It's A Bull Market, You Know

In Fullerton's, there were the usual crowd. All grades!

Well, there was one old chap who was not like the others. To begin with, he was a much older man. Another thing was that he never volunteered advice and never bragged of his winnings. He was a great hand for listening very attentively to the others. He did not seem very keen to get tips – that is, he never asked the talkers what they'd heard or what they knew. But when somebody gave him one he always thanked the tipster very politely. Sometimes he thanked the tipster again – when the tip turned out OK. But if it went wrong, he never whined, so that nobody could tell whether he followed it or let it slide by.

It was a legend of the office that the old jigger was rich and could swing quite a line. But he wasn't donating much to the firm in the way of commissions; at least not that anyone could see. 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 ways 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.

One day a fellow named Elmer Harwood rushed into the office, wrote out an order, and gave it to the clerk. Then, he rushed over to where Mr. Partridge was listening politely to John Fanning's story of the time he overheard Keene give an order to one of his brokers and all that John made was a measly three points on a hundred shares and of course the stock had to go up twenty-four points in three days right after John sold out. It was at least the fourth time that John had told him that tale of woe, but old Turkey was smiling as sympathetically as if it was the first time he heard it.

Well, Elmer made for the old man and, without a word of apology to John Fanning, told Turkey, "Mr. Partridge, I have just sold my Climax Motors. My people say the market is entitled to a reaction and that I'll be able to buy it back cheaper. So you'd better do likewise. That is, if you've still got yours."

Elmer looked suspiciously at the man to whom he had given the original tip to buy. The amateur, or gratuitous, tipster always thinks he owns the receiver of his tip body and soul, even before he knows how the tip is going to turn out.

"Yes, Mr. Harwood, I still have it. Of course!" said Turkey gratefully. It was nice of Elmer to think of the old chap.

"Well, now is the time to take your profit and get in again on the next dip," said Elmer, as if he had just made out the deposit slip for the old man. Failing to perceive enthusiastic gratitude in the beneficiary's face Elmer went on: "I have just sold every share I own!"

From his voice and manner you would have conservatively estimated it at ten thousand shares.

But Mr. Partridge shook his head regretfully and whined, "No! No! I can't do that!"

"What?' yelled Elmer.

"I simply can't!" said Mr. Partridge. He was in great trouble.

"Didn't I give you the tip to buy it?"

"You did, Mr. Harwood, and I am very grateful to you. Indeed, I am, sir. But"

"Hold on! Let me talk! And didn't that stock go up seven points in ten days? Didn't it?"

"It did, and I am much obliged to you, my dear boy. But I couldn't think of selling that stock."

"You couldn't?" asked Elmer, beginning to look doubtful himself. It is a habit with most tip givers to be tip takers.

"No, I couldn't."

"Why not" And Elmer drew nearer.

"Why, this is a bull market!" The old fellow said it as though he had given a long and detailed explanation.

"That's all right," said Elmer, looking angry because of his disappointment. "I know this is a bull market as well as you do. But you'd better slip them that stock of yours and buy it back on the reaction. You might as well reduce the cost to yourself."

"My dear boy," said old Partridge, in great distress–"my dear boy, if I sold that stock now I'd lose my position; and then where would I be?"

Elmer Harwood threw up his hands, shook his head and walked over to me to get sympathy: "Can you beat it?" he asked me in a stage whisper. "I ask you!"

I didn't say anything. So he went on: "I give him a tip on Climax Motors. He buys five hundred shares. He's got seven points' profit and I advise him to get out and buy 'em back on the reaction that's overdue even now. And what does he say when I tell him? He says if he sells he'll lose his job. What do you know about that?"

"I beg your pardon, Mr. Harwood; I didn't say I'd lose my job," cut in old Turkey. "I said I'd lose my position. And when you are as old as I am and you've been through as many booms and panics as I have, you'll know that to lose your position is something nobody can afford; not even John D. Rockefeller. I hope the stock reacts and that you will be able to repurchase your line at a substantial concession, sir. But I myself can only trade in accordance with the experience of many years. I paid a high price for it and I don't feel like throwing away a second tuition fee. But I am as much obliged to you as if I had the money in the bank. It's a bull market, you know." And he strutted away, leaving Elmer dazed.

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 got my first BlueVoda website builder from vodahost and realized at last that when Mr. Mario Dorizas 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 – that is, not in reading the tape but in sizing up the entire market and its trend.

How To Get Rich

The Apple Macintosh hit the market on January 22, 1984, launched by a Super Bowl commercial directed by Ridley Scott. You may remember it: Big Brother is dictating to a hoard of zombies when a woman runs in and hurls a sledgehammer at the screen. The screen represents IBM.

In 1984, Apple was actually the leader in the computer market, but IBM's PC was catching up. The Ridley Scott commercial alludes to IBM's growing market share and shows Apple smashing IBM.

Apple's confidence was justified. The Mac was sleek, cool, functional, and far superior to anything else out there. The operating system was superior, too. While other computers used command line code, the Mac had a mouse and a "graphical user interface."

But the fantasy never came true.

The problem with the Apple Mac was simple. Steve Jobs wouldn't share the Apple operating system with other companies. He created the best product, but he didn't allow Apple to be compatible with other products.

Meanwhile, Microsoft didn't care about the quality of idea... it wanted the money... and so it went after the corporate and business market. Corporations are risk-averse. They change slowly. Gates recognized this, so he put compatibility above quality in his design to encourage corporations to adopt his product.

In other words, Apple was better, but Microsoft executed better. Here's what happened:

In 1983, Apple was the leading maker of personal computers. IBM's PC had only 8% of the market. By the mid-1990s, IBM's PC controlled 97% of the market, and Apple was virtually extinct. And then in 2001 came the BlueVoda website builder from VodaHost web hosting.

Why did Steve Jobs make this mistake? Felix Dennis can tell us...

With a fortune of $2 billion, Felix Dennis is one of the richest people in Britain. His fortune is self-made. He had no education and no capital when he started. Now he owns thousands of acres of land, fine art hangs on his walls, servants cater to his needs, and he spends his time writing poetry, drinking expensive wine, and loafing around the Caribbean.

But don't be fooled by the vintage cars and bronze statues. Felix Dennis is still a very astute businessman. This weekend I read Dennis' new book, titled How To Get Rich. I'll tell you about the book in a moment – it's fantastic – but first I want to share an observation Dennis makes about Steve Jobs.

"Apple have a problem. They have always had a problem. His name is Steve Jobs," says Dennis. "Steve Jobs has been a victim of the fallacy of the good idea over and over again."

Dennis made his money in publishing. So he knows the value of good ideas. Here's the thing. Unless an idea is executed with "panache" and "originality," says Dennis, it doesn't matter how great the idea is. The enterprise will fail. Many start-up entrepreneurs fall into this trap, he says. Proving the validity of their idea becomes such an obsession they forget to make money.

Steve Jobs' behavior in the early 1980s is a perfect example. Jobs looked at the PC market and asked, "How can we make something better than everything out there." The Mac was his answer.

Gates asked, "How can we make the most money?" Selling software to the business market was his answer.

Now Dennis says the story is repeating itself with the iPod.

Jobs has created a fantastic product and once again. It's better than anything else on the market. But like the Apple Mac in the 1980s, the iPod only connects with other products made by Apple. In other words, Jobs has locked out the rest of the industry again.

"It's classic Steve Jobs," says Dennis, "the tale of the great idea wrapped in the passion of one man, wrapped in a ball of arrogance, wrapped again in the shell of a marketing genius. It's a joy to behold, but it's not smart business, except in the short-term."

Dennis predicts that rivals will connect with each other and conspire to steal all Apple's customers again. When this happens, he says Apple's share price will collapse, just like it did the last time.

I'm not recommending you trade Apple's stock based on this theory – although it is an interesting insight. I do recommend – however – you read Felix Dennis' book.

How To Get Rich does exactly what it says on the cover... it shows you how to get rich. Dennis tells you how to negotiate, he explains the importance of ownership, and he shows you where to get capital. He also describes the pitfalls to entrepreneurship.

The book is funny, blunt, and filled with business stories.

Be warned: It is not a self-help book. The author is not some slimebag who made a few bucks selling get-rich-quick books. He's a true billionaire. No education, no inheritance, no special talent... except making money. Dennis does not guarantee you will make a fortune after reading his book. The opposite. He makes it clear the reader will probably not get rich. For most of us, the enormous wealth – like Dennis has – is just a curiosity. This book satisfies that curiosity.

How To Get Rich makes an immediate entry into my top-10 list of books about money. It's a classic. If you are curious what it takes to get filthy rich, you should read this book too.