Another option market saying that began to fascinate me was "Buy Cheap, Sell Dear." This sounded even better. But where could I buy something cheap for option market trading? As I searched for a bargain, I discovered the over the counter market, the market of unlisted securities. I knew from my books that in order to get its option listed for option market trading on the option exchange, a company has to observe very stringent financial regulations. I had read that this did not apply to over the counter stocks.
This option option
market trading, therefore, seemed to me the perfect place to
find a bargain. I naively believed that because these stocks were
not listed, few people knew about them and I could buy them cheap.
I hurriedly subscribed to a monthly booklet called Over-the-Counter
Securities Review and started hunting.
I searched eagerly among the thousands and thousands of names for the option market trading bargains that seemed to be offered. I bought stocks like PACIFIC AIRMOTIVE, COLLINS RADIO, GULF SULPHUR, DOMAN HELICOPTER, KENNAMETAL, TEKOIL CORPORATION and some of the more obscure ones. What I did not know was that when I came to offer them for sale, some of these stocks stuck to my fingers like tar. I found it very difficult getting rid of them - and rarely at anything like the price I paid for them.
Why? Because there was no rigid price discipline as there is for the listed securities; there were no specialists - professionals to assure a continuous and orderly market. There were no reports where one could see at what price a transaction took place. There were only the "Bid" and "Ask" prices from option market trading. These, I discovered, were often very far apart. When I wanted to sell at 42, which was the quoted "Ask" price, I only found a buyer at 38, the quoted "Bid" price. I sometimes ended up option market trading at 40 but that was by no means certain.
When I stumbled into the over the counter option market trading market, all this was unknown to me. Fortunately, I quickly came to realize that this is a specialized field and is only lucrative for experts who really know something about the affairs of a particular company.
I decided to give it up, and returned my attention to listed securities. All
this time, I never once questioned the truth of any Wall Street
rumors. I had no way of knowing that they are just as ill-founded
and dangerous as rumors in the Canadian or other option
market trading markets.
What I believed to be solid information, piped straight from Wall Street, had the most sensational lure for me.
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Turned Investor Who, Within 18 Months, Turned $25,000
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