Twenty Years of Inside Life in Wall Street or Revelations of the Personal Experience of a Speculator
by Fowler, William Worthington
This is literally on of the coolest books I have ever read and if you’re a Wall Street history buff like I am put this at the top of your list. It is a must read.
This book was written in 1870…five years after the Civil War ended. The author, William Fowler, was a ‘market operator’. I guess you could say that the modern equivalent is a hedge fund manager or a propriety trader. He describes in great detail the day to day workings of Wall Street from the 1850s and 1860s.
He describes really interesting things such as how at the beginning of the war, when the Union won a battle the market would rally because this meant that the war would come to an end soon and business would resume and that would be Bullish for the market. But towards the end of the War when the Union lost it was Bullish because it was thought that the Lincoln Government would issue more Greenbacks (paper money that wasn’t specifically backed by gold) so that it could pay more soldiers and buy more weapons. This would result in inflating the markets making prices go higher.
So here we are one hundred and fifty years later this is essentially the exact same thing that modern day ‘Quantitative Easing’ is. The government is issuing IOUs. Back then it was literally a printing press and the Banks literally got paper certificates. Now its figuratively a printing press and the digits in the bank account are changed. But what is fascinating is that it’s the same thing.
He also says “A most weighty maxim, verified by Wall Street experience, is this: Cut short your losses, and let your profits run. This has been the making of many a speculator, and yet few have the nerve to practice it.” He discusses a strategy of buying 100 shares. If they go up 1%, buy another 100. Keep doing this if the shares continue to appreciate. If they go down 1% sell them all.
Despite the fact that this book is almost 150 years old, it just amazes me how the more things change the more they stay the same. The players change, but the game doesn’t because human nature doesn’t.