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

Chapter 271 Prices Plunge Below Floor (3.8k)

Just as the clock struck 11:30, Van der Lipp's assistant, sitting in the private box, received a call that should have come much earlier.

The person on the phone said something cryptic to him, "The message has been released, and it should reach the venue soon!"

Van der Lipp's assistant was somewhat bewildered. He hesitated for a moment while holding the phone before asking, "Was this... was this arranged personally by that important person?"

The person on the phone seemed annoyed by the assistant's question and coldly replied, "This is none of your business. Tell Vanderlip to short it!"

“But Mr. Van der Lipp has already gone to the central counter! The stock started to plummet half an hour ago. I... I thought your information had been leaked in advance!” The assistant vented his anger through questioning.

The person on the other end of the phone was also a little confused, and waited a while before speaking.
"I can guarantee this information was just released... I'm the one who handled this. You can go and talk to Vanderlip, really! The information was just released!"

Van der Lipp's assistant didn't say much to him, hung up the phone, and rushed out of the agency's private room.

At that moment, a message was transmitted to the counters of major securities companies via direct telegraph lines.

After translating the news, the brokerage traders, with only 25 minutes left before the market closed, hurried to spread the urgent message to their clients!

Prior to this, the upward trend in GE's stock price, which had begun as the first batch of profitable short sellers had already bought back their positions, had ended, and there were no more buying opportunities. Meanwhile, other short sellers remained inactive.

This caused the buying power to quickly disappear, and the stock price fell back to the previous low.

Quincy, with his slicked-back hair, closed out all the short positions entrusted to him by Mr. James Keane, and at a high price from Vanderlip! Not only did he complete the task quickly, but he also managed to provoke his old rival.

Quincy was very happy, but he forgot to close his short position of 2000 shares.

On the other hand, Van der Lip, trapped in the stadium, also looked unhappy.

He finally managed to close out all his long positions in General Electric that he had originally intended to use as leverage to drive down prices, but this had already resulted in significant losses.

In addition, Van der Lip also suffered from the taunts of his old rival... but he could only endure it in silence!
He cursed inwardly the idiot who leaked the information to his own camp!

"Sir, shall we continue shorting now?" asked the assistant who had been trading for him.

“What the hell are you doing shorting... the news has been leaked! The current stock price is already the lowest GE can reach!” Van der Lipp yelled at him.

Just then, the assistant who was standing by the phone ran over and recounted the report from the person on the phone.

Van der Lipp didn't believe him at all. With nowhere to vent his frustration, he glared at his assistant and continued shouting.
"A lie! It's a complete lie! I'm going to report him to Mr. Stillman! He's ruined the young master's important business!"

Although Van der Lipp didn't believe it, the news had already reached the New York Stock Exchange.

Those who learned of the negative news were somewhat surprised, and some aggressive traders quickly concluded that General Electric was about to have a black weekend.

So while discussing this negative news, they dumped all their short positions in GE, including those held by clients and themselves, onto the central counter!

Following the recent sharp drop, General Electric's stock price plummeted once again!
·
At 11:40 a.m., Larry watched as General Electric's stock price fell below the previous low of $68 and continued to decline.

He had already taken out the trading order he was carrying in his chest, ready to close all the short positions and then go long.

Henry Goldman, standing nearby, understood the stock market crash, but he couldn't figure out what Larry was planning to do next. He only caught a glimpse of the buy order on the trading board, his face filled with surprise and confusion.

Has this little brat finally gone mad?

Henry Goldman kept asking himself aloud the question, thinking that if Larry went long now while General Electric was plummeting, he would easily be wiped out on Monday.

Despite harboring some jealousy and resentment towards Larry deep down, Henry Goldman couldn't help but dissuade him when he saw Larry preparing to go against the trend. "Larry! You can't buy at this price! It could be disastrous! GE's sharp drop means there must be something wrong with its fundamentals!"

Larry nodded, seemingly understanding. He turned to look at Goldman and murmured, "Yeah, there must be bad news, but why hasn't it been announced yet?"

Just as the two were discussing stock prices, a trader from Paine Weber Securities rushed over. Seeing Larry, he said directly, "Mr. Porter asked me to tell you that they just heard some bad news: the Chicago World's Fair organizing committee has officially canceled Westinghouse Electric's lighting contract!"

Larry clutched the trading order, intending to hand it to the trader so he could close out his profitable short position and then go long.

Upon hearing the latest news from Mr. Porter, Larry abruptly turned his head towards the price board, awaiting subsequent market quotes.

Henry Goldman couldn't help but urge, "Larry, good news for GE! If I remember correctly, the stock fell on its first day of trading this Wednesday because of the Westinghouse light-emitting contract. Now that the contract has been terminated, GE's stock price is sure to skyrocket."

Goldman's reasons are very valid.

He was convinced that Larry would immediately liquidate his profitable position, but the latter didn't budge. Instead, he stood on the second floor, gripping the railing, frowning, waiting for the next stock quote.

The trader was a little nervous, but dared not leave Larry's side. He had already seen the order book in Larry's hand and knew that the man might place an order at any moment.

Larry Livingston, however, remained silent, his face solemn, staring at the price board until the latest price appeared.

"General Electric, $65 3/4!"

Upon hearing the offer, Gao Man's face stiffened. He thought to himself, "Isn't this stock price wrong? Floor traders would definitely know the news faster than the brokerage staff."

Why did they continue to sell off their shares after learning of this positive news?
On the other side, Larry showed no surprise; he simply stood there blankly, staring at the latest quotes. "Why aren't you closing your position? This is bullish news!" Goldman couldn't help but ask.

Larry turned his head in confusion. "Why is this good news? This is clearly bad news for General Electric!"

Gohmann was taken aback. "Why do you think that? This is clearly GE's competitor, and they lost an order they had already secured... Isn't that good for GE?"

Larry, as if waking from a dream, snapped out of his deep concentration. He glanced at Goldman, paused briefly to consider how to phrase his words, and said, "No! Henry. This is classic bearish news, bearish for General Electric!"

“How is that possible? Wasn’t the stock that fell on Wednesday precisely because the competitor won the government’s lighting contract?” Henry Goldman asked.

Larry nodded calmly. “That’s definitely bad news! First of all, you only know what happened, but not why… It’s true that Westinghouse Electric won the lighting contract, which caused the stock price to fall, and it was indeed one of the reasons why GE’s stock price fell on Wednesday. But after the fall, GE was able to recover because the traders in the market knew that this negative news was not very strong.”

"Why?" Henry Goldman stared, completely clueless about what Larry was trying to say.

"Because this actually means that both companies benefit. Westinghouse gets orders for lights and power grids, but GE, which has always made power grids for Chicago, can at least get orders for power generation equipment," Larry explained.

Henry Goldman blinked. "Uh, okay, is that what you think? Then how come canceling orders today is also bad news for GE?"

Larry smiled. "This is the real bad news! If the organizing committee of the Chicago World's Fair cancels the contract with Westinghouse, they won't give it to General Electric either, because it's obvious that Westinghouse's AC power is far superior to General Electric's DC power in terms of power distribution network."

If they don't win the bid for electric lights, they'll have to switch to gas lamps. But if they do switch to gas lamps, then all the reasons for General Electric's price increase will become invalid..."

Henry Goldman didn't know much about pure trading.

At this moment, he was extremely shocked.

Westinghouse Electric won a large government contract, which is bad news for General Electric! But what if this order is cancelled? Will it still be bad news for General Electric?
What kind of illogical logic is this? Henry Goldman simply didn't believe Larry's words, because in his eyes, it was either a good business, a profitable business, or it was a bad one...

But Larry wasn't finished. He looked at the price chart again and continued to Henry Goldman, "Secondly, when a stock's least resistance level has changed, any ambiguous news will be considered negative. You see, GE's stock price will continue to fall."

After saying that, Larry leaned on the railing and continued to check the stock price.

Only bewildered traders and a completely dumbfounded Henry Goldman were left behind.

For the first time, Henry Goldman realized that, despite his intelligence and quick wit, he couldn't understand what Larry was saying at all...

At 11:47, after frequent and continuous price quotes, GE's latest price has fallen to the $60 mark and paused.

Larry nodded and beckoned to the trader beside him.

At the same time, he picked up a quill pen from the table. "I need to revise my request, and then you need to have them place the order for me right away!"

The trader nodded nervously and stood beside him.

Larry took the transaction order and quickly changed the market price in the price column to: "Close out the short position of 3 shares of General Electric at $40, and buy a long position of 3 shares at the same time!"

Henry Goldman had been standing by the side. He first saw the offer—$40—and looked up at the offer board in disbelief.

On the price list, GE's latest offer is only $60!

There are only a few minutes left until the New York Stock Exchange closes for lunch on Saturday! How could the stock price possibly drop from $60 to $40 in one go?

Has Larry gone mad? Is he possessed?
Keep in mind that this stock only managed to fall below $20 in the morning despite the negative news... How could Larry possibly believe that this stock could fall another $20 in the next ten minutes?

Henry Goldman simply didn't believe it!
At the same time, Larry slapped the revised trade order into the trader's hand and ordered, "Ten minutes left, make sure they complete my order!"

The trader grabbed the order slip and dashed off to place the order by phone...

Larry frowned, continuing to stare at the price chart. There, General Electric's latest stock price had fallen below $58 and a quarter.

Henry Goldman couldn't hold back any longer. Standing behind Larry, he said solemnly,
"Larry, please allow me to advise you again: you still have time to have the trader change the price to a market order. Writing a price of $40 makes absolutely no sense!"

Larry turned to Henry Goldman, a smile spreading across his face. He pulled out the gold coin and said to Goldman with a grin, "Anyway! Thanks for your kindness... but let's make a bet, brother. This stock will definitely drop to $40!"

Henry Goldman frowned, took out his wallet from his pocket, pulled out five dollars from it, and slammed it on the table. "I'm taking this bet!"

Larry chuckled, placing his eagle coin on top of Henry Goldman's five-dollar bill, and said with a smile, "Let's see what the closing price is in ten minutes."

Ten minutes later, at exactly 12 noon.

The stock market had already closed, and Henry Goldman stared blankly at the last General Electric bid displayed on the price chart.
"General Electric, $38 3/4!"

It really did... drop below $40...

This is truly a drop below the floor price... Also, Larry must have made a fortune this time, right? How could he have known this stock would fall below 40?
Goman's face was full of confusion, but when he looked at Larry, Larry was also smiling at him...

(End of this chapter)