Reminiscences of a Stock Operator, Chapter 6 summary

What happens

1. While vacationing in Atlantic City, Larry follows an unexplained urge and builds a short position of five thousand Union Pacific shares.
2. After earthquake reports initially fail to depress prices, he expands his short position as the market falls and earns a sum of money.
3. At Saratoga Springs that summer, he detects steady buying in Union Pacific and purchases shares in small batches.
4. Ed Harding warns that insiders are selling, so Larry abandons his purchases and sells four thousand shares short.
5. A dividend announcement sends Union Pacific sharply higher, and Larry closes his short position at a a sum of money loss.
6. He buys four thousand shares, recovers his loss with an additional profit, and commits to independent judgment and broader market analysis.

In this chapter

What to notice

Larry identifies why he abandons an accurate reading of the market. Good intentions and expertise do not make Harding's advice correct.

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