“Buy straw hats in the winter” (out of season, when the prices are cheapest) is an old Wall Street proverb that’s usually credited to financier Russell Sage (1816-1906). Another saying is: “Buy overcoats in the summer.”
buy straw hats in winter
(idiomatic) Of stocks, to buy when both demand and price is low, sell when demand and price is high.
Wikipedia: Russell Sage
Russell Sage (4 August 1816 - 22 July 1906) was a financier and politician from New York, United States.
Sage was born at Verona in Oneida County, New York. He received a public school education and worked as a farm hand until he was 15, when he became an errand boy in a grocery conducted by his brother, Henry R. Sage, in Troy, New York. He had a part interest in 1837-1839 in a retail grocery in Troy, and in a wholesale store there in 1839-1857. In 1841 he was elected an alderman, and he was re-elected to this office until 1848, also serving for seven years as treasurer of Rensselaer County. He was then elected to Congress as a Whig, and served, with re-election, from 5 December 1853 until 3 March 1857. He served on the Ways and Means Committee. Sage was the first person to advocate, on the floor of Congress, the purchase of Mount Vernon by the government. Subsequently he settled in New York City and engaged in the business of selling puts and calls and privileges on Wall Street.
On 7 May 1867, Sage’s first wife died of stomach cancer. This purportedly led to his focus on the accumulation of wealth later in life. In 1869, Sage was involved in a case concerning the usury laws in New York state, accused of being the gang leader in an usury group. He was convicted and fined $500, but his jail sentence was suspended. Later that year, Sage married his second wife, Olivia Slocum.
He bought a seat on the New York Stock Exchange (1874) and thereafter was known as a financier. At the same time he became interested in railroads, and secured stocks in western roads, notably the Chicago, Milwaukee and St. Paul Railroad, of which he was president and vice-president for twelve years. By disposing of these investments, as the smaller roads were absorbed by trunk-lines, he became wealthy.
In his later years he was closely associated with Jay Gould in the management of the Wabash Railway, St. Louis and Pacific, Missouri Pacific Railroad, Missouri-Kansas-Texas Railroad, Delaware, Lackawanna and Western Railroad and the St. Louis - San Francisco Railway, the American cable company, the Western Union telegraph company and the Manhattan consolidated system of elevated railroads in New York city, in all of which corporations he was a director. Mr. Sage was for many years closely connected with the affairs of the Union Pacific Railroad, of which he was a director. He was a director and vice-president in the Importers and Traders’ National Bank for twenty years, and also a director in the Merchants’ Trust Company and in the Fifth Avenue Bank of New York City.
In 1891, a man toting a bag concealing dynamite entered Russell Sage’s New York office claiming that he had an important matter to discuss with Sage concerning railroad bonds. To further his claim, the man told Sage he held a letter of introduction from John D. Rockefeller. Sage accepted the letter from the man, only to find that it was a demand for $1,200,000. His clerk, not having heard any dialogue between the two men, was unaware that there was a life or death situation being played out in the office. Sage moved himself over to his clerk and placed the clerk in between himself and the man with the dynamite. The man realized then that he was not going to have his demand met and detonated the dynamite killing himself and causing injury to the clerk. Sage was shielded from any injury. Following the event, Sage’s clerk sued Sage on battery charges.
In 1906 he died and left his entire fortune of about $70 million to his wife, Margaret Olivia Slocum Sage (1828-1918), who subsequently devoted a major portion of these funds to philanthropy. In 1907 she established the Russell Sage Foundation, and in 1916 she founded Russell Sage College in Troy. In addition she gave extensively to Rensselaer Polytechnic Institute (RPI) and the Emma Willard School.
10 January 1910, Waterloo (Iowa) Reporter, pg. 6, col. 1:
Chas. Rosemond, representing the T. G. White Cereal Co., of Cedar Rapids, made the response. he prophesied a great future for the organization and intimated the secret of success was to look ahead, in other words, “buy straw hats in the winter time if you would get rich.”
Investment and Speculation:
A Description of the Modern Money Market and Analysis of the Factors Determining the Value of Securities
By Thomas Conway, Jr. and Albert William Atwood
New York, NY: Alexander Hamilton Institute
A good business axiom is the observance of a saying credited to Russell Sage — “Buy your straw hats in winter.”
5 January 1914, Racine (WI) Journal-News, pg. 6, col. 5:
Milwaukee Daily News: Our kind faced old friend John D. Rockefeller is looking for some cheap, second-hand bricks for use in improvements on his Cleveland property, which reminds us that Uncle Russell Sage used to buy his straw hats in the winter.
3 March 1914, San Antonio (TX) Light, pg. 5, col. 5 ad:
Someone asked a famous Wall Street millionaire one day if he had any rule for making a fortune. “Certainly,” said the millionaire. “I always buy my straw hats in the winter.”
In this little jest lies the recipe for making money—a recipe that has never been known to fail. Put in a little less cryptic language it is: “Always buy when prices are low and sell when prices ar high.”
17 April 1920, Albuquerque (NM) Journal, pg. 2:
“I am acting upon the advice of an old campaigner of Wall street, Russell Sage, who said, Buy straw hats in the winter, in other words, buy things when nobody wants them and turn loose when everybody wants them.”
8 August 1928, Nashua (Iowa) Reporter, pg. 5, col. 1:
Marshall Field said that the secret of success is to buy straw hats in the winter.
Russell Sage, the Money King
By Paul Sarnoff
Published by I. Obolensky
Precisely at that moment, Sage was instructing Gould to “buy straw hats in the winter, when nobody wants them, and sell them in the summer when everybody needs them.
JUNE 11, 2002
SAM STOVALL’S SECTOR WATCH
By Sam Stovall
There’s an old Wall Street adage: “Buy overcoats in the summer and straw hats in the winter,” meaning investors usually anticipate seasonal trends and buy stocks accordingly.
Stocks or Bonds?
Tuesday, March 08, 2005
BUY YOUR STRAW HATS IN THE WINTER TIME
I mentioned the name Bernard Baruch a couple of times and a reader says she never heard of him. Bernard was born in 1870 in Camden S.C.. He was rich at 30 years of age through shrewd investments in the stock market.
He served his country in a number of ways including helping to negotiate the peace at the end of WWI. He was a highly respected good man, a philanthropist. A university business school bears his name. I looked up a few details through the Columbia Encyclopedia as posted at http://www.bartleby.com.
It has been 30 years or more since I read his favorite saying. A member of the press had asked him to tell the secret of his success. He immediately replied, “Buy your straw hats in the winter time”. I can’t remember where I read about Bernard, but the idea has stayed with me. The idea has helped me to become a successful investor; it will help you do as well. Just remember that if everyone is excited about a certain stock or sector, it is almost too late to buy.
New York City • Banking/Finance/Insurance • Friday, October 03, 2008 • Permalink