Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-11-16
WALL STREET POOLS
BY POOL MANAGER AS TOLD TO JAMES ABELLE.


tober break, with heavy losses on hold
ings retained too long, were able TO
recover the loss from bear operations.
This brings me to a technical aspect
Of short selling operations not clearly
understood by some people, which should
be clarified as it explains the preference
of many spectators for the bear side.
This is the fact that, provided the Judg-
ment of the market position Is equally
good, the bears have an advantage over
the bulls in the conditions under which
they operate. It is not always pos
sible to sell stocks in large quantities
at any price, but, barring corner"
it is always possible to buy stocks at a
price. Once the bear has placed his
short line" that is, made his short
sales, he can always cover. He can
cover at profit If he is right, and at a
loss If he is wrong. The bears are not
compelled, as bull operators often are.
to "Sit tight on the anxious seat"
through a long period of inactive mar
kets and uncertain price trends. It Is
this consideration which tends to pref
udice the more cautious and conserva-
tive spectators in favor Of short selling
operations.
Describes October Bear Raid.
One of the most interesting bear pools
which took large profit from opera
tions was formed as a result of chance
conversation the pool manager over
heard in his club. This bear, who Is
well known In the Street, but not to the
outside public, has a way OF speaking
in q slow drawl and in delightful vein
OF ironic humor. I will tell the story of
the club conversation as he told 1t TO
me, but first must explain that when
large investors wish to sell a big block
of stock they sometimes approach the
bull pool handling the issue. The pool,
In order to avoid having to meet this
large sale In the market, will often take
the block at small reduction under
prevailing quotations. Under normal
conditions this discount is only 2 or 3
points for very active stocks.
II was sitting alone at lunch at my
club" said the bear-pool operator,
"twiddling my thumbs and gazing out
the window, wondering II it wasn't about
time to do something. But stocks were
so high wherever I looked couldn't
| make up my mind what to sell. All of a
sudden the two men at the next table
began to talk most interestingly.
They were two wealthy investors, old
friends meeting to talk things over.
One asked the other: What do you
know about this Blank stock?' naming
q utility which had been going up like
q balloon for months"
I don't know much about 1t, Harry,
replied his friend, Why do you ask?'"
"I own some of it. the first man
went on, and 1 thought 1t was pretty
high. So went over to see the outfit
thinking would sell them some of
mine. But they would not offer me
within is points of the market for 20 900
shares. Now, what is your idea of that,
Bill?'"
"Bill had no ideas" continued the
bear operator, "but 1 hadl I left the
two gentlemen to finish their lunch
and went out to check up. 1t seemed a
| shame not to take a hand in such a
sweet little game. Well, found the bull
crowd in this blank stock were unload
ing as fast as the market would take
the stuff. OF course, hated to delay
them, but decided owed it to my
self to sell about $4,000 shares of that
stock before let the bulls out. man
aged to get short line out within
20 points Of the top, but had to play
around with the bull outfit for a month
to do it."
Short Covering Ends Break.
My bear friend leaned back in his
chair, pufing his cigar contentedly. 1t
was near the end of october when he
told me this story, and the blank
utility issued had dropped over SO
points from the September high.
How far did you ride it?" I in
quired.
"Oh, we have covered most of It..
never let myself get too ambitious.
Twenty or thirty points profit is always
enough for me-"
Most bears are similarly willing to
take profits. Throughout my expert
ence in Wall Street I have noticed that
operators on the short side are seldom
as greedy as the bulls. Bears are never
subject to the delusion that stocks win
go down forever" And usually, by the
time the tales are out about bear raids
and the huge operations of rich bear
pools, the shorts are actually covering
their sales and taking profits. This
short covering is often the chief support
OF the market at times when stocks have
been overboomed by overenthusiastic
bulls. The resulting crash is inevitable,
and would sometimes be much worse
were 1t not for the short interest"
Copyright, 1929, by Current News Features,
Inc)