Through these and other experiences, however, certain conclusions began to emerge. As a baby repeatedly hearing the same words starts to learn them, so did I slowly start, through my commodity market pick
trading experiences, to discern the outlines of some commodity market pick rules that I could apply. They were:
1. I should not follow advisory services. They are not infallible, either in Canada or on Wall Street.
2. I should be cautious with brokers' advice. They can be wrong.
3. I should ignore Wall Street sayings, no matter how ancient and revered.
4. I should not trade "over the counter" - only in listed commodity market pick where there is always a buyer when I want to sell.
5. I should not listen to commodity market pick rumors, no matter how well founded they may appear.
6. The fundamental approach worked better for me than gambling. I should study it.
I wrote out these rules for myself and decided to act accordingly. I went over my brokerage statements and it was then that I discovered a transaction that gave me a seventh rule and led to the events that immediately followed. I discovered that I owned a commodity market pick and did not know it.
The commodity market pick was VIRGINIAN RAILWAY and I had bought 100 shares in August 1954 at 29 & three quarters for $3,004.88. I had bought this commodity market pick and forgotten it, simply because I was too busy on the telephone jumping in and out of dozens of stocks - sometimes making as little as 75 cents; other times frantically calling up about a sliding commodity market pick, trying to sell it before it dropped any lower.
VIRGINIAN RAILWAY had never given me a moment's anxiety, so I left it alone. It was like a good child that sat playing quietly in the corner while I worried and fretted about the behavior of a dozen bad children. Now that I saw its name - after having held it for eleven months - I hardly recognized it. It had been so quiet, it had gone completely out of my mind. I rushed to my commodity market pick tables.
It was standing at 43 & a half. This forgotten, calm, dividend-paying commodity market pick had been slowly rising. I sold it and received $4,308.56. Without any effort on my part, or even any anxiety, it had made me $1,303.68. It also made me dimly aware of what was to become my rule number 7: I should rather hold on to one rising commodity market pick for a longer period than juggle with a dozen stocks for a short period at a time.
But which commodity will rise? How to find it by myself?
I decided to have a look at VIRGINIAN RAILWAY. What had caused its steady rise while other commodity market picks were jumping about? I asked my broker for information. He told me that the company paid a good dividend and had a fine earnings record. Its financial position was excellent. Now I knew the reason for the steady rise. It was a fundamental reason. This convinced me of the Tightness of my fundamental approach toward commodity market picks.
I made up my mind to refine this approach. I read, studied, analyzed. I set out to find the ideal commodity market pick. I thought that if I really studied the company reports I could find out all about a commodity market pick and decide whether it was a good investment. I began to learn all about balance sheets and income accounts. Words like "assets," "liabilities," "capitalization," and "write-offs" became commonplace in my vocabulary.