon explained kindly, "I did not doubt that you were telling me the
truth as you saw it. But even if I had heard H. O. Havemeyer tell you himself, I still
would have acted as I did. For there was only one way to find out if anybody was buying
the stock in the way you said H. O. Havemeyer and his friends were buying it, and that
was to do what I did. The first ten thousand shares went fairly easily. It was not quite
conclusive. But the second ten thousand was absorbed by a market that did not stop
rising. The way the twenty thousand shares were taken by somebody proved to me that
somebody was in truth willing to take all the stock that was offered. It doesn't
particularly matter at this point who that particular somebody may be. So I have covered
my shorts and am long ten thousand shares, and I think that your information was good
as far as it went."

"And how far does it go?" asked the tipster.

"You have five hundred shares in this office at the average price of the ten thousand
shares," said the deacon. "Good day, my friend. Be calm the next time."

"Say, deacon," said the tipster, "won't you please sell mine when you sell yours? I don't
know as much as I thought I did."

That's the theory. That is why I never buy stocks cheap. Of course I always try to buy
effectively in such a way as to help my side of the market. When it comes to selling
stocks, it is plain that nobody can sell unless somebody wants those stocks.

If you operate on a large scale you will have to bear that in mind all the time. A man
studies conditions, plans his operations carefully and proceeds to act. He swings a pretty
fair line and he accumulates a big profit on paper. Well, that man can't sell at will. You
can't expect the market to absorb fifty thousand shares of one stock as easily as it does
one hundred. He will have to wait until he has a market there to take it. There comes the
time when he thinks the requisite buying power is there. When that opportunity comes
he must seize it. As a rule he will have been waiting for it. He has to sell when he can,
not when he wants to. To learn the time, he has to watch and test. It is no trick to tell
when the market can take what you give it. But in starting a movement it is unwise to
take on your full line unless you are convinced that conditions are exactly right.
Remember that stocks are never too high for you to begin buying or too low to begin



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selling. But after the initial transaction, don't make a second unless the first shows you a
profit. Wait and watch. That is where your tape reading conies in to enable you to decide
as to the proper time for beginning. Much depends upon beginning at exactly the right
time. It took me years to realize the importance of this. It also cost me some hundreds of
thousands of dollars.

I don't mean to be understood as advising persistent pyramiding. A man can pyramid
and make big money that he couldn't make if he didn't pyramid; of course. But what I
meant to say was this: Suppose a man's line is five hundred shares of stock. I say that he
ought not to buy it all at once ; not if he is speculating. If he is merely gambling the only
advice I have to give him is, don't!

Suppose he buys his first hundred, and that promptly shows" him a loss. Why should he
go to work and get more stock? He ought to see at once that he is in wrong; at least
temporarily.