Reminiscences of a Stock Operator

by Edwin Lefevre

It was extremely disagreeable to see the story in the newspapers. I had always paid my debts in full and this new experience was most mortifying to me. I knew I’d pay off everybody some day if I lived, but everybody who read the article wouldn’t know it. I was ashamed to go out after I saw the report in the newspapers. But it all wore off presently and I cannot tell you how intense was my feeling of relief to know that I wasn’t going to be harried any more by people who didn’t understand how a man must give his entire mind to his business—if he wishes to succeed in stock speculation.

My mind now being free to take up trading with some prospect of success, unvexed by debts, the next step was to get another stake. The Stock Exchange had been closed from July thirty-first to the middle of December, 1914, and Wall Street was in the dumps. There hadn’t been any business whatever in a long time. I owed all my friends. I couldn’t very well ask them to help me again just because they had been so pleasant and friendly to me, when I knew that nobody was in a position to do much for anybody.

It was a mighty difficult task, getting a decent stake, for with the closing of the Stock Exchange there was nothing that I could ask any broker to do for me. I tried in a couple of places. No use.

Finally I went to see Dan Williamson. This was in February, 1915. I told him that I had rid myself of the mental incubus of debt and I was ready to trade as of old. You will recall that when he needed me he offered me the use of twenty-five thousand dollars without my asking him.

Now that I needed him he said, “When you see something that looks good to you and you want to buy five hundred shares go ahead and it will be all right.”

I thanked him and went away. He had kept me from making a great deal of money and the office had made a lot in commissions from me. I admit I was a little sore to think that Williamson & Brown didn’t give me a decent stake. I intended to trade conservatively at first. It would make my financial recovery easier and quicker if I could begin with a line a little better than five hundred shares. But, anyhow, I realised that, such as it was, there was my chance to come back.

I left Dan Williamson’s office and studied the situation in general and my own problem in particular. It was a bull market. That was as plain to me as it was to thousands of traders. But my stake consisted merely of an offer to carry five hundred shares for me. That is, I had no leeway, limited as I was. I couldn’t afford even a slight setback at the beginning. I must build up my stake with my very first play. That initial purchase of mine of five hundred shares must be profitable. I had to make real money. I knew unless I had sufficient trading capital I would not be able to use good judgment. Without adequate margins it would be impossible to take the cold-blooded, dispassionate attitude toward the game that comes from the ability to afford a few minor losses such as I often incurred in testing the market before putting down the big bet.

I think now that I found myself then at the most critical period of my career as a speculator. If I failed this time there was no telling where or when, if ever, I might get another stake for another try. It was very clear that I simply must wait for the exact psychological moment.

I didn’t go near Williamson & Brown’s. I mean, I purposely kept away from them for six long weeks of steady tape reading. I was afraid that if I went to the office, knowing that I could buy five hundred shares, I might be tempted into trading at the wrong time or in the wrong stock. A trader, in addition to studying basic conditions, remembering market precedents and keeping in mind the psychology of the outside public as well as the limitations of his brokers, must also know himself and provide against his own weaknesses. There is no need to feel anger over being human. I have come to feel that it is as necessary to know how to read myself as to know how to read the tape. I have studied and reckoned on my own reactions to given impulses or to the inevitable temptations of an active market, quite in the same mood and spirit as I have considered crop conditions or analysed reports of earnings.

So day after day, broke and anxious to resume trading, I sat in front of a quotation-board in another broker’s office where I couldn’t buy or sell as much as one share of stock, studying the market, not missing a single transaction on the tape, watching for the psychological moment to ring the full-speed-ahead bell.