Saturday, July 25, 2009

Lefèvre, Wall Street Stories

Edwin Lefèvre, author of the 1923 classic Reminiscences of a Stock Operator, a fictionalized biography of Jesse Livermore, launched his writing career twenty-two years earlier with Wall Street Stories. This collection of eight short stories, reissued by McGraw-Hill in 2008, is the perfect read for a rainy afternoon or a dull market. You’ll laugh, you’ll be forewarned (or admonished), you’ll even be educated.

The first and last story (“The Woman and Her Bonds” and “A Theological Tipster”) are very funny. The stories in between relate the shenanigans of syndicates, the inevitable fall of star-struck market amateurs, and the ruthlessness of most of the survivors.

Characters in these stories may listen to the “ticky-ticky-ticky-tick” of the ticker but they are not dispassionate tape readers. Quite often their trading is personal, sometimes the result of a vendetta. For instance, two “skillful stock operators, very rich and utterly without financial fear,” loathe another member of the NYSE and set out to “bust” him.

The educational value of this book, to my mind, lies in a theme common to many of the short stories—the process of accumulation and distribution. Markets may have grown exponentially, regulations may have been put in place to prevent many of the practices common in 1901, but the rhythm of accumulation and distribution hasn’t changed in any fundamental way. The problem today for someone trying to understand this rhythm is that accumulation and distribution have become abstract concepts. In Wall Street Stories they are personalized (and occur in warp speed). We watch, for instance, as one of the titans of Wall Street launches a campaign to gain a controlling interest in Iowa Midland. He looks for the support level (“Bagley has orders to buy 300 shares every quarter of a point down until 37 is reached, and then to take 5,000 shares at that figure.”) and sets off the herding instinct (“Mr. Brown had been seen whispering to Harry Wilson . . .”).

Set a couple of hours aside and thoroughly enjoy yourself. It’s like a trip to the spa.

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