Jun

19

 My boss had an intimate friend who was formerly in the cordage business. I used to hear them talking about how he had sold out his plant for about four times its worth of stock of the National Cordage Co., and how this trust would absorb everyone in the cordage trade, and soon have a monopoly. One day I heard my bosses friend say "when the whole thing is rounded up, that common stock will double in value and pay ten percent a year."

This was good enough for me. Here was an insider who knew all about the stock, giving his intimate friend this rare piece of information. That my boss was himself  convinced was evidenced by a check which I saw the next day, made payable to a firm of stock brokers and for an amount just equal to the value of 500 shares at the opening price for th National Cordage Co..

All hesitancy on my part now vanished, and at the noon hour I hustled up to my brokers office, sold out every share I owned, and put my last dollar in to Cordage. I was staking everything on this venture, and thought of all the things I would do with the money I was going to make. So carried away was I with the proposition, that I departed from my heretofore inflexible rule, and asked my broker on what margin he would carry the stock. His very conservatism saved me perhaps from what might have been a worse fiasco, as he refused to buy it except for cash.

After I bought cordage, it didn't seem to have so much resilience as I hoped, but I thought of the vast negotiations which were going on, and how the value was being added to daily, unknown to the outside public. But there's no use going over the details, everyone knows what happened to me and my cordage. It went from 90 after I bought it, to one, in the panic of '83. It went to pot along with General Electric and a lot of others.

To cap the climax, my firm was so crippled by the loss of capital sustained through the senior's investments in Cordage (shades of Imclone), that it was obliged to go into liquidation, and I lost my job … It was at that time that I changed my ways, and I became a specialist in panics.

– The Ticker, August 1908.

After this loss, the author realized that when they wanted him to buy, and the price was high, they never showed any of the bad points. When they wanted him to sell, they never showed any of the good points. He became a specialist in panics, a cane investor if you will, and became a millionaire in a few years, which he documents in the subsequent two issues of the Ticker.

I find that cane investing still works. Indeed, whenever the fake Doctor or his ilk try to bear things down, there is a scare about interest rates or plague or war, and the market reacts: it's time to hobble down to Broad street again.

Peter Earle contributes:

These are great accounts to follow. In the building of my own collection, which I hope to either auction off on the 100th anniversary of the Big Wind (about October 25 - 28, 2029) or perhaps donate to a free market economic research institution (The Von Mises Institute, most likely), I recently scored a great coup. I purchased, from the Dayton Public Library, the entire run of the Magazine of Wall Street from 1920 to 1972. I'm reinforced in my assessment of their great value in your citing of them. 


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