The stock market is an ever evolving game. At least that is what you would think as the years roll out new technology and ideas into the market that apparently change everything.
High frequency trading has apparently turned the stock market world upside down. The market is now controlled by robots that run havock.
Or so we are told.
Before the robots took control, before the world of online broking and computers, the stock market was simply people dealing with people. The introduction of computers and online broking that came later was meant to revolutionise the market and change the game forever.
But did it.
Of course it must have.
How could the world of light speed execution resemble the world of people running to a trading floor to execute trades for clients who phoned or telegraphed order in and watched a ticker tape.
Today is surely a different world.
However last week I bought a book. A first edition of the first book to feature a stock chart, ever.
“The Game in Wall street and How to play it Successfully, by Hoyle.
My book, (link to amazon) 101 Ways to pick stock market winners, is currently in and out of the top 5 in the UK finance charts so I’ve decided for buying antique equivalents as an investment, a source for inspiration and ideas and as a bit of whimsy.
Enough to say, the book wasn’t cheap.
It was printed in 1898, 115 years ago.
To my shock some of the advice is the same as in my best seller two centuries later.
It appears that little has changed in the market for all the computers, algos, real time data, massive regulation and the 115 years of learning by doing represented in the inumerable booms and crashes.
Here are five rules that after 115 years have still to be learned by many.
“Greed and impatience are the causes of most of the losses in Wall Street.”
“Tips and points and “they say” and “we hear” and the “gossip” of so called financial papers, as well as newsletters of advertising brokers, ought not to be allowed to influence your views as to the course of the market.”
“In Wall Street everything is anticipated. If bad news is expected, do not sell after the worse is known, buy. If favourable news is looked for, buy in advance and sell out when the good news becomes a fact and is known by the public”
“A bull market begins in gloom and ends in glory. When the Universal cry is “now we have an old fashioned Bull market,” and there is a unanimous scramble for stocks; this marks the culmination of the bull market campaign.”
“Keep large margins.”
Its quite shocking to see core mistakes made by traders and investors in the market two centuries ago: greed, listening to tipsters, misunderstanding news and market cycles and over-gearing, are still common today and that many of the rules of the road when William McKinley was president are as relevant in the era of President Obama.
It appears that while technology has come a long way in the stock market speculators playing “the Game in Wall Street haven’t come that far.