REMINISCENCES OF A STOCK OPERATOR
I WENT to work when I was just out of grammar school. I got a job as
quotation-board boy in a stock-brokerage office. I was quick at figures.
At school I did three years of arithmetic in one. I was particularly
good at mental arithmetic. As quotation-board boy I posted the numbers
on the big board in the customers' room. One of the customers usually
sat by the ticker and called out the prices. They couldn't come too fast
for me. I have always remembered figures. No trouble at all.
There were plenty of other employes in that office. Of course I made
friends with the other fellows, but the work I did, if the market was
active, kept me too busy from ten A.M. to three P.M. to let me do much
talking. I don't care for it, anyhow, during business hours.
But a busy market did not keep me from thinking about the work. Those
quotations did not represent prices of stocks to me, so many dollars per
share. They were numbers. Of course, they meant something. They were
always changing. It was all I had to be interested in-the changes. Why
did they change? I didn't know. I didn't care. I didn't think about
that. I simply saw that they changed. That was all I had to think about
five hours every day and two on Saturdays: that they were always
That is how I first came to be interested in the behaviour of prices. I
had a very good memory for figures. I could remember in detail how the
prices had acted on the previous day, just before they went up or down.
My fondness for mental arithmetic came in very handy.
I noticed that in advances as well as declines, stock prices were apt to
show certain habits, so to speak. There was no end of parallel cases and
these made precedents to guide me. I was only fourteen, but after I had
taken hundreds of observations in my mind I found myself testing their
accuracy, comparing the behaviour of stocks to-day with other days. It
was not long before I was anticipating movements in prices. My only
guide, as I say, was their past performances. I carried the "dope
sheets" in my mind. I looked for stock prices to run on form. I had
"clocked" them. You know what I mean.
You can spot, for instance, where the buying is only a trifle better
than the selling. A battle goes on in the stock market and the tape is
your telescope. You can depend upon it seven out of ten cases.
Another lesson I learned early is that there is nothing new in Wall
Street. There can't be because speculation is as old as the hills.
Whatever happens in the stock market to-day has happened before and will
happen again. I've never forgotten that. I suppose I really manage to
remember when and how it happened. The fact that I remember that way is
my way of capitalizing experience.
I got so interested in my game and so anxious to anticipate advances and
declines in all the active stocks that I got a little book. I put down
my observations in it. It was not a record of imaginary transactions
such as so many people keep merely to make or lose millions of dollars
without getting the swelled head or going to the poorhouse. It was
rather a sort of record of my hits and misses, and next to the
determination of probable movements I was most interested in verifying
whether I had observed accurately; in other words, whether I was right.
Say that after studying every fluctuation of the day in an active stock
I would conclude that it was behaving as it always did before it broke
eight or ten points. Well, I would jot down the stock and the price on
Monday, and remembering past performances I would write down what it
ought to do on Tuesday and Wednesday. Later I would check up with actual
transcriptions from the tape.
That is how I first came to take an interest in the message of the tape.
The fluctuations were from the first associated in my mind with upward
or downward movements. Of course there is always a reason for
fluctuations, but the tape does not concern itself with the why and
wherefore. It doesn't go into explanations.
I didn't ask the tape why when I was fourteen, and I don't ask it
to-day, at forty. The reason for what a certain stock does to-day may
not be known for two or three days, or weeks, or months. But what the
dickens does that matter? Your business with the tape is now-not
to-morrow. The reason can wait. But you must act instantly or be left.
Time and again I see this happen. You'll remember that Hollow Tube went
down three points the other day while the rest of the market rallied
sharply. That was the fact. On the following Monday you saw that the
directors passed the dividend. That was the reason. They knew what they
were going to do, and even if they didn't sell the stock themselves they
at least didn't buy it. There was no inside buying; no reason why it
should not break.
Well, I kept up my little memorandum book perhaps six months. Instead of
leaving for home the moment I was through with my work, I'd jot down the
figures I wanted and would study the changes, always looking for the
repetitions and parallelisms of behaviour-learning to read the tape,
although I was not aware of it at the time.
One day one of the office boys-he was older than I-came to me where I
was eating my lunch and asked me on the quiet if I had any money.
"Why do you want to know?" I said.
"Well," he said, "I've got a dandy tip on Burlington. I'm going to play
it if I can get somebody to go in with me."
"How do you mean, play it?" I asked. To me the only people who played or
could play tips were the customers-old jiggers with oodles of dough.
Why, it cost hundreds, even thousands of dollars, to get into the game.
It was like owning your private carriage and having a coachman who wore
a silk hat.
"That's what I mean; play it!" he said. "How much you got?"
"How much you need?"
"Well, I can trade in five shares by putting up $5."
"How are you going to play it?"
"I'm going to buy all the Burlington the bucket shop will let me carry
with the money I give him for margin," he said. "It's going up sure.
It's like picking up money. We'll double ours in a jiffy."
"Hold on!" I said to him, and pulled out my little dope book.
I wasn't interested in doubling my money, but in his saying that
Burlington was going up. If it was, my note-book ought to show it. I
looked. Sure enough, Burlington, according to my figuring, was acting as
it usually did before it went up. I had never bought or sold anything in
my life, and I never gambled with the other boys. But all I could see
was that this was a grand chance to test the accuracy of my work, of my
hobby. It struck me at once that if my dope didn't work in practice
there was nothing in the theory of it to interest anybody. So I gave him
all I had, and with our pooled resources he went to one of the near-by
bucket shops and bought some Burlington. Two days later we cashed in. I
made a profit of $3.12.
After that first trade, I got to speculating on my own hook in the
bucket shops. I'd go during my lunch hour and buy or sell-it never made
any difference to me. I was playing a system and not a favorite stock or
backing opinions. All I knew was the arithmetic of it. As a matter of
fact, mine was the ideal way to operate in a bucket shop, where all that
a trader does is to bet on fluctuations as they are printed by the
ticker on the tape.
It was not long before I was taking much more money out of the bucket
shops than I was pulling down from my job in the brokerage office. So I
gave up my position. My folks objected, but they couldn't say much when
they saw what I was making. I was only a kid and office-boy wages were
not very high. I did mighty well on my own hook.
I was fifteen when I had my first thousand and laid the cash in front of
my mother-all made in the bucket shops in a few months, besides what I
had taken home. My mother carried on something awful. She wanted me to
put it away in the savings bank out of reach of temptation. She said it
was more money than she ever heard any boy of fifteen had made, starting
with nothing. She didn't quite believe it was real money. She used to
worry and fret about it. But I didn't think of anything except that I
could keep on proving my figuring was right. That's all the fun there
is-being right by using your head. If I was right when I tested my
convictions with ten shares I would be ten times more right if I traded
in a hundred shares. That is all that having more margin meant to me-I
was right more emphatically. More courage? No! No difference! If all I
have is ten dollars and I risk it, I am much braver than when I risk a
million, if I have another million salted away.
Anyhow, at fifteen I was making a good living out of the stock market. I
began in the smaller bucket shops, where the man who traded in twenty
shares at a clip was suspected of being John W. Gates in disguise or J.
P. Morgan traveling incognito. Bucket shops in those days seldom lay
down on their customers. They didn't have to. There were other ways of
parting customers from their money, even when they guessed right. The
business was tremendously profitable. When it was conducted
legitimately-I mean straight, as far as the bucket shop went-the
fluctuations took care of the shoestrings. It doesn't take much of a
reaction to wipe out a margin of only three quarters of a point. Also,
no welsher could ever get back in the game. Wouldn't have any trade.
I didn't have a following. I kept my business to myself. It was a
one-man business, anyhow. It was my head, wasn't it? Prices either were
going the way I doped them out, without any help from friends or
partners, or they were going the other way, and nobody could stop them
out of kindness to me. I couldn't see where I needed to tell my business
to anybody else. I've got friends, of course, but my business has always
been the same-a one-man affair. That is why I have always played a lone
As it was, it didn't take long for the bucket shops to get sore on me
for beating them. I'd walk in and plank down my margin, but they'd look
at it without making a move to grab it. They'd tell me there was nothing
doing. That was the time they got to calling me the Boy Plunger. I had
to be changing brokers all the time, going from one bucket shop to
another. It got so that I had to give a fictitious name. I'd begin
light, only fifteen or twenty shares. At times, when they got
suspicious, I'd lose on purpose at first and then sting them proper. Of
course after a little while they'd find me too expensive and they'd tell
me to take myself and my business elsewhere and not interfere with the
Once, when the big concern I'd been trading with for months shut down on
me I made up my mind to take a little more of their money away from
them. That bucket shop had branches all over the city, in hotel lobbies,
and in near-by towns. I went to one of the hotel branches and asked the
manager a few questions and finally got to trading. But as soon as I
played an active stock my especial way he began to get messages from the
head office asking who it was that was operating. The manager told me
what they asked him and I told him my name was Edward Robinson, of
Cambridge. He telephoned the glad news to the big chief. But the other
end wanted to know what I looked like. When the manager told me that I
said to him, "Tell him I am a short fat man with dark hair and a bushy
beard!" But he described me instead, and then he listened and his face
got red and he hung up and told me to beat it.
"What did they say to you?" I asked him politely.
"They said, 'You blankety-blank fool, didn't we tell you to take no
business from Larry Livingston? And you deliberately let him trim us out
of $700!'" He didn't say what else they told him. I tried the other
branches one after another, but they all got to know me, and my money
wasn't any good in any of their offices. I couldn't even go in to look
at the quotations without some of the clerks making cracks at me. I
tried to get them to let me trade at long intervals by dividing my
visits among them all. But that didn't work.
Finally there was only one left to me and that was the biggest and
richest of all-the Cosmopolitan Stock Brokerage Company.
The Cosmopolitan was rated as A-I and did an enormous business. It had
branches in every manufacturing town in New England. They took my
trading all right, and I bought and sold stocks and made and lost money
for months, but in the end it happened with them as usual. They didn't
refuse my business point-blank, as the small concerns had. Oh, not
because it wasn't sportsmanship, but because they knew it would give
them a black eye to publish the news that they wouldn't take a fellow's
business just because that fellow happened to make a little money. But
they did the next worse thing-that is, they made me put up a three-point
margin and compelled me to pay a premium at first of a half point, then
a point, and finally, a point and a half. Some handicap, that! How?
Easy! Suppose Steel was selling at 90 and you bought it. Your ticket
read, normally: "Bot ten Steel at 90 1/8." If you put up a point
margin it meant that if it broke 89 1/4 you were wiped out
automatically. In a bucket shop the customer is not importuned for more
margin or put to the painful necessity of telling his broker to sell for
anything he can get.
But when the Cosmopolitan tacked on that premium they were hitting below
the belt. It meant that if the price was 90 when I bought, instead of
making my ticket: "Bot Steel at 90 1/8," it read: "Bot Steel
at 91 1/8." Why, that stock could advance a point and a quarter
after I bought it and I'd still be losing money if I closed the trade.
And by also insisting that I put up a three-point margin at the very
start they reduced my trading capacity by two thirds. Still, that was
the only bucket shop that would take my business at all, and I had to
accept their terms or quit trading.
Of course I had my ups and downs, but was a winner on balance. However,
the Cosmopolitan people were not satisfied with the awful handicap they
had tacked on me, which should have been enough to beat anybody. They
tried to double-cross me. They didn't get me. I escaped because of one
of my hunches.
The Cosmopolitan, as I said, was my last resort. It was the richest
bucket shop in New England, and as a rule they put no limit on a trade.
I think I was the heaviest individual trader they had-that is, of the
steady, every-day customers. They had a fine office and the largest and
completest quotation board I have ever seen anywhere. It ran along the
whole length of the big room and every imaginable thing was quoted. I
mean stocks dealt in on the New York and Boston Stock Exchanges, cotton,
wheat, provisions, metals-everything that was bought and sold in New
York, Chicago, Boston and Liverpool.
You know how they traded in bucket shops. You gave your money to a clerk
and told him what you wished to buy or sell. He looked at the tape or
the quotation board and took the price from there-the last one, of
course. He also put down the time on the ticket so that it almost read
like a regular broker's report-that is, that they had bought or sold for
you so many shares of such a stock at such a price at such a time on
such a day and how much money they received from you. When you wished to
close your trade you went to the clerk-the same or another, it depended
on the shop-and you told him. He took the last price or if the stock had
not been active he waited for the next quotation that came out on the
tape. He wrote that price and the time on your ticket, O.K.'d it and
gave it back to you, and then you went to the cashier and got whatever
cash it called for. Of course, when the market went against you and the
price went beyond the limit set by your margin, your trade automatically
closed itself and your ticket became one more scrap of paper.
In the humbler bucket shops, where people were allowed to trade in as
little as five shares, the tickets were little slips-different colors
for buying and selling-and at times, as for instance in boiling bull
markets, the shops would be hard hit because all the customers were
bulls and happened to be right. Then the bucket shop would deduct both
buying and selling commissions and if you bought a stock at 20 the
ticket would read 20 1/4. You thus had only 3/4 of a point's run for
Excerpted from "Reminiscences of a Stock Operator" by Edwin Lefèvre. Copyright © 2005 by Edwin Lefèvre. Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher. Excerpts are provided solely for the personal use of visitors to this web site.