From legendary short seller to god of American capital

Chapter 371 A Heart-Pounding Short-Term Opportunity: Immediately Adopt the Strategy of "Besieging Wei to Rescue Zhao"

Larry made a total of $22437.5 from the trip to St. Louis. This is pure profit, excluding the $500 he returned to Dunbar.

At 6 p.m. in the hotel, Larry returned $500 to Dunbar, plus an additional $100 in "interest".

Dunbar stared at the $600 Larry was holding, then at the thick stack of brown paper bags in Larry's hand, shaking his head and smiling wryly. "Oh, I've watched you get to where you are now, but the speed at which you make money really makes it hard not to think—you have the Midas touch."

Larry, with a smile on his face, stuffed a thick stack of brown paper bags into the suitcase and then handed it to Dunbar.

"We'll teach the betting companies a lesson, cut a slice of their ill-gotten gains, and make a small profit. But you're right, they'll turn on us if we make too much. So our next step is to cancel our booking."

Dunbar nodded. "That's right. I need to ensure your safety. Unless there's a specific reason, I'd like you to leave tonight."

"I've already arranged for Matthew to buy the train tickets," Larry said with a smile, glancing towards the hotel lobby entrance just as Matthew returned. He added with a laugh, "I know better than to provoke these rattlesnakes lurking in the grass. We're leaving tonight!"

Saturday, April 9.

The three arrived back in Chicago at 7:15 a.m. Luckily, Matthew had bought a sleeper car ticket, and despite the ordeal of the night, they were still full of energy as they walked out of the Chicago train station.

Larry flagged down a horse-drawn carriage at the train station, and the three headed straight for the Chicago Mercantile Exchange.

As usual, a transaction certificate was required, but Matthew had already become familiar with the guards at the entrance while gathering intelligence here before, and with Larry's generous intelligence funding, the three of them were easily let into the trading hall by the guards.

Today is Saturday, and it is 8:45 a.m., 15 minutes before the market opens.

Dunbar went to the trading hall and found a phone to share the information from the past few days with his hotel companions. Larry and Matthew stood in front of the huge price board, watching the crowded brokers and spot traders in the hall, silently swarming like ants.

Larry disliked crowded places, so he said to Matthew, "Matthew, keep an eye on the opening price and see if there are any unusual changes. I'll go buy breakfast for the three of us."

After giving his instructions, Larry squeezed through the crowd to the outside of the trading hall, intending to buy hot dogs for the three of them for breakfast. But when he got there, Larry was surprised to find that the breakfast stall was selling steamed milk tea and pioneer barbecue, and the stall's signboard even featured "Golden Fire."

"What is this?!" Larry asked the shop owner, pointing to the milk tea and Turkish kebab.

"Would you like breakfast?"

"Oh, right, three portions!"

"Alright!" the shop owner cheerfully agreed, slicing meat from the rotating grill while smiling at Larry, "This is a local Chicago delicacy, Pioneer BBQ. Have you heard of it? It's the most popular convenience food in Chicago, served with fragrant milk tea. Have one in the morning and you won't be hungry until evening."

Chicago local food?

Larry smiled. Of course he knew that the stall with the "Golden Fire" sign was actually a "public service" run by local Democratic Party tycoons. This was part of the bubble tea shop's nationwide expansion. It seemed that the Democratic National Committee was using this as part of their election campaign to expand this convenient food for ordinary people into a public welfare project.

After receiving the grilled meat and the milk tea from the tin cup, Larry took out a dollar and handed it to the shopkeeper, who surprisingly gave him $2 in change.

5 cents.

Larry returned to Matthew's with breakfast in his arms, and Dunbar also came back.

As the three ate breakfast and waited for the market to open, Dunbar whispered to Larry, "Mark has some news, breaking news—someone's trying to target the railroad workers!"

Larry paused for a moment. Mark was the Italian guy who said he wanted to get information from the railway company. Suddenly, the barbecue in his hand didn't taste so good anymore.

After a few seconds of thought, Larry hurriedly asked, "Who's in charge of all this? How do they plan to make their move?"

"It is said that the board of directors of the Great Northern Railway could no longer bear the shareholder pressure caused by the delay in construction, and was preparing a one-time..."

"We need to completely resolve the workers' strike issue," Dunbar said, frowning.

Larry felt a heavy weight in his heart. He knew what the so-called "resolution" meant at the very least: using gangs to threaten and intimidate. If it escalated to the highest level, it wouldn't be impossible for "Night of Massacre" to be repeated.

"Where are they looking for people? If it's someone from the Pinkerton Detective Agency, then this could be a big problem—" Larry pondered.

Dunbar shook his head slightly. "No, it's said that they hired gangs from several neighboring states—they plan to teach the leaders who organized the strike a lesson, and incidentally set a few fires in the community. It's probably mainly a threat."

Larry nodded, frowning as he looked at the price list.

For Larry, this actually involves two things. First, in business, it was the railroad workers' strike that caused this rebound in wheat prices. The strike had been ongoing for two months, and wheat futures prices had been climbing intermittently for the same period.

If the railroad workers' strike is truly resolved, futures prices will plummet immediately. This is actually detrimental to Larry, as Cargill's warehouse receipt registration will take time, at least until next week.

But Larry has no choice but to be prepared for such unexpected situations.

This news will likely reach the ears of other futures traders, causing wheat futures prices to fall, and they should take advantage of the situation to establish positions.

But short-term trading opportunities conflict with the fact that I haven't established a position in the long term—what should I do?

Larry thought for two minutes, then turned to Dunbar and said, "Could you find out for me again how many people the railroad company employs? What forces are involved? The more details the better—I'll check today's opening prices first!"

Dunbar agreed and turned to leave. Larry secretly breathed a sigh of relief and was about to continue eating his breakfast when he heard Matthew suddenly say, "My God! The opening price today is 5 cents lower than yesterday!"

Larry was startled and quickly looked up at the price list.

The current price is $1.18, while yesterday's closing price was $1.23, a drop of 5 cents.

Wheat futures opened with a very large gap down of 5 cents because the price per bushel was not high, which explains Matthew's exclamation.

"The news has probably already reached the venue," Larry muttered, taking a half-step forward to stand shoulder to shoulder with Matthew, watching as a commotion and commotion erupted in the hall.

"What news?" Matthew had been engrossed in looking at the price list and hadn't noticed Larry and Dunbar's hushed conversation.

"I'll tell you in a bit. Right now, the most important thing is to see how the opening price evolves—" Larry stopped staring at the price chart and instead looked at the restless traders and spot dealers in the trading floor.

Even most floor traders wouldn't know Larry's insider information that would cost $1000 to obtain. So, when they saw wheat prices open so low, floor traders immediately felt confused and anxious, because no one knew why such an absurd thing had happened.

Everyone grabbed their orders and headed straight to the trading floor, ready to begin trading futures contracts based on their understanding of "gap down" —

Larry's gaze then turned to the three trading agents with whom he had already opened accounts, and he immediately noticed that the people from Stone Company were also craning their necks to look at the market data.

"Let's go! We're going to Stone's!" Larry patted Matthew on the shoulder and squeezed through the crowd toward Stone's.

As the two walked, they heard gasps of surprise from the people around them. Larry glanced at the price chart and saw that the second price after the futures market opened had dropped by 2 cents, reaching $1.16.

Futures trading involves leverage of 5 to 10 times. From yesterday's closing price of $1.23 to the current price, those with heavy positions may soon face the risk of margin calls.

Matthew couldn't help but exclaim, "My God! Small investors will be wiped out!"

Larry nodded without saying a word.

That's how futures work. A 7-cent drop translates to a 5.7% drop in wheat prices today. If someone had a fully leveraged long position in wheat with 10x leverage, that gap down would represent a 57% drop.

Thinking of this, Larry suddenly had an idea.

The first thing he asked when he squeezed into Stone's office was, "Here, what loss does it take for a position to be forcibly liquidated?"

A trader at Stone Securities quickly replied, "Generally, losses exceeding 50% will require clients to deposit more margin, and at 100% they will be forced to liquidate. However, in a sharp drop like today, forced liquidation might begin as early as 80%."

Sir, how many long positions do you hold? Do you need to close them now?

Larry didn't speak, but turned and pulled Matthew aside. The two went to a relatively quiet corner, and with Larry's back against a cold stone pillar, he whispered in Matthew's ear, "—We have a short-term opportunity!"

Matthew was taken aback and quickly asked, "What opportunity?"

Larry said in a voice only Matthew could hear, "The liquidation line! Many people will take the opportunity to liquidate their positions at this level, and this is where short-term selling pressure is strongest. The market manipulators today are here to hit the liquidation line of the existing orders, and then—they can instantly realize their short-term profits at the liquidation point!!!"

Matthew thought for a few seconds, his eyes widened, and he was speechless. After a while, he exclaimed, "My God!"

Matthew has been studying candlestick charts every day for the past few months, and since coming to Chicago, he's been spending all his time at the futures exchange. He instantly understood what Larry was talking about.

In this one-sided market, everyone is selling, and the market is most lacking in liquidity and counterparties.

Today's gap down opening will likely trigger panic selling of most long positions, leading to stop-loss or forced liquidation levels. That level represents the most ample opportunity for those willing to cut their losses, and also the best point for market manipulators to realize short-term profits.

Larry glanced at the still-falling wheat prices, pondered for a few seconds, and then said to Matthew again, "If the price drops to around $1.12 to $1.08 and the market stops falling—immediately go long!"

When the price drops to $1.12, it's confirmed that it has fallen by 10 cents. At this level, most people with 5x or 10x leverage will be forced to liquidate their positions, which marks the short-term bottom of the market.

Larry stared at the numbers on the price chart, his voice low and rapid, "At this level, if the price drops another two or three cents, a large number of accounts will be forcibly liquidated by brokers—those are the chips they have to sell, the last wave of panic selling in the short term—"

At this point, Larry's tone became excited, "Once the market absorbs these forced sell orders, the selling pressure will be gone in no time, and a rebound from oversold conditions could come at any moment."

Matthew gasped and asked, "Do you want to catch the flying knife? The market is in a downtrend right now, and what if it doesn't stop?"

The orders we placed halfway through could continue to lose money at any time!

"It's not about catching a flying knife, it's about waiting for it to fall to the ground," Larry corrected, his eyes sharp. "Now we need to see if the price of wheat can hold steady around $1.1. If it holds steady and doesn't make a new low, we'll use half of our funds to go long."

Larry paused, then continued firmly, "If it continues to fall to $1.05, we'll cut our losses; that way we won't lose much. But if a rebound starts and it recovers to the current price, we'll buy back in. Our target is $1.19 first, then $1.22."

"What if it drops below $1.05?" Matthew asked.

"That means the bottom isn't here, and the trend is still downward." Larry shrugged, looking relaxed, as if he were talking about someone else's trade and someone else's money. "We'll admit our mistake, cut our losses, and wait for the next opportunity."

Matthew thought about it for a while, but it was still not easy for him to accept it immediately.

Larry knew he was a cautious and honest man, and smiled. "My brother! Remember, either don't do short-term trading. If you do, don't treat the money as your own. You have to gamble with the kind of money and mindset that you wouldn't care if you lost it all. But remember, this time we're not gambling blindly. We're not making money from the luck of buying at the bottom, but from the blood shed by those who were forced to liquidate their positions after their accounts were wiped out."

Matthew's eyes narrowed, he suddenly realized something, looked up at Larry, and nodded heavily.

Larry glanced at the price list, smiled at Matthew, and said, "Let's go! Place the order. While others are panicking, we need to be prepared to be the only buyer."

The two returned to the Stone Company counter and quietly watched as wheat prices continued to fall.

In fact, wheat prices are quoted frequently, and the battle between bulls and bears is fierce. Sometimes, the struggle at a certain price level can last for a long time, but overall, prices are gradually declining.

$1.14, $1.13 — finally, the market reached $1.12.

An apocalyptic panic permeated the entire trading floor; everyone was terrified by the 10-cent drop in 40 minutes!

This is equivalent to a drop of nearly 10% in one day.

Frenzy, screams, the desperate cries of bulls desperately trying to close their positions but unable to, and the laughter of a few fearless bears—

A jumble of noises filled the air.

A floor trader who had rushed out of the inner trading hall suddenly collapsed in the middle of the hall, howling in agony like a wolf in the forest, "It's over—I'm fucking all over!!"

Matthew and Larry exchanged a glance, feeling a pang of pity.

Larry, however, remained steadfast in his gaze, seemingly oblivious.

"It's not over yet—" Larry said softly.

Just then, Dunbar spotted the two men, carrying a small suitcase full of money, struggling to squeeze through the bustling crowd.

"Larry!!" Dunbar's voice was urgent, but he lowered it only after squeezing in front of Larry, "Mark has intelligence that the leader of the railroad workers is coming for them, and we know him—it's Taylor from St. Louis!"

"Which Taylor?"

"That's him, H.S. Taylor! The boss of the betting company!"

Larry suddenly realized, thinking to himself, "It's true what they say, enemies always meet!" He had actually been invited to suppress the workers.

Larry frowned deeply, lost in thought.

Dunbar clutched the suitcase full of money, fearing he might lose it, but he still kept his eyes on Larry, waiting for him to make a decision.

Matthew, who was standing nearby, suddenly raised his voice, "Larry! It's $1.11 now—"

Larry looked up and his eyes narrowed into two blue dots. Suddenly, he pulled a half-eagle gold coin from his shirt pocket, squeezed back to the Stone Company counter, grabbed an older trader, and shoved the coin into his hand.

"Damn it—what are you doing? What is this—my God, gold coins!!"

The market was already tense, and the older traders were already suppressing their anger. They couldn't even be bothered to answer normal inquiries, let alone be suddenly pulled aside.

The older trader was initially furious, but when he saw the half-eagle gold coin in his hand, he immediately widened his eyes and glared at Larry.

Larry remained calm, closing his fingers to let him hold the gold coin tightly, then asked, "Sir! I'd like to ask you something. Is there a betting agency in Chicago called Taylor's? You mean the head of the St. Louis Trade Promotion Association, Mr. Taylor?"

"Yes, there is!" the older trader said excitedly. "At 133 Canal Street, that's his biggest betting agency outside of St. Louis. What do you want to ask?"

"Thanks! I've finished asking! The gold coins are yours." Larry ignored the look in the other person's eyes, which was as if he were crazy, and walked back to Dunbar and Matthew.

"Uncle Dunbar, count out $5000 for me! Matthew—just follow our plan. Remember, if you lose money, cut your losses. Don't be afraid. Don't treat money like money when you're betting on the short term—" Larry instructed in a deep voice.

Dunbar carefully counted out $5000 from his suitcase and handed it to Larry. Larry didn't even look at it, stuffed the roll of dollars into his pants pocket, and reached in with his right hand to hold it tightly.

Seeing their questioning looks, Larry finally said, "I have something to do to get Taylor to postpone his plans."

Dunbar frowned and said, "Then I'll go with you!"

Larry shook his head and pointed to Matthew, saying, "Uncle Dunbar, you should put the rest of your money with Stone & Co. and place the order as Matthew instructed—because there are three brokers and the situation is so chaotic right now, I'm afraid Matthew won't have enough time to place the order by himself."

"Don't take any risks!" Dunbar warned again.

"It's not a big problem, there's no danger," Larry looked up at the clock on the wall; it was 10:20.

There's plenty of time. If I go to the gambling house and launch a diversionary tactic, I can disrupt Taylor's plans to some extent.

Matthew added, "Wait, Larry. You just mentioned stop-loss orders. But what if—we make a profit? Do we need to take profits before the market closes?"

Larry squinted at the price chart in the distance and said with a smile, "Normally, short-term trading isn't held overnight—but it's Saturday. If there's a profit, I'll take half—I bet I can successfully disrupt Taylor's plans!"