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

Chapter 155 Selling Colt, Making a Huge Profit (Part 2)

At 9:15 a.m., Larry arrived at Lexington Avenue, which is also located on the Upper East Side but in a less desirable location.

Further along from here is Third Avenue, right next to the East River, far from the core affluent area, and the shape of the houses is quite different from that of Fifth Avenue.

Reading has a storefront here, and its facade and size are somewhat similar to Paine Weber Securities' Boston branch, which is quite a large investment for a small brokerage firm.

The residents here are mainly professionals such as doctors, lawyers, and newspaper editors, as well as some mid-level managers from Wall Street financial companies. They mostly live in five- to six-story red brick apartment buildings, some of which have boutique shops and small galleries on the ground floor.

Larry walked into Reading, his hand already taking out the gold-embossed account card from his wallet. Just as he was about to hand it to the trader, he heard a somewhat familiar greeting.
Good morning, sir! How can I help you?

Larry looked up and immediately recognized him; he was the former front desk manager of Reading's Hartford branch.

The front desk manager recognized Larry instantly, because the latter had left such a deep impression on him!

The front desk manager still remembers Larry's brilliant move of shorting Colt in Hartford and then going long at the end of the trading day.

"It's you!"

The two said in unison.

The front desk manager smiled sincerely, bowed slightly, and asked, "Mr. Livingston, it's an honor to meet you here."

Larry smiled and said, "I'm sorry, I don't know your name yet."

"Bernard Baruch, you can just call me Bernard. I'm only 26 years old, not much older than you..." the front desk manager said politely.

Larry, being an industry insider, genuinely praised the man upon hearing he was only 26, saying, "Oh, you're really amazing! To be the front desk manager of the New York branch at 26, your future is limitless."

After exchanging a few pleasantries, Larry took out his account card and said he was going to make a transaction that day.

Baruch respectfully accepted the gold-embossed account card he had personally presented to Larry with both hands, then turned to a shrewd trader and specifically instructed him to prioritize Mr. Livingston's trading class.

Larry thanked Baruch and turned to walk to the temporary VIP seat that the front desk manager had specially arranged for him.

Soon after, a trader came over and handed him a trading order printed with "Mr. Larry Livingston," and informed him that this branch also placed orders with the NYSE by phone, so the order placement speed could be as fast as within 3 minutes, but the execution time of floor trading was unknown, especially for limit orders, because the price at that time was not controllable.

Larry nodded, thinking to himself that this was already a hundred times better than the branch offices in other cities. In branches outside of New York, it would take at least fifteen minutes to close a deal.

After the trader left, Larry took out his gold-cased pocket watch and looked at it. It was 9:25, 35 minutes before the market opened.

Larry pulled out his small notebook and began to review Colt's stock price changes before trading was suspended.

Colt's stock had been suspended from trading a month ago, on the first Saturday of February. Larry had planned to sell all 1500 shares he held that day, but as he was selling, he noticed something unusual about the stock price. He not only stopped selling the last 500 shares, but also bought the maximum margin of 6000 shares with his entire margin account.

Therefore, I now hold a total of 6500 shares of Colt firearms, of which the earliest 500 shares were sold at a price of $26.5 each…

Damn, it's still $26.5...

Wow! That's a really low price!
Larry couldn't help but sigh.

The other 6000 shares were sold at an average price of $116.5. At the time, I saw that the stock price might still have the potential to break upwards, so I overcame my fear and bought another 6000 shares despite my great anxiety.

Looks like I need to find an opportunity to close my position today.

As Mr. Porter said, stocks like Colt, which experience a surge followed by another surge in price, must have hired professional traders.

Even Morgan's senior banking partners couldn't find enough professional traders. Although both are financial professionals, in the eyes of industry insiders, traders who can stir up a storm in the secondary market and bank executives who live off financing and connections are simply from different worlds.

Mr. Morgan will inevitably invite James Keane, the greatest trader in America today...

No! You can't use the word "trader" to describe Mr. Keane. He should be called a "master trader"!
Since he began to shift his attention from the quote board to the betting bank, Larry has been eagerly searching for biographies and insights of the greatest traders and operators of the past and present.

Following the American Civil War in the mid-19th century, as stocks gradually became the largest trading activity on Wall Street, a large number of outstanding stock traders emerged.

This included Jay Gould, known as the "cold-blooded killer" and the controller of the Erie Railroad. Gould's most notable achievement was his battle with railroad magnate Vanderbilt for control of the company. The result of this battle was that Gould not only won control of the Erie Railroad but also forced the railroad magnate to lose $700 million.

Meanwhile, his attempt to hoard gold with speculators in 1869 was a classic battle on Wall Street, but unfortunately it failed due to the government's emergency gold release.

Then there's Percy Thomas, a renowned speculator in the futures market whose status in cotton and futures is unparalleled. Larry's most admired and respected speculator is James Keane.

He was born in 1838 and was an unknown figure in his early years.

In 1876, Keane moved from California to New York and began to engage in New York stock trading. Drawing on his experience in California mining stocks, Keane began to design trading strategies that exploited information asymmetry and human weaknesses.

Between 1876 and 1878, in just two years, James Keane earned a staggering $900 million on the New York Stock Exchange!

This is a number that would shock even God, especially considering it was 16 years ago.

Some people move much faster than the masses, and they are bound to become leaders.

After gaining fame, he became a frequent guest of Hafmeier, chairman of the American Sugar Corporation. In addition, he was also the go-to trader for the Morgan financial group. In every stock trading case he handled, the clients were able to sell their shares at a higher price.

Keane was well aware of the "fear and hope" psychology of retail investors. He attracted everyone's attention by raising the stock price, and then dumped the stock to retail investors who were looking for a bargain when the price fell.

The "line of least resistance" principle that Larry talks about every day was actually first created by James Keane, and Larry has always kept this belief in mind.

Of course, like all great speculators, James Keane's career wasn't always smooth sailing; he went bankrupt several times...

But each time, he miraculously rises again, which is something Larry greatly admires.

Larry felt very at ease knowing that Keane was most likely controlling Colt's stock price fluctuations at the moment.

Larry was even glad that he was on the same side as James Keane.

Larry learned a great deal from Keane's biography and interviews, and it's no exaggeration to say that Larry is a fan of Keane.

"Anyone who gets targeted by James Keane and becomes his rival is truly doomed!" Larry thought to himself, a smile spreading across his face. He had never experienced such fervent admiration for his idol in his previous life.

After a moment of random thoughts, Larry calmed down again. While looking at the general patterns of Colt's stock price fluctuations in his small notebook, he recalled the classic cases of Mr. Keane's trading and began to try to make contingency plans and response strategies for Colt today.

If Colt opens below $200 today, Larry doesn't feel too worried. This would prove that Mr. Morgan, the market manipulator, might push the price up further in the future, because a relatively low opening price leaves room for a subsequent rise.

However, if Colt's stock price surges to above $227 today, which is more than 100 points higher than when it was suspended from trading a month ago, it may not be a good thing.

Larry anticipates that the stock will either distribute shares directly or drastically drop to the $200 support level before raising the price to distribute shares.

In this case, there's no chance for the stock price to surprise anyone, because since the major players are focusing on the 100-point gap up at the open, they are unlikely to continue pushing the price up further.

Having considered the pre-booking situation and devised a strategy, Larry felt confident, because regardless of whether the market opened high or low, he was certain he would make a huge profit; the only question was how much.

When he's making a profit, Larry never gets caught up in the ups and downs, nor does he regret seeing the stock price rise after he sells.

Making money is already a great achievement! We can't let sunk costs get involved in major decisions!
Having planned everything out in his mind, Larry let out a long breath, stopped thinking about anything else, and began to wait for the market to open.

Time ticked by, and as the 10 o'clock opening time approached, Larry began to concentrate all his attention on the price chart.

Finally, the clock struck 10 o'clock.

At that very moment, all four price quotation machines at Reading Company suddenly started clicking in unison, like the drums of war, like thunder in the sky, like Beethoven's Symphony No. 5, which suddenly resounded in the hall.

There weren't many people sitting in the lobby of the business department, but at that moment, everyone seemed to be possessed by an evil god, and all of them focused their attention on the price list.

Larry's ears perked up, and his fingernails, gripping the notebook tightly, turned pale from the force...

The two young men in front of the stock quote machine kept pulling out slips of paper and shouting out stock quotes.

Finally, it was the turn of that stock that had been suspended from trading for a month.

The young man pulled out a slip of paper and shouted to the scribe in front of the price list, "Collt firearms, $198 and a quarter!"

Larry didn't hear the gasps of his customers, but he thought he could hear them nervously swallowing hard.

The price clerk climbed the portable wooden ladder, first wiping away the large "X" after Colt's name with a burlap sack, before finally filling in the price of $198.25 on the price board...

(End of this chapter)