[ Pobierz całość w formacie PDF ]
.Such corrections tend to push prices along the line of least resistance.And right here I will say that, though I do not give it as a mathematical certainty or as anaxiom of speculation, my experience has been that accidents that is, the unexpected orunforeseen have always helped me in my market position whenever the latter has beenbased upon my determination of the line of least resistance.Do you remember thatUnion Pacific episode at Saratoga that I told you about? Well, I was long because I- 101 -Reminiscences of a Stock Operatorfound out that the line of least resistance was upward.I should have stayed long insteadof letting my broker tell me that insiders were selling stocks.It didn't make anydifference what was going on in the directors' minds.That was something I couldn'tpossibly know.But I could and did know that the tape said: "Going up!" And then camethe unexpected raising of the dividend rate and the thirty-point rise in the stock.At 164prices looked mighty high, but as I told you before, stocks are never too high to buy ortoo low to sell.The price, per se, has nothing to do with establishing my line of leastresistance.You will find in actual practice that if you trade as I have indicated any important pieceof news given out between the closing of one market and the opening of another isusually in harmony with the line of least resistance.The trend has been establishedbefore the news is published, and in bull markets bear items are ignored and bull newsexaggerated, and vice versa.Before the war broke out the market was in a very weakcondition.There came the proclamation of Germany's submarine policy.I was short onehundred and fifty thousand shares of stock, not because I knew the news was coming,but because I was going along the line of least resistance.What happened came out of aclear sky, as far as my play was concerned.Of course I took advantage of the situationand I covered my shorts that day.It sounds very easy to say that all you have to do is to watch the tape, establish yourresistance points and be ready to trade along the line of least resistance as soon as youhave determined it.But in actual practice a man has to guard against many things, andmost of all against himself that is, against human nature.That is the reason why I saythat the man who is right always has two forces working in his favor basic conditionsand the men who are wrong.In a bull market bear factors are ignored.That is humannature, and yet human beings profess astonishment at it.People will tell you that thewheat crop has gone to pot because there has been bad weather in one or two sectionsand some farmers have been ruined.When the entire crop is gathered and all the farmersin all the wheat-growing sections begin to take their wheat to the elevators the bulls aresurprised at the smallness of the damage.They discover that they merely have helpedthe bears.When a man makes his play in a commodity market he must not permit himself setopinions.He must have an open mind and flexibility.It is not wise to disregard themessage of the tape, no matter what your opinion of crop conditions or of the probable- 102 -Reminiscences of a Stock Operatordemand may be.I recall how I missed a big play just by trying to anticipate the startingsignal.I felt so sure of conditions that I thought it was not necessary to wait for the lineof least resistance to define itself.I even thought I might help it arrive, because it lookedas if it merely needed a little assistance.I was very bullish on cotton.It was hanging around twelve cents, running up and downwithin a moderate range.It was in one of those in-between places and I could see it.Iknew I really ought to wait.But I got to thinking that if I gave it a little push it would gobeyond the upper resistance point.I bought fifty thousand bales.Sure enough, it moved up.And sure enough, as soon as Istopped buying it stopped going up.Then it began to settle back to where it was when Ibegan buying it.I got out and it stopped going down.I thought I was now much nearerthe starting signal, and presently I thought I'd start it myself again.I did.The same thinghappened.I bid it up, only to see it go down when I stopped.I did this four or five timesuntil I finally quit in disgust.It cost me about two hundred thousand dollars.I was donewith it.It wasn't very long after that when it began to go up and never stopped till it gotto a price that would have meant a killing for me if I hadn't been in such a great hurry tostart [ Pobierz całość w formacie PDF ]