Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-11-19
CHAPTER x.
Publicity Methods Of Pools.


ChdpteT accounting for some OF the
strange and often disastrous tips
on sure things that get into cfrcuid-
tom
"The market action of sny stock IS
its best advertisement. This OLD wall
Street platitude expresses the opinion OF
most pool operators on the subject OF
publicity. Pools and large spectators
actually "go in for" very little propa-
ganda of any kind. 1t is not necessary:
other interests take care of the job OF
focusing public attention upon the STOCK
market.
Every large corporation has a vital
interest in maintaining and extending
the market for its securities. New CAPT.
tel can only be secured on the most ia
yorable terms by corporations which en-
10Y the favorable opinion of large num-
bers of investors. The executives OF cor
porationS nowadays can be depended
upon to see to it that the attractions OF
the corporations securities are given
widespread publicity
Investment bankers, as is obvious,
have a similar interest in broadcasting
the merits of securities. The continued
expansion of American business depends
ulS7n a continuous flow of capital into
CORPORATION securities, and all important
financial interests foster the diSsemina-
ton of information concerning Sounu
investment opportunities.
In recent years the tremendously eX-
tended public participation in the stock
market on the part of thousands of new
investors and-until recently-thousandS
of new margin spectators, has created
q public demand for news of the mar
ket which has inspired the newspapers
to maintain large stats of financial
writers. who day by day tell the story OF
Wall Street happenings.
With these factors at work. the pool
operators are not troubled about lack
of publicity. AS matter of fact many
of the most successful pool managers
never give out any information concern
ing their activities, not even to fellow
pool members. They do their work in
The stock market, where the price move
ments of stocks supply the best possible
advertisements Of pool activity. Other
pool managers, especially those interest
cd in the stocks of less we'll known COM
panieS, sometimes arrange that in
formation concerning these stocks be
handed out" at certain times.
Pools Seldom Give dope"
This information is seldom, if ever,
given directly to the newspapers. It is
given to brokers or, more accurately the
brokers gain the information as the
orders of pools come in. Readers Of
brokers' bulletins and market letters
know how information of prospective
"moveS" in stocks is passed along to
customers. Newspaper reporters gain
the information from the brokers, usual
ly somewhat later, as newspapers as
rule do not make predictions of market
movements, such moves" are reported
after they have occurred.
In the case of inside pools" working
In cooperation with the controlling in
tereSts in corporation, the corporation
officials may effectively assist the pool
operations. BY the proper timing of re-
ports and public statements attention is
drawn to the stock at the right mo-
ments. This is not to say that it is
general practice of corporation officials
to issue statements, or other data, in
order to help the pool in the corpora
tons stock, although, as is evident, this
sometimes happens. But If pool man
ager knows when reports are to appear
ne can, of course, stage his market
demonstrations to take advantage of
the publicitya
operators, men like Mr.. Arthur Cutten,
Mr.. Durant and MIR. Raskob have given
out statements for publication. These
men have a large following all over the
country and have been able to influence
market sentiment by announcements
at certain times. But most pool oper-
ators and large spectators are un-
known to the larger financial public.
They avoid the "limelight." And in the
case of the very prominent men who
are quoted on the market situation, it
can usually be said that their interest
is not that Of the Spectator pure and
simple.
Most publicity regarding particular
stocks, while valuable from the long
pull" viewpoint. is actually disad-
vantage to a pool manager who is pre-
pairing rapid advance. There are a
host of floor traders and other short
swing" spectators who endeavor to
anticipate such moves. The pool man
ayers chief concern is usually to pre-
vent information from leaking out"
for the reason that the traders for the
short pull Immediately sell out after
the advance and their selling restricts
the sale of the pool. When a pool
: manager wants publicity is after the.
advance, to induce buying in the hope
of another advance. And this publicity
Is provided without effort on the part
of the pools. Whenever a stock is adj
Vanced on the market both brokers and
newspapers are called upon for expla-
nations Of the move. And both brokers
and newspapers respond by digging up
all available information concerning the
stock.
Mystery" Most Effective Publicity.
The most effective publicity, from the
viewpoint of pool operators, Is mystery.
When there is no adequate basis to es-
innate the value of a stock it is easy
for the imaginations of stockbuyers to
run riot. In the absence OF defnNe
facts and figures spectators are ready
to believe the most exaggerated tales OF
possibilities, and market commentators
never fail to provide lurid stories when
any stock advances rapidly. When
mergers are under consideration, or
stocks are to be split up" or rights is
sued, when any developments are under
way which are not subject to StatlStlcal
ANALYSIS the only limit for the price OF
q stock is the limit Of cash resources OF
the speculative public.
For the same reason, spectators OF
experience attempt to liquidate holdlngs
before the good news Is out. Wnen
the actual development is announced,
the merger effected or the stock divl-
Cend declared the value OF stockholderS
can be more accurately analysed. Then
sometimes the price drops sharply. Pool
managers therefore who are handing
stocks in the mystery class exert their
efforts to prevent details OF proposed
developments being made public In ao-
vance of contamination.
In periods OF distribution, Wnen tlAo
pools are selling stocks on each advance
'tips" are allowed to leak out more ire
cvently. One very amusing case Of this
Kind was brought to my attention last
summer A pool which had been IN
existence for about year had mucn
trouble with one of its members VINO
could not refrain from informing his
friends of each succeeding advance pre-
nared by the pool. All through the
operation the pool manager had been
compelled to deal with buying and SELL
ing from SOURCES which were advised OF