The Gambler
Chapter 1 - Canadian Period
- My pet stocks were causing me my biggest losses
- The sudden drops after he has invested his money are one of the most mystifying phenomena facing the amateur
The Fundamentalist
Chapter 2 - Entering Wall Street
Chapter 3 - My First Crisis
- The stock that saved me I knew nothing about; I picked it for one reason onlyit seemed to be rising
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The Technician
Chapter 4 - Developing the Box Theory
Chapter 5 - Cables Around the World
- If a dignified matron would suddenly (jump on a table and do a wild dance), this would be unusual and people would immediately say: There is something strange heresomething has happened. In the same way, if a usually inactive stock suddenly became active I would consider this unusual, and if it advanced in price I would buy it.
- It was evident that I had bought the stock at the wrong timehow to judge a movement at the time it happens?
- I began to realize that stock movements were not completely haphazard. As if attracted by a magnet, they had a defined upward or downward trend which, once established, tended to continue.
- Within this trend stocks moved in a series of frames, or what I began to call boxes
- They would oscillate fairly consistently between a low and a high point. These boxes began to exist very clearly for me
- This was the beginning of my box theory which was to lead to a fortune
- When the boxes of a stock in which I was interested stood, like a pyramid, on top of each other, and my stock was in the highest box, I started to watch it
- If it did not bounce up and down in that box I was worriedno bouncing meant it was not a lively stock
- I found that a stock sometimes stayed for weeks in one box
- The task was to define the frame exactly, and be sure the stock did not move decisively below the lower edge of the boxif it did, I sold it at once
- A reaction from 55 to 50 was quite normal while it stayed within its box; stocks are like dancers, they crouch, ready for the spring-up (and dont go smoothly from 50 to 70)
- I learned that the 45 position in a stock after a 50 high point has another benefitit shakes out the weak and frightened stockholders
- I came to see that when a stock was on a definite upward trend there was a feeling of proportion about its advance; if it was on its way, rising from 50 to, say, 70 but occasionally dropping back, that was all part of the right rhythm
- My broker told me I should have put in an automatic on stop buy order
- There is no such thing as cannot in the marketany stock can do anything
- I finally realized that:
1) There was no sure thing in the marketI was bound to be wrong half of the time
2) I must accept this fact and readjust myself accordinglymy pride and ego would have to be subdued
3) I must become an impartial diagnostician, who does not identify himself with any theory or stock
4) I cannot merely take chances. First, I have to reduce my risks as far as humanly possible
- I decided to give on-stop orders to buy at a certain figure with an automatic stop-loss order on them in case the stock went down; this way, I figured, I would never sleep with a loss
- Because of commissions my profits had to be bigger than my losses
- I always sold too quickly because I am a coward; I knew the right thing to do but I invariably did the opposite
- Since I could not train myself not to get scared, I decided to hold on to a rising stock but, at the same time, keep raising my stop-loss order parallel with its rise. I would keep it at such a distance that a meaningless swing in the price would not touch it off. If, however, the stock really turned around and began to drop, I would be sold out immediatelythis way the market would never be able to get more than a fraction of my profits away
- I realized I would never be able to sell at the top, and I would be a fool to sell an advancing stock, so when the boxes started to go into reverse, when the pyramids started to crumblethat was when I would sellautomatically!
- I knew I had to adopt a cool, unemotional attitude toward stocks; that I must not fall in love with them when they rose, and I must not get angry with them when they fell
- There are no such animals as good or bad stocksonly rising or falling stocks. I should hold the rising ones and sell the ones that fall
- I felt like a man who knew a room could be lit up and was fumbling for the switches
My Objectives
1. Right stocks
2. Right timing
3. Small losses
4. Big profits
My Weapon
1. Price & volume
2. Box theory
3. Automatic buy order
4. Stop-loss sell order
Chapter 1 - Canadian Period
- My pet stocks were causing me my biggest losses
- The sudden drops after he has invested his money are one of the most mystifying phenomena facing the amateur
The Fundamentalist
Chapter 2 - Entering Wall Street
Chapter 3 - My First Crisis
- The stock that saved me I knew nothing about; I picked it for one reason onlyit seemed to be rising
--------------------------------------------------------------------------------
The Technician
Chapter 4 - Developing the Box Theory
Chapter 5 - Cables Around the World
- If a dignified matron would suddenly (jump on a table and do a wild dance), this would be unusual and people would immediately say: There is something strange heresomething has happened. In the same way, if a usually inactive stock suddenly became active I would consider this unusual, and if it advanced in price I would buy it.
- It was evident that I had bought the stock at the wrong timehow to judge a movement at the time it happens?
- I began to realize that stock movements were not completely haphazard. As if attracted by a magnet, they had a defined upward or downward trend which, once established, tended to continue.
- Within this trend stocks moved in a series of frames, or what I began to call boxes
- They would oscillate fairly consistently between a low and a high point. These boxes began to exist very clearly for me
- This was the beginning of my box theory which was to lead to a fortune
- When the boxes of a stock in which I was interested stood, like a pyramid, on top of each other, and my stock was in the highest box, I started to watch it
- If it did not bounce up and down in that box I was worriedno bouncing meant it was not a lively stock
- I found that a stock sometimes stayed for weeks in one box
- The task was to define the frame exactly, and be sure the stock did not move decisively below the lower edge of the boxif it did, I sold it at once
- A reaction from 55 to 50 was quite normal while it stayed within its box; stocks are like dancers, they crouch, ready for the spring-up (and dont go smoothly from 50 to 70)
- I learned that the 45 position in a stock after a 50 high point has another benefitit shakes out the weak and frightened stockholders
- I came to see that when a stock was on a definite upward trend there was a feeling of proportion about its advance; if it was on its way, rising from 50 to, say, 70 but occasionally dropping back, that was all part of the right rhythm
- My broker told me I should have put in an automatic on stop buy order
- There is no such thing as cannot in the marketany stock can do anything
- I finally realized that:
1) There was no sure thing in the marketI was bound to be wrong half of the time
2) I must accept this fact and readjust myself accordinglymy pride and ego would have to be subdued
3) I must become an impartial diagnostician, who does not identify himself with any theory or stock
4) I cannot merely take chances. First, I have to reduce my risks as far as humanly possible
- I decided to give on-stop orders to buy at a certain figure with an automatic stop-loss order on them in case the stock went down; this way, I figured, I would never sleep with a loss
- Because of commissions my profits had to be bigger than my losses
- I always sold too quickly because I am a coward; I knew the right thing to do but I invariably did the opposite
- Since I could not train myself not to get scared, I decided to hold on to a rising stock but, at the same time, keep raising my stop-loss order parallel with its rise. I would keep it at such a distance that a meaningless swing in the price would not touch it off. If, however, the stock really turned around and began to drop, I would be sold out immediatelythis way the market would never be able to get more than a fraction of my profits away
- I realized I would never be able to sell at the top, and I would be a fool to sell an advancing stock, so when the boxes started to go into reverse, when the pyramids started to crumblethat was when I would sellautomatically!
- I knew I had to adopt a cool, unemotional attitude toward stocks; that I must not fall in love with them when they rose, and I must not get angry with them when they fell
- There are no such animals as good or bad stocksonly rising or falling stocks. I should hold the rising ones and sell the ones that fall
- I felt like a man who knew a room could be lit up and was fumbling for the switches
My Objectives
1. Right stocks
2. Right timing
3. Small losses
4. Big profits
My Weapon
1. Price & volume
2. Box theory
3. Automatic buy order
4. Stop-loss sell order
