Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-11-14
CHAPTER v.
Jshe Rig Pools in Leading Active Stocks,


The Big Pools in Leading Active Stocks
EVERY one who is interested in the
stock market knows the old maxim :
Stocks never 60 up until .,s some poo,
Street proverb expresses the truth,
which each generation learns in its time,
that bull markets are not produced by
mysterious outburstS of spontaneous
buying. It Is human to be skeptical OF
futures. People usually wait and see,
And 1t is also human to want to climb
aboard the band wagon when the parade
starts" The public comes into the
stock market when it sees prices adj
yAncing. But the initial advance which
tnduces "pubiic participation" is almost
invariably brought about by the pools
and other big operators behind the
scenes"
In most cases, therefore, when an
experienced market observer sees the
price of stock advancing rapidly, the
first question he asks is: who is put
ting it up?" And the next question he
asks is: 'Why?" The amount of stock
outstanding of most issues is not large
enough to permit more than one or two
groups of spectators to operate very
heavily. As we say in the Street:
There Is no room for an argument"
Successful operations in the stocks of
the smaller corporations usually depend
upon accurate knowledge Of the inside
situation"
But in the case of the leading active
stocks, the issues which at times are
traded daily in quantities of $4,000,
100000, 100000 shares and more, it is
futile to ask: Who is behind the mar
ket?" Not merely one or two pools, or
groups of powerful market interests,
may be operating, in one Of the big
stocks Sometimes five or six such
groups are active simultaneously, to-
gether with dozen or more smaller
yet nevertheless important combina-
tons, each possessing large resources
of capital and credit Some Of these
Some pools are entering the market
as others are hquidating. And, as we
have seen in recent weeks, some very
powerful speculative interests may be
at work on the short sideI
It Is true of the stocks of the largest
corporations, as of smaller issues, that
when prices decline the figures at
which the shares are valued by the
big insiders" the market Is supported
with buying orders in volume. But
as soon as this support buying makes
an appearance large number of other
people "join the party" Some of them
are invited, but most of them invite
themselves. It is only necessary for
the door to be opened. In half an
hour the house Is full The first guests
TO arrive are served with refreshments
in the form of good stocks at bargain
prices" And they grab everything in
sight" Later corners must bid Tor o
share Of the goodies"
Pools Scramble for Cheap Stocks.
In the early stages Of an advance in
stock prices the big spectators and
pools, the large investment institutions
and important individual investors, the
whole panoply Of Wall Street market
interests, engage in Q scramble for
"cheap stocks" much the same sort of
buying orgy the outside public" will
be seen to indulge in at later stage
of the bull movement. On the occas-
ion of one such outburst of inside
buying" at the end Of the decline which
terminated on March 26 of this year,
q young friend of mine was given the
opportunity to win his spurs" as
pool manager. The history Of the oper-
alton he conducted at that time will
serve to illustrate some Of the methods
of the big pools in leading active stocks.
In January and February several pool
operators found themselves loaded up"
with stocks which they could not dis
pose of prohtably in the irregular
markets then prevailing. The majority
Of this particular group were rich men
81 inadequate Wall Street experience.
Their entire knowledge Of pool opera