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

Chapter 218 My Stocks Have Dropped?
On Friday, Larry went directly to Reading to transfer the remaining funds from his account.

In fact, Larry still has a considerable amount of money left in his bank account.

However, at this time, transferring funds between banks is a very troublesome matter. Not only are the procedures complicated, but a lot of handling fees are also deducted.

Larry realized that the money he had previously transferred to the accounts of United English Capital and Freeport Cornerstone Holdings had all been wired from Reading's account.

According to current securities company rules, it would be better to use this account for further transfers.

My two holding company accounts have 14 and 13 respectively, and now I need to replenish each of them to reach 25 in capital for investment in Eastman Kodak.

Larry walked to the New York office of Reading Company and immediately spotted the front desk manager, a guy named Bernard Baruch.

The other person spotted Larry immediately and greeted him, "Mr. Livingston, it's been a long time! Is today my lucky day?"

Larry waved his hand with a smile and then said, "I've been busy with some things at the physical company lately, so I haven't played the stock market in a long time. To be honest, I really want to hear the ticking of the ticking machine! Stock market trends are much easier to predict than people's hearts."

Baruch smiled and pointed to the seat of the most distinguished client closest to him, saying, "Whether you want to trade today or not, I've already prepared an account for you; that's my duty."

Larry nodded his thanks and then sat down in the chair.

The last time I traded for Reading was in their Boston branch.

That time, I bought American Tobacco, a stock I had long admired, but unfortunately it had already risen significantly.

Larry bought 40,000 shares at an average cost of $4.30. Of course, Larry wasn't entirely happy about buying these 40,000 shares, because he had previously believed that American Tobacco Company had long-term investment value.

Unfortunately, before Larry noticed, the stock had already experienced a very sharp rise.

This caused Larry to miss the most favorable opportunity to build a position at the beginning of the consolidation phase.

But there's nothing we can do about it. If we miss it, we miss it. Anyway, Larry wants to be like Warren Buffett this time, with strategic holdings and long-term investments, so even if the stock price has already gone up, he will still buy it.

Today, Larry not only needs to transfer funds, but also needs to check how high the stock price of American Tobacco has risen, in order to decide how many shares he should buy in his second batch.

Larry's best-case scenario is that American Tobacco stock will consolidate for a long period above four dollars.

Such consolidation has two advantages. One is that it provides a stronger basis for the stock price to rise again, since the longer the consolidation, the higher the subsequent rise.

The second benefit is that if the stock price consolidates at this time, it will prevent your long-term investment cost from being too high.

But Larry thought that possibility was a bit small, after all, the stock had risen from a consolidation range of $2.

At this time, the US stock market was experiencing a sustained upward trend, with many stocks rising by 200% or 300% in a week or two. Moreover, US Tobacco was previously a very cheap stock.

Once these stocks start rising, they won't easily stop.

Therefore, Larry anticipated that all he could do was follow the steadily rising stock price and chase the upward trend.

As Larry sat down in the VIP seat, he looked up but did not see the stock price of American Tobacco on the price list.

Larry was a little puzzled, then looked at the clock on the wall and realized that it was already 10:10 a.m. Logically, the opening price of American Tobacco stock should have been sent to the brokerage office long ago.

Why isn't his quote on the blackboard yet? Has the stock been suspended from trading?

Just then, Baruch arrived near Larry's seat with the trading order form. As he handed it to him, he jokingly asked, "Mr. Livingston, which stock have you got your eye on? Can you tell me? I'd like to make some money along with you."

Larry smiled and pointed to the price chart, specifically to the position of American Tobacco. "Is this stock suspended from trading? I haven't seen its opening price yet."

Baruch squinted at the price list, a slight look of surprise on his face, then turned to Larry and said,
"Are you planning to buy this stock? Oh my god, isn't this stock quite risky right now?"

"Is it risky?" Larry was taken aback by his words, glanced at the name of American Tobacco on the price list, then frowned and turned to Baruch.
"What's wrong with this stock? Is there a problem with its fundamentals? Is there some major negative news?"

Baruch shook his head, frowned slightly, and asked, "Haven't you been watching the market lately? This stock has experienced a very rapid drop and is now below $3.5."

"...Really? What's the reason for the decline? If it's not a fundamental issue I can foresee, I personally think there's no reason for it to fall?"

Baruch shook his head again, a wry smile on his face.
"There's really no special reason. Mr. Livingston, it's just that there's a huge amount of selling pressure on the market."

As you know, this stock had nearly doubled in value before, leading to a lot of profit-taking. After being pressured by selling, the stock experienced a sharp drop. We don't know why, but some people say it might be that insiders were selling their own shares.

Larry shook his head, stared silently at the ceiling, and thought for a moment. He felt that unless there was an accident such as a fire, the tobacco company's current excellent operating performance should not lead to insider selling.

Baruch looked at Larry, knowing he didn't believe him, and then explained with a smile, "You see, the stock still doesn't have an opening price, which proves that after the previous sharp drop, many people are only taking a wait-and-see attitude and are not in a hurry to buy or sell the stock."

Larry nodded with some skepticism, then gripped the trading slip tightly and stared intently at the quote board. A full three minutes later, the clerk at the stock quote machine shouted, "American Tobacco, three and a half dollars!"

Hey, it's really fallen pretty badly! My 4 shares in the US market are now down by almost a dollar.

He frowned at first, then smiled wryly. He thought to himself, "Luckily, I bought the stocks through a legitimate brokerage firm. If I had bought them through a betting company, I would have been wiped out by the stock price drop long ago."

However, this drop has put Larry in a dilemma. Should he transfer the money out of the account, or continue to buy more shares as planned?

Larry turned to Baruch and asked, "How much money do I have in my account?"

Baruch glanced down at the account book and said, "You have about $31 in your account."

"How much?" Larry was a little confused.

He previously bought 4 shares of American Tobacco at an average cost of $4.3 per share. This purchase should have required $16 in margin.

Baruch chuckled and explained to Larry, "Have you forgotten? Your account has four times leverage?"

He slapped his forehead and said, "I thought leverage was only useful during trading; I didn't expect it could still be used after the five-day settlement."

Larry's account is four times leveraged, so the margin required is probably over $4.

So there are still 31 yuan left.

Baruch laughed and said, "If you transfer the funds out, it won't work; it will be calculated at $16. As long as you don't transfer your own funds, then the cost of these 4 shares has a leverage of four times."

"Is there really such a good thing? Paine Weber's accounts have a five-day settlement period, after which leverage cannot be used."

Larry turned to look at the price list and suddenly made up his mind that he would not do anything else with the Reading Company account but only make long-term investments.

For the rest of the day, I don't need to rush to transfer money. I should keep a close eye on the stock performance of American Tobacco to see if there are any problems and whether it's worth continuing to invest in for the long term.

At this point, a second offer arrived, still at the original price.

It seems that Baruch's statement that the stock had not been traded and that the market was still in a wait-and-see mode was correct.

第三个报价，该股已经跌破了3又3/8美元，而直接掉到了3又1/4美元。

Larry was a little helpless, thinking to himself that he had just missed the low point in buying the stock, and that it would be better if it fell further later.

This time, things really did fall...

Larry spent the entire morning looking at the stock but couldn't find anything unusual. He then asked for the previous stock quotes and reviewed the stock's performance over the past ten days or so, but still found nothing wrong.

That's strange! The stock price dropped the day after I bought it, as if I had rung the bell to signal the end of get out of class.

Larry held the transaction order, hesitated slightly, but still asked the trader to buy another 40000 shares of American Tobacco before 11:30 a.m.

"Do you want to buy again at this position?" Baruch asked.

“Yes…” Larry didn’t want to explain further, so he nodded and told the other person to go buy stocks.

At exactly 12 o'clock, Larry's transaction report came back: the cost price for 40,000 shares of American Tobacco was $3 and 1/4.

Moreover, his 40,000 shares were not fully traded until 12 o'clock.

The reason the transaction took so long to complete is that there were simply no extra shares available for buying or selling.

Larry held the transaction report, thinking to himself that he had finally managed to buy more shares. He wondered if the stock would continue to fall.

This stock is in the lower quartile; four shares are equivalent to one common stock.

If the price keeps falling like this, I can keep buying more shares and eventually become a major shareholder...

……

That afternoon, in the Keane Company office, James Keane looked at the report from his subordinates and smiled.

"Hmm, he finally added to his position. Good, I want him to think he can hold onto this stock, and keep adding to his position. When he's heavily invested, I'll find an insider to increase his margin and then bankrupt him in one fell swoop!"

Keane held his pipe, the flame inside flickering.

(End of this chapter)