Reborn in America, I am a legendary short seller on Wall Street.

Chapter 14 Identifying Trends
December 18th, 10:00 AM.

As the stock market opened, the price quote machine stared at the crowd in the trading hall like a gargoyle perched on a counter, while the crowd stared back at it.

When the quotation machine started spitting out price data strips, the people in the trading hall became impulsive, as if possessed by demons.

Larry, holding onto the horizontal bar of the ladder with one hand and a piece of chalk in the other, listened as Tom shouted out the latest stock quotes, then began writing rapidly on the quote board...

By this time, the trading floor was already packed with upper-class people from all walks of life in Boston. Thanks to the cast-iron radiators embedded in the floor and walls of the trading floor, these gentlemen were spared the cold winter outside and could sit in their seats in shirts, holding fruit wine, watching the market with peace of mind.

"Larry, what was the quote for Hollock Pipeline ten minutes ago?"

"Ten and a quarter dollars, sir!"

"Larry, help me calculate the minimum amount of money I need to buy 500 shares of a deep-sea fishing company."

"...The current price of deep-sea fishing stock is $75. If you want to buy 500 shares, and according to our margin requirements, you will need to put up a minimum of $3.18, sir!"

Now, all the clients in the brokerage know that the guy who copies down the quotes is incredibly bright. Whenever they have a problem with math or stock prices, they're happy to ask Larry directly.

Of course, such inquiries were not free; these wealthy men would tip Larry during their breaks.

Sometimes, Larry can earn $7 or $8 a day just from tips, which is almost his weekly salary.

The other young men in the sales department were very envious. One of them even dared to question Larry about whether others should be given a chance.

Larry then uttered the phrase that later became a Boston slang term: "If you can do it, then do it; if you can't, then shut up."

The other young men were helpless against Larry; they were simply not as skilled, and the management of the sales department were all on his side.

While Larry was copying down the market information, he quietly unbuttoned the top two buttons of his shirt; the trading hall was just too stuffy.

Just then, the quoting machine started clicking and spewing out paper tape. Larry had a vague premonition that this quote was very important, so he turned to look at the counter of the quoting machine.

Tom held a three-inch-long strip of paper between his hands, reading it as he called out.
"DuPont, $94.5!"

hiss!
Larry inwardly gasped, feeling that DuPont's stock price had been moving rather "recklessly" lately.

Just this Monday, DuPont's stock price was around $85, but as the stock price rose steadily throughout the week, DuPont became a hot stock in the market, and traders chasing its rising stock price became increasingly optimistic about its future.

There are clear signs that insider buying has occurred in this stock.

Larry certainly didn't know why those big shots were buying, but based on his own market intuition and ability to analyze quotes, he could sense that the stock price was unusual.

Larry's keen interest in DuPont's stock performance led him to subsequently pay similar attention to the stock prices of other companies related to DuPont.

Harrington and Richardson Arms, $16 and three-quarters, up $1 and a quarter from the start of the week;

Wesson Arms, $32.8, up $1.5 from the start of the week;

Holt Manufacturing, $45, up nearly $5 from the start of the week...

Larry felt increasingly uneasy as he wrote. He sensed that military stocks, represented by DuPont, were beginning to show a synergistic effect, much like a flock of sheep. Led by DuPont, the leading sheep, they were exhibiting a completely different sector trend from other stocks.

Near the close of trading, DuPont's latest price was $95.1!
Without further hesitation, Larry checked the time and saw that there were still 15 minutes left before the market closed. He quickly called over the substitute market recorder to take his place, while Larry casually threw on a coat, grabbed the more than $300 in margin in his pocket, and hurried to the betting house.

As soon as Larry entered the betting shop, the front desk manager spotted him immediately, a clear look of disgust in his eyes. Larry walked to the counter, placed a $100 bet, tossed down a 25-cent transaction fee, and shouted to the teller,
"Buy 100 shares of DuPont!"

The teller glanced at him, and the man reluctantly put the deposit into the drawer. He looked up at the price list and wrote on the transaction slip:

"DuPont... purchased 100 shares at $95.1 each, with a margin of $1 per share."

Then, the teller realized that she hadn't filled in Larry's name yet. She rolled her eyes at Larry, then forcefully scribbled "Larry Livingston" on the paper with her pen.

Larry took his transaction order, but instead of folding it, he stood quietly in front of the quote board, waiting for DuPont's latest offer.

At that moment, the front desk manager, who was wearing a monocle, walked over and asked the teller in a low voice.

"What stocks did this kid buy? How many shares?"

The teller quickly replied, "DuPont, 100 shares, margin of $1 per share!"

The front desk manager glanced up at DuPont's stock price of $95.1 and gave a disdainful sneer.

"Oh, this stock is so high. If it just pulls back one point and falls below $94, this kid will lose all his margin!"

As he spoke, the front desk manager glanced at Larry's retreating figure and muttered, "That kid's made some money lately, and he's gotten arrogant. High-priced stocks are very volatile, and I think he'll definitely be shaken out this time. Good thing, let's make some money back from him too!"

The teller quickly nodded and smiled apologetically, "That's right, as long as DuPont fluctuates downwards by 1%, Larry's margin will be wiped out."

Both of them smiled.

Of course, Larry was unaware of what happened at the counter.

He was naturally also worried about the volatility of high-priced stocks.

In fact, Larry is currently unwilling to touch high-priced stocks because they are highly volatile. With the same $1 margin, if the stock price is several or even tens of dollars, it may not fall below $1 for two or three days after purchase.

Even if the market moves against him, Larry can calmly accept the loss and exit the trade.

But high-priced stocks are different; they can easily fluctuate by several dollars a day, and in some extreme cases, such as earnings announcements or unexpected events, a gap in price could be more than $10.

Larry has just bought $95 worth of DuPont stock, but he might be ousted by the next offer, losing his $100 deposit. Larry is very nervous right now.

The price quote machine beeped, and the black-haired boy looked down and shouted towards the price quote board.
"DuPont... $95!"

Oh no! I lost 10 cents!

This means Larry has lost $10 of his $100 margin.

Oh, that's not the key point. The key point is whether the stock price will continue to fall afterward?
To reiterate, if the price falls, it's perfectly normal for a stock like DuPont to drop by $3 or $5. The next price move could wipe out Larry's $100 margin.

Larry glanced at the clock on the wall; there were only 3 minutes left until the morning market closed.

Should we cut our losses and exit the market?
Larry felt like there were two little men fighting on his shoulder, each wielding a giant sword. One red-faced little man told him to sell quickly, cut his losses, and get out of the market; while the other white-faced little man told him that DuPont was about to rise, and that in a narrow encounter, the brave would win, and that one must always draw their sword when facing a strong enemy!

Larry was taken aback, turned his head and saw that the pale-faced little man had a face that looked just like Li Yunlong...

(End of this chapter)