Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-11-21
CHAPTER XII.
How to Interpret Pool Activities.

| ket. He lays dotUn the rules ana
offers his ddUice 1T the hope, ne
says, of creating a better under
standing betDeen the operator and
the pubI,c)
The October smash Of the stock mar
ket ended the 1926-l929 bull market
Any apparent revival of activity will
prove illusory and short lived. The
boom" is definitely. conclusively. COM
pletely dead. After number OF
months there may be a new bull mar
tions are sound, and many stocks are
growing in value. But the new move
ment will not come until the foundation
Of the stock market is rebuilt on solid
ground. And by solid ground"
mean that stocks must again be sold
at prices which represent actual in
vestment values, and stocks must again
veStors.
During the reorganization period
pools will be comparatively inactive
Speculative interest in the market on
a large scale will be suspended. But
the pools and large spectators VIII
come to life" and renew their act1v.
tiles many months before there VIII
again be renewed speculation on the
part of the outside public" Just as
the bears came to life many months
before the october "wind-up" Of the old
bull market. And l am now in a
nosition to give my readers good
tip" I can tell them now, as could
not have told before October the nrst
stocks which the pools will select Tor
their renewed operations7-when the
time comes for the new bull market to
get under way.
The pools will first select stocks which
Weld a fair return in dividends on the
cost, and which have undoubted pros
poets of higher dividends from increaS-
ing earnings: in other words, the stocks
which will lead the advance will be con-
sentative investment stocks. Later IN
the history of the new bull Market
receive the increment of their fore
sight. in buying good stocks at low |
prices. less wise. men will be drawn into
the market in the hope OF collecting |
Quick and easy profits. Ana Cne pools
will then cater to this public, as at the
beginning Of the movement they VIII
cater to stock buyers with more
knowledge and less enthusiasm.
These Stocks viii Advance.
Tn the next bull market, as in the
last and all previous bull markets on
record. the largest winners" ana the
permanent beneficiaries Of the move,
ment will be the people who buy ana
hold good stocks when they are avail
able at prices which represent SOLID m
vestment values. And these are the
stocks the big speculative pools will
first buy and first advance in the
the right time comes:
This Tip" is alright: follow 1t ana
you will make money IN the STOCK
market. -
how can we select the good Stocks?
And I must reply: "Ah, that's the
or a speculator you must know invest
ment values. If you do not understand
how to invest money do not attempt
to speculate. People who expect to
make money in securities on hopes and
ss-work may be lucky Tor while,
when boom conditions prevail as in
1927 and 1928. But in the long run
most of them lose"
This is not to say that 1t is impos-
sible to correctly interpret pool activities
and the longer speculative movements
of the stock market. Pool operations
are of great interest both to experienced
and successful spectators and to ex-
perienced and successful investors.
without pools and speculation there
could be no active markets for stocks
or anything else, and neither specula-
could be realized in cash when needed.
Further, the activity of pools supplies
one of the most reliable indices OF the
way the winds of business are blowing"
But this activity means nothing to the
man who is not in position to accurately
the investment value OF the
stocks in which the pools are working"
When pools are active in good stocks
selling at prices in direct relationship
1,,ac tho haCfS nf dividend re. |
turns you may be sure that wise In
vestors are buying the stocks in the be-
lief that a period of business expansion
is under way. When pools are active in
other stocks at any price, or IN good
stocks at inflated prices, you may be
sure that the public which is drawn to
the market does not include the wise
and substantial investors of the country.
Pools Supply Stocks Public Demands.
In sum, the pools and larger specu-
lators are merchants of stocks, supply
ing whatever demand may be in evil
dence. Pools can neither create values
nor destroy them. And pools must
therefore be judged just as other mid
dlemen'' are judged, by the quality of
the merchandise offered. When you
know that a stock is a sound invest
ment. to hold, the fact that pool Is
operating In that stock is an added
attraction. 1t shows that wealthy In
vestors believe that it Is a good time
to buy. But If you buy stocks solely
because pools are advancing the price
in the hope that you can beat the
game" then / say to you, speaking as
a Spectator with 20 years experience
in Wall Street, that you deserve what
you will get. What you will get sooner
or later will be another october, 1929.
There are only two classes Of men
who can accurately forecast pool
moves" in stocks. The first class is
very limited-it consists of the mem
bers of the pool which is putting up"
the stock. Sometimes although by no
means always, the members of a pool
know when the pool manager will bid
up prices. But whenever this informa-
ton leaks out beyond the circle of pool
members, 1t must be regarded with
grave suspicion, as we have seen In pre-
vious articles.
The other class of men who can some
times accurately predict short swing"
advances and declines in stocks are the
expert 'tape readers" Some Of these
men, as every one in Wall Street knows,
develop amazing ability to spot" move
ments in stocks. and they profit accord
ingly. But it is even more difficult to |
get information from these men than |
from the pools. Their success as traders |
depends upon unbroken secrecy.
So, If any reader desires to learn the |
art of forecasting the intermediate
speculative movements of stocks, must |
advise him either to become a pool |
member or an expert tape reader. To |
become a pool member-of successful |
pools-the following qualifications are |
peceSSarv.