Book Reviews, Trading

Book Review of The Game in Wall Street by William Hoyle

The full title is The Game in Wall Street And How to Play It Successfully by William E. Forrest Hoyle (1898).

I am a sucker for old books on the markets. I tend to find them having better content compared to many of the books published nowadays on the markets. And it is always interesting that much of the wisdom from the past is still applicable today.

From reading the book, the game on Wall Street today is remarkably similar to the Wall Street 115 years ago. Stocks are still manipulated, leading stocks are still the best vehicles to play the market, anticipation is still the way to play, the same risk and money management rules apply. In fact, one thing that surprised me was that the day of week biases here looks the same as the day of week biases in George Angell’s Sniper Trading book.

The book’s advice to buy in Spring and sell in Fall seems to be counter to the ‘sell in May and go away’ advice that one so frequently hears (every year!). The Stock Trader’s Almanac is probably the best source for getting updated seasonal information.

The scale system advocated by Hoyle is an interesting one. In intraday trading, such a technique is used to make quick scalps as the price jiggles around, so that even if your original position gets stopped out, the overall trade might still turn out to be a winner or a scratch.

All in all, the book packs a good deal of information into a thin volume of roughly ~80 pages. It’s a good quick read, especially for people interested in the historical context of Wall Street in the past.

Confine Your Transactions to the Leading, Active Stocks

  • At the beginning and during the first half of both the bull and bear campaigns, stick to the big pool stocks. These stocks are the first to move and will make by far the most rapid progress up or down. These stocks are the leaders, the active fighters, both in the advance and the decline, and the others are the reserves.
  • When Sugar and the “Grangers” have advanced ten or fifteen points the “specialties” will be up only three or five. When, however, the leaders are near the top then the laggards come up with a rush and a hurrah.
  • Invest in the leaders first, then with the profits made in them you can make a turn in the “specialties” later in the campaign. Don’t invest in anything that is not active as shown by the volume of daily transactions.

The Game in Wall Street

  • Accumulation
    • The bull campaign begins when prices are low, when the general public are bearish. All the news at such times seems to favor a decline.
    • Yet if one notices closely, he will see that after these conditions have existed for some time, the prices on the Stock Exchange, in spite of the continual bad news, do not go any lower. The prices fluctuate day by day up and down over a narrow range, but for some reason, in spite of the continued short selling of the chronic bears, the decline is checked.
    • At these times the pool generals are quietly and steadily mobilizing their forces. In other words, they are accumulating their stocks and locking them up in their strong boxes.
  • Mark-up
    • When this period of low prices has lasted two or three months and the pools have secured their stocks, the word is given out to commence the advance.
    • A battle takes place, the bears are defeated, and prices advance. Then there may be a retreat to encourage more short selling. Again an advance takes place and this time it goes a little further. So the contest wages, the prices going up and down, but on the whole advancing.
    • Finally toward the end of the campaign, after four or five months of gradually advancing prices, the advance begins to be rapid and continuous, the bears are then routed “horse, foot and dragoons,” prices are booming, the public, and even the bears, are madly buying, all the news and indications are favorable for a continued advance, the volumes of transactions are very heavy, and right then — the bull campaign ends.
  • Distribution
    • The It takes a month or two after prices have been worked up near the top to get the public to take the stocks off the hands of the pools.
    • The pools after accumulating the stocks must put the price up and hold them up until they can get out.
  • Mark-down
    • When once this distribution has taken place nothing can prevent prices from sagging.
    • The lowest point reached is not the accumulation point, or the price at which the pools buy the most of their stock. On the final break when the pools bring the stocks down to where they can afford to gather them in, the down rush carries prices temporarily below the buying-in price.

Seasonality of the Campaigns

  • As a rule the public has more money and consequently more courage in the Fall than in the Spring, and, hence, as a rule, the bull campaign begins in the Spring and ends in the Fall; when the public take the stock.
  • As a general rule get on the bull side in the late Spring and stay there until Fall. Then reverse and take the bear side. There is usually, however, after a decline in the Fall, a small bull campaign, starting about the middle of December and lasting till the middle or latter part of January. Then a decline until April, when the grand yearly campaign starts.
  • This is a general rule, but your records if carefully kept will be your best guide.

Nature of the Pool Generals

  • The pool generals are men who study crops and politics, both domestic and foreign, and legislation and finance. They know when the time is ripe to start a bull or a bear campaign, and when they can afford to end it.
  • They know when natural conditions will warrant an extended movement, and, on the other hand, when only a moderate one will be accepted, and they lay their plans accordingly.
  • They take a long look ahead; they study all these facts, but specially they study human nature. They play upon the hopes and fears of the public through their agents of the press and on the exchange and in the legislative halls, as the organist plays on his instrument.
  • It is not a difficult game for them to play so as to win with the means they have at their command. The cards they use both “marked and stacked,” and they take no chances.

Rules for Playing the Campaign

  • After prices have been declining for four or five months, and then come, comparatively speaking, to a standstill, simply moving up and down over a narrow range, do not be tempted to take the bear side of the market.
  • After the market has gone on for some time in the manner above mentioned, t here will come a day or two of almost complete stagnation in the market. Then you can buy stocks with safety and hold them for a good rise.
  • After five or six months from the time when stocks were at the lowest point, after there has been a good advance and now the bull market is under way with great enthusiasm, then there will come three days of rapidly advancing prices all along the line with great excitement and an enormous volume of business. At such times sell out and go into the country to cool off. If you are near the scene you will be hypnotized by the enthusiasm and tempted to make one more turn on the bull side.

The Scale System

  • The first requisite is to select one or two good dividend-paying, active stocks, that is, one or two of the big pool stocks.
  • The essential thing is to first determine, as we have said before, whether a bull campaign or a bear campaign is in progress, so as to know whether to start your system on the long or short side of the market.
  • Let us suppose, for instance, you started the “scale system” on the long side of the market in Rock Island in April, 1897.
  • You send your broker an order as follows: “Buy me ten Rock Island at market (say sixty-five) and ten more every point up or down. Hold only one lot at a time at any particular quotation (price). Sell each purchase one and one-half points advance. Buy back at original buying price any lot that has been sold. Continue until further orders.”

The Martingale System

  • If one has a large capital he can give the following order: “Buy ten Rock Island at market and double the quantity bought on each point decline.”
  • This system will work all right if you have plenty of capital and you are on the right side of the market.
  • Without these two essentials the “system” will break a a millionaire.

The Market Cycle of Panics

  • A real, thorough panic comes only once in about twenty years. Witness 1837, 1857, 1873, 1893.
  • Between each big panic, there are about two smaller cycles, or distinct periods of prosperity, followed by depression. A period of prosperity and advancing prices lasts about three years. Then the pendulum swings the other way and prices gradually decline for four or five years.
  • It will be noted that the big panic years each commenced after the top of a rise, and one of the smaller rises at that. It will also be noticed that the period of prosperity that followed a panic reached a higher level than the preceding period of prosperity. It will also be noticed that this period was not followed by a real panic but by a decline while the second period of prosperity preceded a panic.

Buy More on a Decline in a Bull Market Instead of Selling

  • If you are right in your views as to the general course of the market you should buy more stock on the decline, instead of selling.

Pay Attention to the Third Day of a Decline / Rise

  • As a rule do not sell stocks on the third day of a decline (unless you are working on the “scale system”) and do not buy on the third day of a rise.
  • After stocks have advanced three days and close at top and open high the next morning there is almost sure to be a reaction of a point or two.
  • After they have declined three days and close at bottom they are almost sure to advance the next day.

Do Not Enter a Countertend Position

  • During a bull campaign never try to make a turn on the short or bear side of the market. No matter how straight the information may be that a reaction is due, do not allow yourself to get on the wrong side of the market for a day.
  • You may succeed three or four times in cutting out a profit on the short side at such times, and then the next time you try it the market will run away from you and wipe out your margins.
  • If you think there is going to be a temporary reaction then sell out if you like and wait for the reaction, and commence buying again. Do not go short.

Don’t Short a Dull Advancing Market

  • On a dull advancing market after the foundation for a bull campaign has been formed, do not play for reactions.
  • If everyone is waiting for reactions so as to buy back short stocks, or to start in on the bull side from a lower level, be sure there will be no material reactions. What everyone expects does not happen in Wall Street.

Pyramid if You Started at the Beginning of a Campaign

  • If you start in at the beginning of a bull campaign it is a good plan to “pyramid” for a time, that is, hold your purchases and add more stocks as the prices advance and your margins grow.
  • At a later stage more money will be made by playing the “scale system” so as to take advantage of the reactions.

To Succeed, Anticipate, not React

  • One must take broad views and look ahead, in order to succeed in Wall Street. There everything is anticipated.
  • If bad news is expected, do not sell after the worst is known, but buy. If favorable news is looked for, buy in advance, and sell out when the good news becomes a fact and is known to the public. Anticipate.
  • If you wait until the uncertainties are all removed and the clouds all gone from the financial skies before buying, then prices are up ten to thirty points and those you “anticipated” are ready to unload on you.
  • If you sell when the worst has been told and hope is dead then the pools are ready to buy, because a change is at hand. It is darkest just before the dawn.

Play Double Tops and Bottoms

  • When a market is at an extreme low price at the panic stage, watch for the day to arrive when volume increases greatly compared to all preceding days. Wait until after the large volume day closes, and there is a reaction of a few points from the bottom.
  • Then send your buy orders for the next or second downward movement at or near the lowest previous bottom figures touched by on the first downward movement of the large volume day
  • You will observe the greater the volume and the bear excitement the more certain of the lowest figures being touched a second time. Then purchases should be made without relying on lower quotations because you will not be able to buy from this point on a scale down for the reason that on the second decline prices seldom go over a few fractions below the first lowest movement before a strong advance sets in.

Stocks with High Volume Breakouts is in for a Big Rise

  • When you have seen any stock lay a broad foundation for a rise, as shown by the records of the fluctuations, and then this stock advances beyond the former stopping point of each advance, accompanied with large volumes of transactions, you may be sure that this particular stock is in for a big rise.
  • The height of the rise may be measured by the breadth of the foundation.
  • Remember that fluctuations mean something. They are the result of design not chance.

Day of Week Biases

  • During the bull campaign, stocks generally sell lowest for the week on Thursday afternoon; on Fridays and Saturdays they advance and reach top either on Monday or Tuesday morning.
  • In the bull campaign buy Thursday night and Friday morning; sell Monday and Tuesday morning.
  • Reverse this rule for a bear campaign.


  • Break — A quick small decline
  • Bulge — A quick small advance
  • Grangers — Those railroads which handle principally farm products, the following are usually included in this classification; Burlington, St. Paul, Rock Island, Northwestern, and Atchison.
  • Point — In stocks a point is one dollar per share. In grain one cent per bushel.
  • Pointer — A theory or fact concerning the market for a given stock or grain on which a speculation is based.
  • Trust — A combination of the various manufacturers of a given article to control its production or sale, as the Sugar Trust, the Leather Trust, etc. The life and success of these trusts depend upon the legality of their combination and their ability to control the trade in their merchandise, and to resist competition therein.



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