The Bucket Shops

Back in Wykoff and Livermore days you did not need a stock brokerage account to trade stocks. In fact you never had to buy or own a single share of stock - ever.

Some of the major Wall Street firms started out as bucket shops. When you hear the term bucket shop today it means a stock broker that sells pump and dump stocks in a high pressure operation. The term meant something different in the old days. If you walked into a bucket shop in the early 1900s it would look like a mini stock exchange. Blackboards with stock symbols and prices covered the walls, and clerks, usually teenagers looking to get into the business, scurried around reading a clankity-clank ticker tape and updating the prices on the boards.

You could walk into a bucket shop off the street and after making a deposit or otherwise establishing your bona fides you could spend the next several minutes or hours betting on the price movement of Union Pacific, and dozens of other NYSE stocks. You could buy or sell or sell short anytime you wanted. At the end of the day you collected your money or kissed it goodbye and received a hearty invitation from the shop owner to come back tomorrow, as the case may be.

You never saw a stock certificate and the shop owner didn’t either. You were trading on the price movement only.

Bucket shops were eventually outlawed. I suspect more from the growing political influence of the Wall Street firms than anything else. You can still find them in England where the practice is called spread-betting.