Evening Star Newspaper, November 14, 1929, Page 12

_12 WALL STREET POOLS BY A POOL MANAGER, AS TOLD TO JAMES ABELLR pool manag e haogs o o groun of nes- P investors, showing how the Wefiv« stocks can be made & b’e‘gau when properly chaper- ) CHAPTER V. The Big Pools in Leading Active Stocks.’ fEvery one who is interested in the k market knows the old maxim: “Btocks never go until somebody ts them up.” anclent Wall proverb expresses the truth, h each generation learns in its time, that bull markets are not produced by terious outbursts of ntaneous ing. It is human to be skeptical of tures. People usually “wait and see.” d it is also human to want to “climb rd the band n when the p.m u) ms neing. ices “public participation” is almost invariably brought about by the pools and other big operators “behind the scenes.” In most cases, therefore,- when an experienced market observer sees the price of a stock advancing rapidly, the first question he asks is: “Who is put- ting it up?” And the next question he asks is: “Why?" The amount of stock outstanding of most issues is not large enough to permit more than one or two oups of speculators to operate very eavily. As we say in the Street: “There is ‘no room' for an argument.” Successful operations in the stocks of the smaller co tions usually depend ‘upon accurate wledge of the “inside lltgattlon." ut in the case of the leadin; stocks, the issues which at tl:le:cg:: traded daily in quantities of 50,000, 100,000, 200,000 shares and more, it is futile to ask: “Who is behind the mar- ket?” Not merely one or two pools, or groups of powerful market interasts, may be operating.in one of the “big tions had been that they combine the several pools into one and turn the managemeut over to a more seasoned market operator. Amateurs Refuse to Take Loss. But no operator of established success could be interested. The list of stocks held was not attractive and the gentle- men of the group, now much humbled in spirit, were adv to close out their commitments and the loss to experience account.’ they did not wish to do, and it was finally suggested that they consult the man I have mentioned, who was then a floor trader. He had been in charge of the execution of orders on the floor of ihe Stock Ex- change for a number of important pools and was known to cherish the ambition to “run & pool” of his own He was not at all interested in the proposition laid before him. ‘But he saw that the group were very wealthy men and might b2 uaded to finance a counter-proposition. He was con- vinced that the market was facing an impending break (this was early last March). He also belleved that, follow- ing the anticipated reaction, a number of active stocks with which he was fa- miliar would enter upon a new and rapid advance. He suggested that the stocks held by the “crowd” be liquidated under his direction, as rapidly as pos- sible, and the money transferred to op- erations in the “big stocks” which he favored, when the right moment ar- rived. He promised to get back the money lost by the rich dilletantes, if he were allowed to put through his own program. These men had already sunk about $5,000,000; but the enthusiasm of the young trader won their confidence. ‘They turned the deal over to him, put- ting up an additional million dollars for trading purposes. THE EVENING STAR, as and large vestment trust and institutional buying, came into the market. When the “big guris” went into action our young man went into action with them. While prices were still in the lower half of the day's range he bought stocks to the full extent of the resources of his pool. He ceased buying only when he had | exhausted the last penny of credit, | tying up his entire personal capital as well as the pool funds. It may be of interest to record here that he told me he slept that night as-well as he had ever slept in his life, and had to be awakened for his break- fast next morning. The rest of the story is, of course, obvious. March 27 he was lightening the load, getting as much as 10 or 15 points profit on some of the stocks carried over night. In the course of the next few weeks the previous losses of his “backers” were recouped; and the pool is still in exist- |ence with its capital much . enlarged, both from profits and from the funds of new members. The pool manager is "REAL ESTATE LOANS Made at Low Interest Rates TYLER & RUTHERFORD Advantages incident {o direct representation 1520 K St. NW. National 0475 First Mortgages o I should add, however, lest no longer compelled to seek capital for his operations. In reading over the above I feel that any inex- perienced young man should be led to unprofitable dreams of quick success in oty Saetoid mad. spent 1 was 5] years in “following the market” as board boy, margin clerk, speculator and floor trader. On three occasions he had gone broke and worked his way back, each time paying off his debts in full. And before he was given the opportu- nity here related, he had demonstrated his ability by accumulating resources of $1,500,000 from his personal la- tions. In Wall Street, as the old say- ing has it, “men spend a lifetime '.g learn how to make a fortune in a day. (Copyright, 1929, by CurséSePRews Features, me) Equipment Order Placed. NEW YORK, November 14 (#).—The Westinghouse Electric & Manufacturing Co. has received orders for ele equipment for two new Dollar Line passenger liners now under construction. ENTERPRISE SERIAL BUILDING ASSOCIATION 7th St. & La. Ave. N.W. 63rd Issue ot Stock Now. Open for Subscription Shares of Stock, $1.00 Each Payable Monthly James E. Connelly James F. Shea President Secretary Consult Us First If you need money for your Real Estate financing fet us have your application today. Prompt Service No Appraisal Fee SEASONAL REDUCTION g IN STEEL INGOT OUTPUT |{he srerieus By the Associated Press. NEW YORK, November 14.—There operl;or ‘whose | has been terests consider it a ment, pointing out that a similar situ- ation existed at this time last year. The United States Steel Corporation has reduced ingot output by about 5 per cent and is now running at about 75 A memorial to civilians who were shof during the World War was unvelled cently at Brussels, Belgium. . WASHINGTON, D. C, THURSDAY, NOVEMBER 14, 1929. 'THE IDEAL INVESTMENT = UNQUESTIONED \ Mortgage \ SAFETY Bonds DI-VER-$1-FI-CA-TION A LONG WORD—but, then, it has a mighty big ersification is an age-old prin- ciple, and when applied to banking, insurance, farming, industry, or f0 the investment of ‘money, it is the greatest factor in safety. ‘To secure the safety of diversification, many individuals find in the investment trust a me- dium for joiming forces. The skilled managers of investment trusts are able to spread the combined resources of individuals over an in- vestment list containing securities of the coun- * meaning., Divi try’s leading industries. Investment Corporation of North America has shown unusual profits in periods of increasing as well as decreasing security prices. It affords large and small investors a high degree of safety and many other advantages which we shall be glad to explain to you, without obligation. BECAUSE the Bonds of the Federal Security and Mortgage Compgny are: 1. Secured by small’ mortgages on properties in District of Columbia. .2. Guaranteed by a strong independent Surety Company, with resources of over $5,000,000.00, under State and Government supervision. 3. Further guaranteed by the Federal Security and Mortgage Company, with a capital and surplus of over $750,000.00. 4. Trusteed by a large National Bank. 5. Mortgages appraised by independent experts of known reputation. 6. Legal investment for National Banks and.Insurance Companies. 3 Write, *phone or call at our . office [or full details ‘[aMPAN ’ Federal Security ¢ Mortgage:Co. #1522 K Street N.W. 7 [nvesTment Bankers Telephone National 2000 . WOODWARD BLDG. WASHINGTON, D. C. Now Available JAMES F. SHEA na Ave. N.W. stocks.” Sometimes five or six such The Commercial National et e O olix Wch | - The firgt move of the naw pool man. Loy ager was to engage a small staff of gether with & Jozen or more smaller | statisticians and_investigators, These T st v combina~ | men made an intensive study of a num- \ of ‘Ciplial 0 erelt, Botos of thes | ok Of ocks, cheeking up the facts interests are buying, some are selling. | Soone MBI he fexpected market ad; Il vance might be predicated. Some of Some pools are entering the market e ‘are Nquidating. And, as we | the original selections of the operator ' others were thrown out arx two or three other Dottt sy wecks, jsome Yery |issues were substituted. The result was at work on the short sidel a list of about a dozen active stocks VTt is true of the stocks of the la: which he was prepared to buy in quan- corporations, as of smaller issues, that ties as soon as the current reaction defl- When prices ' decline the figures at |Ditely touched bottom. Meantime he which the shares are valued by the | had closed out the previous commit- “big insiders,” the market is supported ments of the pool members, using the with buying orders in volume. But | million dollars of fresh capital which as soon as this support buying makes they supplied to facilitate liquidation. an appearance a large number of other | March 20 found him with the pool re- people “ioin tbhe" party.” Some of them sources in cash. are invited, but-most of them invite themselves. It is only necessary for | Funds of Pool Expended in Day. the door to be opened. In half an | The next few days, as will be remem- Bour the house is full. The first guests g:?ds-mm o r;;;’}‘t;‘ Dl T arrive are serve t reshme; 3 ger made -y e mtn | & few purchases to test out the strength in the form of “good stocks at bargain - Exing of the selling and found it too strong prices.” And they “grab eves in sight.” Later comers must rhyl?ht’:r s share of the “goodies.” e CAPITAL & SURPLUS OVE Pools Scramble for Cheap Stocks. CoMPLETE FINANCING In the early stages of an advance in stock meu the big speculators and pools, large investment institutions and important individual investors, the whole panoply of Wall Street market interests, engage in & scramble for “cheap stocks,” much the same sort of “buying orgy” the “outside public™ will be seen to indulge in at a later stage of the bull movement. On the occas- jon of one such outburst of “inside buying,” at the end of the decline which terminated on March 26 of this year, & young friend of mine was given the tunity to “win his spurs” as'a . 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In short, real thoroughbreds ~ The Bond selections embrace all the rich tints of Autumn and Winter —faultlessly tailored in @ manner befitting their high station ~ We believe Bond’s great 26-store business is the first to present such “Great Names" at moderate prices. You are invited to inspect— and enjoy—the luxury of these Fine Overcoats. o5 i BROOKE ;STOKES & Co. Washington Phone District 2672 732 17tk St. N.W. The Wealth of a Continent Australia, your geography teacher used to tell you, is a continent which lies between the Indian. and the Pacific Oceans. It has great natural resources, contains many large. and ever- ing e, A nenia I the world. 1t wtsl ive governmen! worl 2«!1{: is now around $8,000,000,000. Yet the equivalent of the entire wealth of this huge land was wiped out in one disastrous day on the New York Stock Exchange. Between $8,000,000,000 and $9,000,000,000 was automatically erased from the value of 880 stocks listed on the New York Stock Exchange. The ‘wealth of a continent wiped out! M le suffered irreparable loss of thousands of others suffered loss in varying degrees. There was only one of investors who remained unaf- . ot in sound. non-fluctuating safely plac sound, non-fluctua mnr’lt&u—hnch ;{unrlfie;' as ?h. 63 First Mortgage Notes offered throu, the Swartzell, Rheem & Hensey Com- pany. Our clients have viewed calmly far worse panics in speculative stocks . . . the interest on their investment returned to them steadily, unfailingly, -im‘h the dfnmdh( of ‘thh eom more than y yesrs ago— t.hnmy all the widely varying condi- tions since 1869. 4 In all that-time no investor has eyer suffered a penny’s loss. STONEHAVEN 8 $ : : every coat luxuriously lined . Ten Payment Service Pay ‘10 at purchase, the balance in ten payments. Our established cash prices remain unchanged — and there are nointerest charges of any kind. SWARTZELL, RHEEM & HENSEY CO. MORTGAGE BANKERS 727 13 STREET N-W./ \'Wasringron vic. 1335 F St. NW. '