Evening star., 1929-11-15

sap-headed young fools who ask uues-
uons." He is credited with being the
originator of an ancient retort which
mas been laughed at by three genera
lions OF traders: On a day when stock
prices were "skyrocketing" at a rapid
rate fellow broker asked his opinion,
DO you think there is any top to this
market?"
L am waiting, sir, for you to buy
some stockS!" replied the old man, who
must nave been very young man when
ne placed this remark in circulation.
No Loss in Thirty Years.
Some weeks ago dropped into his
Office in the late afternoon and risked
an attack Of his wit by asking what
running pool that he knew of had
been longest in existence. He ran his
fingers through his white hair and
after some minutes decided to enlight-
en- me-
Well" he said, "I look after little
arrangement for some old friends, I
don't know that you can call it pool,
which has continued now for over 30
years.
Tell me about it."
Hum. Well, my friends have conf
Dental relations with the controlling in
terests of several companies. They have
a pretty good idea of what the stocks
OF those companies are worth. Some
time back in the last century they
came in here and opened &accountS,
which have never since been closed.
Whenever the price of their stocks be-
gin to drop down near the right figures,
l begin to pick them up. When prices
go up, I hand the stuff out again.
Every so often, when profits accumu-
late, send them checks, but the orig
inal balances still stand. believe the
balances are larger now than when the
accounts were opened up"
He turned to one of his old book
keepers, George, those accounts am
speaking of are somewhat larger now
than they were, say in 1900, aren't
they?"
George replied with an innocent
gravity equal to his employers, Eyes,
sir; they are rather larger now"'
I ventured another question: "You
send checks to these clients when
profits accumulate. But what do you
do when they have losses? Ask for
more margin, suppoSe?"
The old gentleman gazed at me in
a sort of mild astonishment, with
something like a smile forming on his
lips. Why, to tell you the truth, we
haven't had any losses so far. My
clients, sir, are not spectators. They
do not buy stocks they do not wish to
hold. But you are mighty inquisitive
today. What do you think about the
world serieS?"
Running pools" are pools, like the
little arrangement" described by my
old broker friend, which do not close
when one deal is wound up" but con-
tinue in existence over indefinite pc
riods of time Not many, however,
run" for 80 years. Some pools of this
kind are nothing more than buying or
selling arrangements whereby groups of
investors secure better prices, on the
average, than single invidiuals might
obtain. Other pools, which run for in
determinate periods, are active specula-
tive combines, some of them trading in
and out of the market whenever oppor-
tunitieS arise.
"ShOrt Swing" Dangerous.
I know of pools which give the man
ager full discretionary power as to the
stocks he shall deal in, the managers
being exceptionally able short
swing traders who have attracted q
following of wealthy packers" This
is perhaps the most dangerous type of
speculative activity; yet many men ap-
parently are able to make money at 1t
year after year. Very few, If any, very
large fortunes have been accumulated
by this method of operation, but it
seems to fit the temperament of certain
men capable of making good "rapld-fire
judgments" but who lack the patience
and perhaps the courage for more in
volved undertakings. Such operators
"eut losses" when the market goes
against them, and unless caught in a
sudden break never hold any stock at
a loss of more than a few points.
The so-called general market pool"
is much talked of but rarely seen.
What is meant by the phrase is gen.
eral pool of important market interests
for the purpose of affecting the action
of the market as a whole, Such a
pool" was formed last month (October)
on the gath, when twelve million shares
conditions prevailed for two hours.
Leading bankers headed by Thomas
w. Lamont of j. p. Morgan & Co. were
called together and reached an agree
ment whereby the market was supported
with large buying orders. Such gen
eral market pools are frequently men
toned at times when the market de-
clines rapidly, but seldom are actually
formed. And when they are formed
1t is doubtful if the agreement between
the parties may properly be called
each group of interests acts to protect
the stocks sponsored by that group, the
banks releasing funds on loan to carry
the load.
Another form of loose agreement is
also referred to as a general market
pool" In times of wavering and un-
certain markets a. number Of pool op-
orators may cooperate to advance a
few leading stocks, thus giving bullish
n tr he bot
cover of which each pool manager is
enabled to unload" his holdings of
other stocks. Or, conversely, when
stocks are being accumulated, there may
be concerted agreement to depreSS the
general market by sales of few lead
ing stocks, in order that the stocks
sought by each pool may be picked up"
at lower prices. This last operation is
known in the street as a technical
shakeout.' Bear pools sometimes sell
active stocks short, which they must
later repurchaSe at loss, in order to
break the market and severely depress
the prices of the weak stocks in which
they are actually working.
In these cases again, it is doubtful
II pool is ever formed to handle the
general situation" What happens is
that each important pool manager does
a certain amount of trading in the
NY eOoSAo' ClldIBulB OH IllS IoSSeS,
If these trades result in loss, against
his total operations. What seems to be
concerted agreement is in reality due
to the fact that the keenest minds in
the stock market are apt to reach very
similar conclusions simultaneously. |
Most of the important stock market
operators make the same decisions at
the same time.
Another factor of interest in connec-
ton with these so-called covering op-
erations" is that they most often take |
place on days when the total volume |