Most of you have heard of the classic book about trading written over a century ago named Reminiscences of a Stock Operator (by Edwin Lefèvre). There is a tale within that book which I used to find perplexing, and even kind of annoying, but I think I finally get it. Here’s how the text reads:
His name was Partridge, but they nicknamed him Turkey behind his back, because he was so thick-chested and had a habit of strutting about the various rooms, with the point of his chin resting on his breast. The customers, who were all eager to be shoved and forced into doing things so as to lay the blame for failure on others, used to go to old Partridge and tell him what some friend of a friend of an insider had advised them to do in a certain stock. They would tell him what they had not done with the tip so he would tell them what they ought to do. But whether the tip they had was to buy or to sell, the old chap’s answer was always the same. The customer would finish the tale of his perplexity and then ask: “What do you think I ought to do?”
Old Turkey would cock his head to one side, contemplate his fellow customer with a fatherly smile, and finally he would say very impressively, “You know, it’s a bull market!” Time and again I heard him say, “Well, this is a bull market, you know!” as though he were giving to you a priceless talisman wrapped up in a million-dollar accident-insurance policy. And, of course, I did not get his meaning…What old Mr. Partridge said did not mean much to me until I began to think about my own numerous failures to make as much money as I ought to when I was so right on the general market.
The more I studied the more I realized how wise that old chap was. He had evidently suffered from the same defect in his young days and knew his own human weaknesses. He would not lay himself open to a temptation that experience had taught him was hard to resist and had always proved expensive to him, as it was to me. I think it was a long step forward in my trading education when I realized at last that when old Mr. Partridge kept on telling the other customers, “Well, you know this is a bull market!” he really meant to tell them that the big money was not in the individual fluctuations but in the main movements…
I mean, reading that, and putting myself into the shoes of whomever was asking the question, if “Old Turkey” answered every sincere query with the same “It’s a bull market, you know,” I’d be inclined to deck the guy.
Yet in this new environment we’re in, I think I finally understand what the anecdote was all about, because these days, in my strong opinion, any long-winded arguments about doing this-or-that with equities could probably be answered with one simple phrase: “Well, it’s a bear market, after all.”
It seems hard to believe, since we haven’t had one in almost TWO DECADES, but it’s here nonetheless, and I believe the starting point for any decision for the foreseeable future will be: well, you know this is a bear market. Maybe Old Turkey had something to say worth remembering.
