Tips For The Online Stock Broker
Posted by | Posted in Online Trading | Posted on 02-11-2008
We had a special meeting of our online trading club. We thought it was needed for support. Over the weekend a number of us had spoken and we tallied up what we had lost, and it was a lot.
We called around and some of us are going to meet at 5:00a.m., be-fore any US markets open, and see if we can at least provide some comfort for each other.
Online stock trading and options is not a new endeavor for any of us at this meeting.
One elderly guy, Jim, who has been trading for years, brought a guest, Mr. Callahan. We all looked at each other when this really old man walked up with an even older looking man.
Jim introduced Mr. Callahan around and then said that we might be able to be taught something from him.
Mr. Callahan, it turns out, was a fixture on the Chicago Board of Trade, from the 1920’s to 1960’s, when he retired with a small fortune.
He shook hands with a few of us and told us his tale. Actually, Jim first started to tell the story, but Mr. Callahan took over.
Mr. Callahan is 101 years old. He started working at the Chicago Board of trade in 1927. At that time he had fiery red hair, so he said. He was only 22 years old on October 29, 1929, when Black Tuesday saw millions of traders lose their fortunes. His father was a banker in a small town, which is now a suburb of Chicago. That bank did not lose a cent during the bank panic that followed the stock market crash and the hard times that followed, according to Mr. Callahan.
There is a lot of opinion going around out there, Mr. Callahan said, that tells you to buy and hold and that once the panic is over things will go back up. That will be true, he continued, but just how long can you hold out for recovery. It was 15 years before the DOW made up for the losses of 1929 and the bear market that followed.
His advice was simple. As your own stock broker, if you had been long for awhile, had made some profits, sell and keep the profits. Nobody ever went broke taking profits, Mr. Callahan said.
Mr. Callahan personally knew Benard M. Baruch, who, like him, has shorted the market prior to October 29, 1929. Baruch’s well-known quote is: “I made my money by selling too soon”.
It’s too late to sell too soon, but it’s not too late to take some profits.
It was serious food for thought. We had an hour to go before the markets opened.
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