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More adventurous than the average bear

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Friday, September 30, 2016

Drew's Handkerchief Trick

"Nineteenth-century Wall Street stock trader Daniel Drew was renowned for plenty of scams, but one that served him particularly well was his handkerchief trick. Drew famously once used it to pump up the price of Erie Railroad stock. After dining with fellow stock traders at a New York club, Drew wrapped a note in his handkerchief. It was a list of (fictional) reasons why Erie was a great buy. He placed the handkerchief in his pocket, then, when pulling it out, allowed the note to fall to the floor. After Drew had left, the traders swooped on the discarded note. Acting on Drew's false tip, they bought Erie stock and in the process pushed its price north. Drew was on the other side of the trades, madly selling at the inflated prices."

--- Uncommon Sense: Investment Wisdom Since the Stock Market's Dawn / Michael Kemp, Scott Pape
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