The Grandfather Principle
Grandfather was a great guy and an honest businessman. In the dark days of World War II he floated a company on the stock exchange. In those days, such an act of optimism must have been rare. The business consisted of a chain of retail shops. From the day the company was listed, grandfather would settle into his leather armchair every evening after dinner, open the newspaper and read the financial pages to see how the market was reacting to his bold move. It was a success. The shares came on at about 5 dollars and hovered there, sometimes up and sometimes down. Every time they dropped, grandfather became very upset and called his broker and bought back his shares. "I must not disappoint my shareholders," he explained to me one evening, "so I buy them myself to keep the price up."
At that time I was a university student with little money and a small paying job. I watched the market like a hawk and every time I saw grandfather's shares drop below $5, I too would buy them, knowing that grandfather was about to push the price up, allowing me to sell and make a profit.
Grandfather is no longer around, but to this day I play the market. It became a habit I enjoyed and I like to feel that I have an interest. It's not serious trading. I never have more than about $5,000 invested in there and I never risk major purchases. But I still work the "grandfather principle". At a coffee evening last weekend someone mentioned that the company he works for was about to merge with another. Yesterday I bought shares in that company and by close of trading I had made a tidy sum. Today I sold the shares and walked away with a few hundred dollars earned with no expenses. Everything was done from the computer in my study and the brokerage cost me one dollar for each trade, meaning a total of $2.
Must say I feel pleased with myself.
