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

Chapter 261 General Electric's stock price plummets; short selling begins!
Whenever a major stock goes public, the New York Stock Exchange becomes like an arena built of money and desire.

Inside the enormous trading floor, a cacophony of voices filled the air. The acrid smell of tobacco mingled with the sweat of the traders, creating a unique and exhilarating atmosphere. A floor trader in a blue jacket stood on the second floor of the exchange, looking down, accompanied by three trading assistants.

Today marks the first day of General Electric's listing and trading.

On the huge blackboard in the center of the counter, the words "General Electric (GE)" written in chalk are particularly eye-catching. Below it, the opening price of the stock today is also prominently displayed.

General Electric's IPO price was $100, but today's opening price settled at $105. This 5% jump in opening price drew cheers from traders, as it reflected the market's high expectations for the industrial giant created by the Edison-Morgan partnership.

"It's starting." The man in the blue coat muttered to himself, an barely suppressed arrogance on his face, his fingertips unconsciously rubbing the old silver coin in his pocket. His assistants stood silently half a step behind him, equally attentive to the movements below.

In the first half hour, buying was active, and the stock price was pushed up to $108 at one point.

Inside the trading pool, brokers representing the bulls made buy gestures and shouted bids one after another. Red trading orders were quickly passed around in the crowd, and everything seemed to be developing into the expected exciting scene.

The trader in the blue jacket remained unmoved until an assistant approached him and said...
"Mr. Samuel is instructing you to begin short selling according to the pre-arranged plan!"

The trader in the blue jacket nodded and, with his three assistants, walked down the stairs and headed straight for the central counter.

As he walked through the hall, a floor trader saw his face, paused slightly, and stood still. His colleague, noticing the change in his expression, nudged him with his elbow.

"Hey, what's wrong with you?"

The floor trader glanced at the trader in the blue jacket and his three assistants, frowned, and said to his partner,

"...I've met this guy before. Last year he went long on Omaha Railroad, and he was incredibly aggressive... He drove Omaha's stock price up by more than double in just four days. He's a ruthless character!"

His companion stopped and looked at the man in the blue jacket, hesitatingly saying, "He doesn't seem like a floor trader at a brokerage firm, more like a specialist from some big institution... Since this guy's spending so lavishly, I wonder who he's targeting? Maybe we can get a piece of the action too?"

Upon hearing this, the trader on the floor shuddered, nodded, and said, "...You're right. Let's put down our work and follow him to see what stocks he's going to trade this time."
.
Larry sat in the trading area of ​​Paine Weber Securities, intently watching the stock price fluctuations of the newly listed General Electric.

At this point, the New York branch and other branches were essentially no different in accepting stock prices—because everyone had to listen to the sound of the stock quote machine's paper tape.

New York's advantage is that orders are placed quickly. Making a phone call to the New York Stock Exchange for on-exchange execution is much faster than sending a telegram.

In theory, the price quote machine at the New York Stock Exchange should produce paper tapes faster than elsewhere, but Larry was still a little anxious. Since leaving the betting house, this was the first time he had been so nervous about the next paper tape the machine would spit out.

Now, Larry only has General Electric in his eyes.

For the first half hour, the other party did not make a move, but allowed the price to climb from $105 to $108.

But as the stock price climbed from $108 to around $112, Larry could see many anomalies in the price increase.

First, the distribution of trading volume was abnormal. During the process of the stock price rising to $110, although there were continuous buy orders, every time the price reached a new high, there would be a few precise and just-right sell orders that would slightly suppress the upward momentum.

These sell orders don't resemble sporadic selling by retail investors, but rather calculated, probing reconnaissance fire.

Secondly, there was the lag and inconsistency in the transmission of quotation tapes. Under the current technological conditions, quotation information was transmitted via tape printers with a delay of several minutes.

Larry discovered that the highest transaction prices displayed on the tape were often intermittent and not continuous. This was likely because someone had placed "buying" orders between different quotes, deliberately hiding large sell orders in the middle of the transaction prices, because if the price fluctuated within a short period of time, such as one minute, the floor price clerk would only record the last one.

“Matthew,” Larry said without turning around, “have you noticed? The buying is loud, but the price is struggling to move up. It’s like something is pulling it down from below.”

Matthew kept staring at the price list, but he couldn't make anything out of it. He frowned and looked at Larry, realizing that the other man wasn't really asking him anything, but rather subconsciously trying to say something to him.

Matthew could see that the eagle coin in Larry's hand was still fluttering around.

Meanwhile, a clear picture was forming in Larry's mind—pre-planned short sellers were taking advantage of the initial market enthusiasm to systematically and covertly establish short positions.

They are not in a hurry to dump shares, as that would expose their intentions too early.

Like experienced hunters, they precisely target and consume the weaker, more unsteady individuals among the herd as they run excitedly.

Sure enough, after the stock price failed to break through $115 again, the selling pressure became heavy and decisive. The price on the blackboard began a relentless decline: $112, $109, $105…

Every small rebound presents a new opportunity to short.

Larry's face remained expressionless, but his eyes revealed a resolute determination. He turned and called over a trader who had been waiting nearby, handing him a pre-prepared trading order.

"Sell 1 shares at market price!"

“Yes, sir.” The trader’s voice carried a hint of nervousness.

Watching the other person dash off to place the order, Larry nodded, the gold coins in his hand tumbling between his knuckles, before turning back to stare at the price chart.

Ten minutes later, General Electric's stock price, which had been slowly climbing to $107 and three-quarters, was suddenly slammed down to $105 and one-half by a single order.

Larry smiled. Judging by the timing and intensity, the price drop should have been triggered by his 1 share buy order.

Larry previously made $242,500 trading New York Central Railroad. After deducting commissions, he now has $1,012,500 in his account. With a leverage of 4x and the current stock price of General Electric, he can sell a maximum of 37,500 shares.

But as his first trial order, Larry felt that a position of 1 shares was already quite good.

Just then, Mr. Porter also came over. He looked preoccupied. He had something to say to Larry, but seeing the seriousness on his face, he stopped beside him and followed his gaze to General Electric on the price list.

"It's fallen back to the opening price? Wait, something's not right, there's something wrong with this stock's price!" Mr. Porter suddenly exclaimed.

Larry turned to look at Mr. Porter beside him, seemingly startled by his sudden appearance, but then said, "This short selling was bound to happen, but I didn't expect them to wait until now to make their move... Judging from the stock market trends, this guy is quite patient."

Mr. Porter, who had been intermittently following GE's IPO, nodded and continued, "The liquidity is best on the first day of listing, making it easier for large funds to operate covertly. The methods are also very sophisticated, precisely suppressing the price and controlling the decline to avoid triggering a panic sell-off. This requires extremely high trading skills and ample capital preparation!"

Larry turned to look at the price board and saw that the latest price had been written down as 104 and seven-eighths by the price clerk. A smile appeared on his face.
"I'm now wondering who the other party is... Who least wants GE's stock price to skyrocket? Perhaps the former Thomson-Houston shareholders who suffered losses in the merger? Or Morgan's other competitors on Wall Street who want to give this financial giant a hard time? Or even, perhaps those huge gas interest groups who see electricity as a deadly threat."

“This isn’t a natural market adjustment,” Mr. Porter said coldly. “It’s a carefully planned attack. Someone doesn’t want Morgan and Edison to have it too easy.”

After saying that, Mr. Potter turned to Larry, a smile unconsciously playing on his lips. "...I guess you've already entered, haven't you?"

Larry gave him a look that said, "You really understand me."

"It's precisely because it's Morgan's company that it has so many enemies, and even more people who want to see him fail." A sharp glint flashed in Larry's eyes.
"The market trend has changed. What I need to do is not to fight the trend, but to go with it."

Mr. Porter nodded, but still cautioned, “You have to be prepared. If you place too many orders, JP Morgan will know that you are shorting. He doesn’t care why others are shorting, but he will definitely be furious about your betrayal… Hmm, I think after he just gave you $50 in fund shares, he will definitely regard your shorting of GE as ‘betrayal’.”

Larry's smile remained, and he nodded, saying, "I know... I've already made preparations!"

Seeing his confident expression, Mr. Potter said nothing more, but remembered his purpose and continued,
"By the way, one of my major clients mentioned that they couldn't find the account for paying for the fund subscription at Morgan Trust Bank. There must be a problem with Morgan Bank's procedures... Why don't you go and follow up with them?"

"Is it Mr. Tiffany? Haha, Mr. Porter, I admire you so much... You actually managed to persuade him to subscribe for $150 million directly!" Larry smiled as he looked at Mr. Porter.

Mr. Potter couldn't help but smirk. "Everyone has their own benefactors. Larry, you have Mr. Morgan, and so do I."

Larry's face turned serious, and he even stopped twirling the gold coins in his hand. He solemnly said to Mr. Potter,

"No! Mr. Potter, you are my benefactor."

Mr. Porter smiled, patted him on the shoulder, told him to contact the fund account when he had the chance, and then turned and left.

Larry turned to look at the latest price of General Electric on the price chart. It was almost noon closing time, and the stock price had fallen below $101, sliding straight toward the $100 mark.

Larry smiled again, casually beckoned to a nervous-looking trader, and handed him his second pre-prepared trading order.
"Short 1 more shares for me, at market price!"

The trader nervously took the order and rushed back to the trading counter, while Larry's fingers twirled the gold coins between them once more...

(End of this chapter)