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

Chapter 8 Short Selling
The stock market opened at 10:00 AM.

The telegraph machine clattered incessantly, the trading hall was noisy and chaotic, and people would occasionally walk up to the counter to place orders. Of course, there were also gentlemen who had lost money in their investments, waving their pipes and cursing the damned market makers...

Logan wasn't here today; another young man was in front of the price quote machine, broadcasting the quotes. He had a slight Italian accent, but Larry could still understand what he was saying.

"Breakton, $6.5!"

"Westpac, $104.1."

"United Steel, $31 and a quarter."

Larry's chalk flew across the price board as he recorded the latest quotes.

"Barton Mining, 12 and three-quarters dollars!"

Larry was not surprised when the young man read out the price.

In fact, the stock has been trading sideways above $13 for nearly three weeks. The price sometimes reaches highs, say $13.5, but most of the time it languishes around the $13 mark.

Until the last three days, the stock price has only occasionally fallen below $13, either to $12.9 or $12.75.

Today's opening price was $12.75, consistent with the stock's recent weak performance.

For the next hour or so, Barton Mining rarely offered new bids. A new bid appeared only every ten minutes or so, consistently at $12.75.

Larry remained calm, keeping his work at hand while listening intently to the latest offers from Barton Mining.

until……

"Barton Mining, $12.6!"

Larry glanced quickly at the clock on the wall; it was 11:23, more than half an hour before the midday market closed.

"Wipe, swipe, swipe," Larry wrote down Barton Mining's latest price on the quote board, then summoned the substitute scribe, clutching his chest as he said to him...
"Tom, can you take my place for a moment? My stomach hurts and I need to go to the toilet!"

The substitute scribe's usual job was to organize transaction slips. Hearing Larry's request, he looked up, piled the organized slips on the table, and muttered,
"Alright, but let's hope it doesn't end in a one-way trip!"

Larry smiled. "No, I'll be right back." With that, he disappeared through the front door in a flash.

The substitute scribe named Tom climbed the ladder, then suddenly realized something was wrong.
"Why are you clutching your chest if your stomach hurts?"
.
Larry ran quickly to the betting house two blocks away, where it was just as bustling with people.

Larry pushed through the crowd and ran to the price list to take a look.

On the price list here, Barton Mining's price is also $12.6.

Larry's heart was pounding. He forced himself to calm down, then turned and went to the counter, clutching his chest as he asked the clerk inside,

How much is the margin required for Barton Mining?

"Two dots," the other party replied.

Larry knew that the two points the teller was referring to meant two dollars.

Larry pulled the wad of bills from his pocket, took out a dollar, and then handed the $12 into the counter, saying firmly,

"Barton Mining, market price, short!"

Short selling refers to an investor's belief that stock prices will fall, so they borrow a certain number of shares from a brokerage firm and sell them on the market. After a certain period of time, they buy back the same number of shares and return them to the brokerage firm.

If the initial selling price is high, but the subsequent purchase price of the stock by the client to close the position is low, a certain price difference will be generated. This price difference is the client's profit from short selling.

Of course, if a client asks a brokerage firm to sell stocks and the stock price skyrockets, the client must return the same number of stocks, but they will have to buy them back at a higher price, which will result in a loss for the client.

Compared to regular securities companies, betting shops are more convenient because they don't need to lend out stocks; they only need to write down a short phrase like "sell stocks."

The teller glanced at Larry, took a transaction slip, looked at the price list, and began writing as she read aloud.
"Sell at $12.60, margin of $2 per share, sell..." The teller glanced at the money Larry handed over, put it in the counter, and continued writing, "Sell 6 shares."

After finishing writing, he handed the transaction slip to Larry.

“A 25-cent transaction fee!” the teller said.

"Here you go!" Larry had already prepared it.

Larry had just put the transaction slip in his pocket and hadn't even left the counter when he heard the dark-haired boy at the gambling den shout, "...Barton Mining, 12 and three-quarters of a dollar!"

The teller rolled her eyes and smiled at Larry, "Kid, you're not very lucky. The stock price went up right after you shorted it."

Larry didn't say anything, turned around and left the counter.

Compared to Paine Weber Securities, the betting room reeked of sweat and cheap tobacco. Larry pushed through the crowd, walked to the price board, and quietly waited for Barton Mining's latest offer, holding the trading slip in his hand.

"Barton Mining, $12.6!"

"Barton Mining, $12.5!"

……

Five minutes later, the stock price began to fall as expected. It seemed that the rise to $12.75 was just a feint by the bulls.

Larry glanced at the clock on the wall; it was only 11:43, less than 20 minutes before the market closed.

However, Larry was certain that the stocks he held would continue to fall, so he folded up the transaction order, put it in his pocket, turned around, and ran back to Paine Weber Securities.

Tom, the substitute on the ladder, was frantically filling in the latest stock prices, much to Mr. Potter's displeasure at his pace...

Mr. Potter was about to lose his temper when he saw Larry approaching and quickly called out to him.
"My God! Does it really take 20 minutes to go to the toilet? Hurry up and copy down the market information. Can't you see how stupid Tom is, like some kind of cannibalistic monster?"

Larry nodded, replaced Tom, climbed the ladder, and continued copying the market data.

The rest of the day was uneventful, with the stock market fluctuating normally, some stocks rising and others falling.

Larry's Barton Mining fell below the $12 mark in the afternoon, eventually closing at $11.9.

Everything went exactly as Larry had predicted.

The next day was Saturday, and the stock market was only open in the morning.

Larry was already waiting in the trading hall, ready to see how the market would perform that day.

At that moment, he noticed that Logan's figure flashed by at the door, but he didn't enter the company; instead, he walked to the other side of the road.

Larry ignored where Logan had gone and focused on analyzing the notebook in his hand.

According to his calculations, today should be the day Barton Mining settles its accounts.

Now that it has broken below the lowest point of the consolidation period and continues to fall, a massive sell-off is expected before the weekend.

This is not merely the inertia of the stock price decline, but rather the irrational panic selling that will occur as the weekend approaches and retail investors who are deeply disappointed with the stock hold it.

Almost every weekend sees a similar stock decline.

Today will be no exception.

At 10:00 AM sharp, right after the market opened, bank stocks were the first to experience a decline!
Next are shipping stocks, then retail stocks.

Then there are fishery stocks.

The people in the service hall sensed something was amiss and began asking each other what had happened.

The quote machine kept transmitting various information from New York and Chicago to this location.

"Barton Mining, $9.45!"

This was the first quote from the stock, which plummeted by more than $2 at the open, surprising even Larry, who was bearish on the stock.

For the next hour and a half, the market continued to collapse.

Barton Mining also fell along with other stocks, but its decline was particularly rapid because it broke through the lower edge of the price range after a long period of consolidation.

Near the close of trading, Barton Minerals had fallen to $8.25.

This means that Larry's $12 margin has earned him an excess profit of over $26!
Larry didn't have time to be happy; his brain was racing, wondering whether he should close out his position and secure his profits.

At that moment, Mr. Potter rushed into the sales office, raising his hand to the anxious customer as if a priest were celebrating mass.

"Gentlemen! I have received an update from headquarters in New York. The reason for this stock market decline has been found..."

The sales hall fell silent instantly, everyone staring intently at Mr. Potter, not even blinking.
Mr. Porter continued, “Damn Chilean mobs attacked the great U.S. Navy, and two of our sailors have been killed! Washington is activating emergency plans, and the Pacific Fleet has raised its readiness level!”

After Mr. Potter finished speaking, the entire sales department erupted in an uproar.

Larry, however, felt relieved and immediately made a decision: not to close his short positions, as there would definitely be lower prices next week!

(End of this chapter)