Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-11-10
CHAPTER I.
Taking the Curse Off Wall Street,

CHAP i En- j.
the Curse Off Wall Street.
This is the first OF series OF ar
ticles describing in detail the
methods used at the present time By
the large pool operators in the stock
market. Actual pools OF recent
months tDill be analysed, shouting eT-
actly hotU the pools are formed, hotO
stocks are selected for pool trading.
hon accumulation is managed, HON
public interest is aroused, hop prices
are advanced and HON distribution
is GccompliShed.)
NY first pool operation was con-
Quoted in 1906. Eight of us were in
the pool, all runners and phone boys
EMPLOYED by brokers on the lod out
door Curb Market. The pool capital
was $4,000 and the entire operation"
was begun and concluded in less than
two hours with a profit of $500 each
for the members. 1t was an insiders"
pool, too; one boy was told by the presi-
dent of a small corporation that the
stock would be run up on that particu-
lar morning. No one had to advise us
when to sell. We hadn't worked in
Broad street with our eyes closed and
we knew that it didn't pay to be a
hog. Back in those old days when you
had 100 per cent profit you took 1t.
Unfortunately this transaction was
too widely advertised. My firm was told
of It and lost my Job. Thus learned
the lesson that the publicity given pool
operation should not be burdened with
too many details of names and figures.
Pools and spectators are necessary;
they perform vital function in our
American economic system. which has
N1NA ENrncYNnrifu
nation has ever experienced But on
more than one occasion since 1905
have observed that when spectators
become too important when too ro-
mantle ideas of the spectators place
in the universe are entertained-there
is always trouble ahead.
Doubtless a number of readers have
noticed that hero-worShip of the big
s'::Ill leaders has considerably abated
since the gath of October-wfen
100000 shares Of stock were traded,
under panic conditions, and the great
est bull market in history" passed wholly
into the realm of the historian. Since
that date it is better understood that
pool operators and important specula-
tors are not possessed of superhuman
attributes. They have not the power
to create stock values, they only can
influence prices. And they cannot long
maintain prices above the levels which
are justified by current earnings and
dividends.
Went Broke Same Way In 1907.
The same disillusioning experience
has been repeated several times during
my years in Wall street. In 1907, in
1920 and in 1926 witnessed similar
reckonings, not to mention the re-
adjustments of the war period. After
the 1907 smash / found myself fiat
broke" and had large opportunities
for serious thought before was again
permitted to regard my speculative abil-
tiles with even mild enthusiasm. And
it is safe to say that the majority Of
successful Spectators and pool man
ayers have, at one time or another, paid
a similar tuition fee before learning
that all stocks cannot advance all the
time, not even all good stocks" The
attitude OF men on the Street toward
such unpleasant lessons is that, If the
information so gained is remembered,
it is worth whatever it cost.
What should also be remembered at
times like the present is that the big
market break was only possible because
for three yearS-from 1926 to 1929
thousands of people made millions of
dollars in the stock market. With
in ways which seem very easy to the
initiated, it, is altogether natural that
people should endeayor to grab share
of the mamma" And many so drawn
into the market have insufficient expe-
rience to make wise investments, to say
nothing at all of the experiences neces-
sary for successful speculations ION
margin"
Yet during the last three years thou
sands of such amateurs" have specu-
lakeland made money. AS their
profits grew their hopes expanded in
proportion, and they were utterly lack
ing in adequate knowledge to protect
themselves. They bought stocks solely
because stocks were "going up" Hav-
ing luckily made money on this prin-
ciple for three years, they expected to
make 1t the same way forever; and, of
course, the pools always take advan-
tage Of such situations to furnish ad-
vances as demanded, with the inevitable
result that investors of experience de-
sert the market. And then. the day of
reckoning speedily arrives.
Investors for Income Not Hurt.
But behind these factors lies the more
fact that thousands of careful
and less excitable people have discovered
the opportunities for sound investments
perity of the United States. This ex-
panding prosperity would be impossible
were 1t not for the maintenance of &C.
tive markets for securities. without
these active markets 1t would be i'm
possible to secure the capital necessary
to finance our gigantic and growing
business. And thousands of experienced
and far sighted investors have profited
continuously. not only in the last 8
years, but for the last so years, by
purchasing sound income bearing stocks
at times when such stocks are available
at prices to yield an attractive return
in dividends. These solid investors are
increasing year by year, and they vastly
exceed, in numbers as in resources, the
stockholders who were wiped out" in
the recent decline of the stock market.
And these wiser investors bought
many stocks, and will buy many stocks,
from the pools and spectators. They
will buy good stocks from the pools
for the same reason that the recent
market public bought overboomed stocks
from the pools because the pools will
at all times have for sale the stocks
which are in current demand. But
these wiser, more experienced, more
-