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Charles Woerishoffer

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Charles F. Woerishoffer

Born: 1843, Gelnhausen, Germany Died: May 11, 1886, New York (pneumonia, age 43) Role: Bear operator, NYSE member; Woerishoffer & Co.

One of the most famous bear operators of the mid-1800s. Came to the United States as a boy in 1843 in search of his fortune. Appeared on Wall Street in 1865, first as a clerk and later as a cashier for Rutten & Bonn, a banking and brokerage operation. By 1870 he had his own seat on the NYSE.

A colleague noted his daring: "He could have marched on a cannon's mouth with a jest on his lips." Henry Clews compared him favorably to Bismarck, Napoleon, and Ulysses S. Grant — a man who set himself on an idea and devotes himself steadily and persistently to it. Clews: "The results of his life work show what can be accomplished by any man who sets himself at work upon an idea, and who devotes himself steadily and persistently to a course of action for the development of the principle which actuates his life."

Career Arc

1870: Woerishoffer & Co. opened and was prosperous from the start.

1879: Took on Jay Gould and Russell Sage in a fight over control of the majority of the bonds of the Kansas Pacific Railroad, which was eventually merged into the Union Pacific. Won.

Early 1880s: German investors helped Woerishoffer build the Denver & Rio Grande Railroad.

1883: Examined the line and found the underlying earnings did not justify the railroad's fanciful stock price. Pricked the Northern Pacific bubble blown by Henry Villard, winning millions "for his allegiance to the fact that stocks cannot be bulled with much satisfaction for any length of time with net earnings out of the question," according to the Times.

Woerishoffer was not beholden to the bear side only — like Livermore, he sought out opportunities as they arose. In the Villard case, he went short after learning the railroads were not saving enough of their net earnings.

Philosophy

His natural bearishness could be traced to a disappointment in the failures of men and a lack of confidence in their corporations. He believed history had shown most companies were destined to failure as the ravages of capitalism wore down their competitive advantages. Said Clews: "It does not matter how successful the development of the business industries of this country may be hereafter, there will always be found men who will speculate upon their ruination."

He understood the importance of good sources of information — information that was not widely known but was operationally true. This is the underlying edge that makes any short selling campaign durable: knowing real conditions when others know only the story.

Death

Pneumonia killed him at the age of 43, in 1886, just as he was preparing for a trip back to Germany.

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