REMINISCENCES OF A STOCK OPERATOR ( MUST READ ARTICLE ) - RAJESH JINDAL .

I WENT to work when I was just out of grammar school. I got

a job as quotation-board boy in a stock-brokerage office. I was

quick at figures. At school I did three years of arithmetic in

one. I was particularly good at mental arithmetic. As

quotation-board boy I posted the numbers on the big board in the

customers' room. One of the customers usually sat by the ticker

and called out the prices. They couldn't come too fast for me. I

have always remembered figures. No trouble at all.

There were plenty of other employes in that office. Of

course I made friends with the other fellows, but the work I

did, if the market was active, kept me too busy from ten A.M. to

three P.m. to let me do much talking. I don't care for it,

anyhow, during business hours.

But a busy market did not keep me from thinking about the

work. Those quotations did not represent prices of stocks to'

me, so many dollars per share. They were numbers. Of course,

they meant something. They were always changing. It was all I

had to be interested in the changes. Why did they change? I

didn't know. I didn't care. I didn't think about that. I simply

saw that they changed. That was all I had to think about five

hours every day and two on Saturdays: that they were always

changing.

That is how I first came to be interested in the behaviour

of prices. I had a very good memory for figures. I could

remember in detail how the prices had acted on the previous day,

just before they went up or down. My fondness for mental

arithmetic came in very handy.

I noticed that in advances as well as declines, stock

prices were apt to show certain habits, so to speak. There was

no end of parallel cases and these made precedents to guide me.

I was only fourteen, but after I had taken hundreds of

observations in my mind I found myself testing their accuracy,

comparing the behaviour of stocks today with other days. It was

not long before I was anticipating movements in prices. My only

guide, as I say, was their past performances. I carried the

"dope sheets" in my mind. I looked for stock prices to run on

form. I had "clocked" them. You know what I mean.

You can spot, for instance, where the buying is only a

trifle better than the selling. A battle goes on in the stock

market and the tape is your telescope. You can depend upon it

seven out of ten cases.

Another lesson I learned early is that there is nothing new

in Wall Street. There can't be because speculation is as old as

the hills. Whatever happens in the stock market today has

happened before and will happen again. I've never forgotten

that. I suppose I really manage to remember when and how it

happened. The fact that I remember that way is my way of

capitalizing experience.

I got so interested in my game and so anxious to anticipate

advances and declines in all the active stocks that I got a

little book. I put down my observations in it. It was not a

record of imaginary transactions such as so many people keep

merely to make or lose millions of dollars without getting the

swelled head or going to the poorhouse. It was rather a sort of

record of my hits and misses, and next to the determination of

probable movements I was most interested in verifying whether I

had observed accurately; in other words, whether I was right.

Say that after studying every fluctuation of the day in an

active stock I would conclude that it was behaving as it always

did before it broke eight or ten points. Well, I would jot down

the stock and the price on Monday, and remembering past

performances I would write down what it ought to do on Tuesday

and Wednesday. Later I would check up with actual transcriptions

from the tape.

That is how I first came to take an interest in the message

of the tape. The fluctuations were from the first associated in

my mind with upward or downward movements. Of course there is

always a reason for fluctuations, but the tape does not concern

itself with the why and wherefore. It doesn't go into

explanations. I didn't ask the tape why when I was fourteen, and

I don't ask it today, at forty. The reason for what a certain

stock does today may not be known for two or three days, or

weeks, or months. But what the dickens does that matter? Your

business with the tape is now -- not tomorrow. The reason can

wait. But you must act instantly or be left. Time and again I

see this happen. You'll remember that Hollow Tube went down

three points the other day while the rest of the market rallied

sharply. That was the fact. On the following Monday you saw that

the directors passed the dividend. That was the reason. They

knew what they were going to do, and even if they didn't sell

the stock themselves they at least didn't buy it. There was no

inside buying; no reason why it should not break.

Well, I kept up my little memorandum book perhaps six

months. Instead of leaving for home the moment I was through

with my work, I'd jot down the figures I wanted and would study

the changes, always looking for the repetitions and parallelisms

of behaviour learning to read the tape, although I was not aware

of it at the time.

One day one of the office boys -- he was older than I came

to me where I was eating my lunch and asked me on the quiet if I

had any money.

"Why do you want to know?" I said.

"Well," he said, "I've got a dandy tip on Burlington. I'm

going to play it if I can get somebody to go in with me."

"How do you mean, play it?" I asked. To me the only people

who played or could play tips were the customers old jiggers

with oodles of dough. Why, it cost hundreds, even thousands of

dollars, to get into the game. It was like owning your private

carriage and having a coachman who wore a silk hat.

"That's what I mean; play it 1" he said. "How much you got.

"How much you need?"

"Well, I can trade in five shares by putting up $5."

"How are you going to play it?"

"I'm going to buy all the Burlington the bucket shop will

let me carry with the money I give him for margin," he said.

"It's going up sure. It's like picking up money. We'll double

ours in a jiffy."

"Hold on!" I said to him, and pulled out my little dope

book.

I wasn't interested in doubling my money, but in his saying

that Burlington was going up. If it was, my notebook ought to

show it. I looked. Sure enough, Burlington, according to my

figuring, was acting as it usually did before it went up. I had

never bought or sold anything in my life, and I never gambled

with the other boys. But all I could see was that this was a

grand chance to test the accuracy of my work, of my hobby. It

struck me at once that if my dope didn't work in practice there

was nothing in the theory of it to interest anybody. So I gave

him all I had, and with our pooled resources he went to one of

the nearby bucket shops and bought some Burlington. Two days

later we cashed in. I made a profit Of $3.12.

After that first trade, I got to speculating on my own hook

in the bucket shops. I'd go during my lunch hour and buy or sell

-- it never made any difference to me. I was playing a system

and not a favorite stock or backing opinions. All I knew was the

arithmetic of it. As a matter of fact, mine was the ideal way to

operate in a bucket shop, where all that a trader does is to bet

on fluctuations as they are printed by the ticker on the tape.

It was not long before I was taking much more money out of

the bucket shops than I was pulling down from my job in the

brokerage office. So I gave up my position. My folks objected,

but they couldn't say much when they saw what I was making. I

was only a kid and officeboy wages were not very high. I did

mighty well on my own hook.

I was fifteen when I had my first thousand and laid the

cash in front of my mother -- all made in the bucket shops in a

few months, besides what I had taken home. My mother carried on

something awful. She wanted me to put it away in the savings

bank out of reach of temptation. She said it was more money than

she ever heard any boy of fifteen had made, starting with

nothing. She didn't quite believe it was real money. She used to

worry and fret about it. But I didn't think of anything except

that I could keep on proving my figuring was right. That's all

the fun there is being right by using your head. If I was right

when I tested my convictions with ten shares I would be ten

times more right if I traded in a hundred shares. That is all

that having more margin meant to me -- I was right more

emphatically. More courage? No! No difference! If all I have is

ten dollars and I risk it, I am much braver than when I risk a

million, if I have another million salted away.

Anyhow, at fifteen I was making a good living out of the

stock market. I began in the smaller bucket shops, where the man

who traded in twenty shares at a clip was suspected of being

John W. Gates in disguise or J. P. Morgan traveling incognito.

Bucket shops in those days seldom lay down on their customers.

They didn't have to. There were other ways of parting customers

from their money, even when they guessed right. The business was

tremendously profitable. When it was conducted legitimately -- I

mean straight, as far as the bucket shop went the fluctuations

took care of the shoestrings. It doesn't take much of a reaction

to wipe out a margin of only three quarters of a point. Also, no

welsher could ever get back in the game. Wouldn't have any

trade.

I didn't have a following. I kept my business to myself. It

was a one-man business, anyhow. It was my head, wasn't it?

Prices either were going the way I doped them out, without any

help from friends or partners, or they were going the other way,

and nobody could stop them out of kindness to me. I couldn't see

where I needed to tell my business to anybody else. I've got

friends, of course, but my business has always been the same --

a one-man affair. That is why I have always played a lone hand.

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