雙語·股票大作手回憶錄 第二十四章

THE public always wants to be told．That is what makes tip-giving and tip-taking universal practices．It is proper that brokers should give their customers trading advice through the medium of their market letters as well as by word of mouth．But brokers should not dwell too strongly on actual conditions because the course of the market is always from six to nine months ahead of actual conditions．Today's earnings do not justify brokers in advising their customers to buy stocks unless there is some assurance that six or nine months from today the business outlook will warrant the belief that the same rate of earnings will be maintained．If on looking that far ahead you can see，reasonably clearly，that conditions are developing which will change the present actual power，the argument about stocks being cheap today will disappear．The trader must look far ahead，but the broker is concerned with getting commissions now；hence the inescapable fallacy of the average market letter．Brokers make their living out of commissions from the public and yet they will try to induce the public through their market letters or by word of mouth to buy the same stocks in which they have received selling orders from insiders or manipulators．

It often happens that an insider goes to the head of a brokerage concern and says：“I wish you'd make a market in which to dispose of 50,000 shares of my stock．”

The broker asks for further details．Let us say that the quoted price of that stock is 50．The insider tells him：“I will give you calls on 5000 shares at 45 and 5000 shares every point up for the entire fifty thousand shares．I also will give you a put on 50,000 shares at the market．”

Now，this is pretty easy money for the broker，if he has a large following and of course this is precisely the kind of broker the insider seeks．A house with direct wires to branches and connections in various parts of the country can usually get a large following in a deal of that kind．Remember that in any event the broker is playing absolutely safe by reason of the put．If he can get his public to follow he will be able to dispose of his entire line at a big profit in addition to his regular commissions．

I have in mind the exploits of an“insider”who is well-known in Wall Street．

He will call up the head customers' man of a large brokerage house．At times he goes even further and calls up one of the I junior partners of the firm．He will say something like this：

“Say，old man，I want to show you that I appreciate what you have done for me at various times．I am going to give you a chance to make some real money．We are forming a new company to absorb the assets of one of our companies and we'll take over that stock at a big advance over present quotations．I'm going to send in to you 500 shares of Bantam Shops at $65．The stock is now quoted at 72．”

The grateful insider tells the thing to a dozen of the headmen in various big brokerage houses．Now since these recipients of the insider's bounty are in Wall Street what are they going to do when they get that stock that already shows them a profit？Of course，advise every man and woman they can reach to buy that stock．The kind donor knew this．They will help to create a market in which the kind insider can sell his good things at high prices to the poor public．

There are other devices of stock-selling promoters that should be barred．The Exchanges should not allow trading in listed stocks that are offered outside to the public on the partial payment plan．To have the price officially quoted gives a sort of sanction to any stock．Moreover，the official evidence of a free market，and at times the difference in prices，is all the inducement needed．

Another common selling device that costs the unthinking public many millions of dollars and sends nobody to jail because it is perfectly legal，is that of increasing the capital stock exclusively by reason of market exigencies．The process does not really amount to much more than changing the color of the stock certificates．

The juggling whereby 2 or 4 or even 10 shares of new stock are given in exchange for one of the old，is usually prompted by a desire to make the old merchandise more easily vendible．The old price was $t per pound package and hard to move．At 25 cents for a quarter-pound box it might go better；and perhaps at 27 or 30 cents．

Why does not the public ask why the stock is made easy to buy？It is a case of the Wall Street philanthropist operating again，but the wise trader bewares of the Greeks bearing gifts．It is all the warning needed．The public disregards it and loses millions of dollars annually．

The law punishes whoever originates or circulates rumors calculated to affect adversely the credit or business of individuals or corporations，that is，that tend to depress the values of securities by influencing the public to sell．Originally，the chief intention may have been to reduce the danger of panic by punishing anyone who doubted aloud the solvency of banks in times of stress．But of course，it serves also to protect the public against selling stocks below their real value．In other words the law of the land punishes the disseminator of bearish items of that nature．

How is the public protected against the danger of buying stocks above their real value？Who punishes the distributor of unjustified bullish news items？Nobody；and yet，the public loses more money buying stocks on anonymous inside advice when they are too high than it does selling out stocks below their value as a consequence of bearish advice during socalled“raids．”

If a law were passed that would punish bull liars as the law now punishes bear liars，I believe the public would save millions．

Naturally，promoters，manipulators and other beneficiaries of anonymous optimism will tell you that anyone who trades on rumors and unsigned statements has only himself to blame for his losses．One might as well argue that any one who is silly enough to be a drug addict is not entitled to protection．

The Stock Exchange should help．It is vitally interested in protecting the public against unfair practices．If a man in position to know wishes to make the public accept his statements of fact or even his opinions，let him sign his name．Signing bullish items would not necessarily make them true．But it would make the“insiders”and“directors”more careful．

The public ought always to keep in mind the elementals of stock trading．When a stock is going up no elaborate explanation is needed as to why it is going up．It takes continuous buying to make a stock keep on going up．As long as it does so，with only small and natural reactions from time to time，it is a pretty safe proposition to trail along with it．But if after a long steady rise a stock turns and gradually begins to go down，with only occasional small rallies，it is obvious that the line of least resistance has changed from upward to downward．Such being the case why should any one ask for explanations？There are probably very good reasons why it should go down，but these reasons are known only to a few people who either keep those reasons to themselves，or else actually tell the public that the stock is cheap．The nature of the game as it is played is such that the public should realise that the truth cannot be told by the few who know．

Many of the so-called statements attributed to“insiders”or officials have no basis in fact．Sometimes the insiders are not even asked to make a statement，anonymous or signed．These stories are invented by somebody or other who has a large interest in the market．At a certain stage of an advance in the market-price of a security the big insiders are not averse to getting the help of the professional element to trade in that，stock．But while the insider might tell the big plunger the right time to buy，you can bet he will never tell when is the time to sell．That puts the big professional in the same position as the public，only he has to have a market big enough for him to get out on．Then is when you get the most misleading“information．”O(jiān)f course，there are certain insiders who cannot be trusted at any stage of the game．As a rule the men who are at the head of big corporations may act in the market upon their inside knowledge，but they don't actually tell lies．They merely say nothing，for they have discovered that there are times when silence is golden．

I have said many times and cannot say it too often that the experience of years as a stock operator has convinced me that no man can consistently and continuously beat the stock market though he may make money in individual stocks on certain occasions．No matter how experienced a trader is the possibility of his making losing plays is always present because speculation cannot be made 100 per cent safe．Wall Street professionals know that acting on“inside”tips will break a man more quickly than famine，pestilence，crop failures，political readjustments or what might be called normal accidents．There is no asphalt boulevard to success in Wall Street or anywhere else．Why additionally block traffic？

THE END