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reminded of the sad fact that no human being can be so uniformly
right on the market as to be beyond the reach of unprofitable
accidents. I have heard people say that no professional
speculator need have been hit very hard by the news of the
torpedoing of the Lusitania, and they go on to tell how they had
it long before the Street did. I was not clever enough to escape
by means of advance information, and all I can tell you is that
on account of what I lost through the Lusitania break and one or
two other reverses that I wasn't wise enough to foresee, I found
myself at the end of 1915 with a balance at my brokers' of about
one hundred and forty thousand dollars. That was all I actually
made, though I was consistently right on the market throughout
the greater part of the year.
I did much better during the following year. I was very
lucky. I was rampantly bullish in a wild bull market. Things
were certainly coming my way so that there wasn't anything to do
but to make money. It made me remember a saying of the late H.
H. Rogers, of the Standard Oil Company, to the effect that there
were times when a man could no more help making money than he
could help getting wet if he went out in a rainstorm without an
umbrella. It was the most clearly defined bull market we ever
had. It was plain to everybody that the Allied purchases of all
kinds of supplies here made the United States the most
prosperous nation in the world. We had all the things that no
one else had for sale, and we were fast getting all the cash in
the world. I mean that the wide world's gold was pouring into
this country in torrents. Inflation was inevitable, and, of
course, that meant rising prices for everything.
All this was so evident from the first that little or no
manipulation for the rise was needed. That was the reason why
the preliminary work was so much less than in other bull
markets. And not only was the war-bride boom more naturally
developed than all others but it proved unprecedentedly
profitable for the general public. That is, the stock-market
winnings during 1915 were more widely distributed than in any
other boom in the history of Wall Street. That the public (lid
not turn all their paper profits into good hard cash or that
they did not long keep what profits they actually took was
merely history repeating itself. Nowhere does history indulge in
repetitions so often or so uniformly as in Wall Street. When you
read contemporary accounts of booms or panics the one thing that
strikes you most forcibly is how little either stock speculation
or stock speculators today differ from yesterday. The game does
not change and neither does human nature.
I went along with the rise in 1916. I was as bullish as the
next man, but of course I kept my eyes open. I knew, as
everybody did, that there must be an end, and I was on the watch
for warning signals. I wasn't particularly interested in
guessing from which quarter the tip would come and so I didn't
stare at just one spot. I was not, and I never have felt that I
was, wedded indissolubly to one or the other side of the market.
That a bull market has added to my bank account or a bear market
has been particularly generous I do not consider sufficient
reason for sticking to the bull or the bear side after I receive
the get-out warning. A man does not swear eternal allegiance to
either the bull or the bear side. His concern lies with being
right.
And there is another thing to remember, and that is that a
market does not culminate in one grand blaze of glory. Neither
does it end with a sudden reversal of form. A market can and
does often cease to be a bull market long before prices
generally begin to break. My long expected warning came to me
when I noticed that, one after another, those stocks which had
been the leaders of the market reacted several points from the
top and for the first time in many months -- did not come back.
Their race evidently was run, and that clearly necessitated a
change in my trading tactics.
It was simple enough. In a bull market the trend of prices,
of couxse, is decidedly and definitely upward. Therefore
whenever a stock goes against the general trend you are justi-
fied in assuming that there is something wrong with that
particular stock. It is enough for the experienced trader to
perceive that something is wrong. He must not expect the tape to
become a lecturer. His job is to listen for it to say "Get out!"
and not wait for it to submit a legal brief for approval.
As I said before, I noticed that stocks which had been the
leaders of the wonderful advance had ceased to advance. They
dropped six or seven points and stayed there. At the same time
the rest of the market kept on advancing under new standard
bearers. Since nothing wrong had developed with the companies
themselves, the reason had to be sought elsewhere. Those stocks
had gone with the current for months. When they ceased to do so,
though the bull tide was still running strong, it meant that for
those particular stocks the bull market was over. For the rest
of the list the tendency was still decidedly upward.
There was no need to be perplexed into inactivity, for
there were really no cross currents. I did not turn bearish on
the market then, because the tape didn't tell me to do so. The
end of the bull market had not come, though it was within
hailing distance. Pending its arrival there was still bull money
to be made. Such being the case, I merely turned bearish on the
stocks which had stopped advancing and as the rest of the market
had rising power behind it I both bought and sold.
The leaders that had ceased to lead I sold. I put out a
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