From legendary short seller to god of American capital

Chapter 422 The dam finally collapsed and the market-stabilizing alliance disintegrated.

11 a.m., New York Stock Exchange lobby.

The air was unusually thick at the over-the-counter trading desk for industrial stocks. National Rope's stock price hovered around $95, with bulls repeatedly battering the dam built by 2.5 short positions.

Prices are trembling; the bulls' last charge has just been repelled, but everyone knows that the next wave of attack is actually gathering strength.

Reading's floor trader, Ellett, stood at the counter, his shirt soaked with sweat. He had only one order left—for 2000 shares!

The National Rope Company's trader looked at Elliott with a cold eye and a smirk playing on his lips.

"So what if he has 2.5 shares? Hanova Bank and Bank of New York will swallow them up quickly!"

His partner nodded. "The banks are really financially strong; we've used up all our credit lines!"

The trader chuckled and shook his head. "Don't worry! The boss has approved another 2 shares for us—but these are the last 2." As he spoke, he leaned closer and whispered to his partner, "—They don't have much money left; this might be their last trade."

The partner nodded, smiling, and gestured with his chin towards Elliott beside the counter, "—If the bank's allies just put in a little more effort, the tide will overwhelm him! We just need to drive the price down to the short sellers' stop-loss line in one fell swoop after the dam collapses—"

2 shares are enough!

Elliott, on the other side, could also feel the gazes behind him.

A dozen or so traders from other brokerages stood a few steps away, each holding their clients' stop-loss orders. The moment Elliott's last 2000 shares were wiped out, and a crack appeared in the dam, they would swarm in, dumping their own buy-and-close orders into the market, trying to escape before the collapse!

In the stock market, bulls can become the best bears at any time, and bears can become the last bulls to overwhelm the bears.

"I want to buy another 1500 shares!"

A trader from Hanover Bank crowded to the counter and handed over a new buy order. This was probably the umpteenth time today, but this time, Elliott noticed sweat on the trader's forehead.

Elliott took a deep breath, preparing to hand over the final 2000 shares. He knew that submitting this order was like plucking one last string from an already stretched taut string—

Either the string breaks! Or, "Make way! Make way, everyone!"

A voice suddenly rang out, and the crowd was roughly pushed aside. Peter Pan, a chubby trader from Paine Weber Securities, squeezed in, clutching a large stack of order books as if he were holding a pistol.

Elliott's eyes lit up. "Peter! Old buddy, you're here to trade too?!"

Peter Pan smiled at him, took out his own order form, and instead of slapping it on him, turned around and stood in front of him, facing the group of traders and bullish traders who were eyeing him with predatory intent.

"Guys! I have 7 shares of National Rope Company stock to sell—who was just about to buy them?"

The area around the counter fell silent instantly.

A few seconds later, the rope company's trader, his face flushed red, took a step forward. "No, you just said you wanted to sell—how many shares?"

"7 shares!" Peter Pan waved the order form in his hand.

"Do you even know how many shares are actually outstanding? How could there possibly be 7 of them?"

Peter Pan shrugged, slapping the order form loudly. "I know. But that's what the client said: 70,000 shares! Market price!"

"But today, a whopping 16 shares have already been traded! How could there still be 7 shares to sell!"

"My clients are shorting, not naked shorting!" Peter Pan waved the order book in his hand.

"—Is it really a short selling deal?" The trader was momentarily speechless.

"Of course! Do you have any orders? If not, get out of my way," Peter Pan said with a grin, adjusting his overalls before turning to the Hanover Bank trader. "Didn't you just say you wanted to buy? Come on! Buy some more!"

The Hanova trader turned pale and instinctively took a half step back.

Peter Pan then looked at the bullish trader and asked, "And you? Weren't you quite assertive just now? Seventy thousand shares, can you handle that?"

The trader's lips trembled, and he couldn't utter a single word. His mind was racing with calculations—7 shares, if calculated at 94.5...

In US dollars, that's $661.5 million!

Even if he squeezed the National Rope Company dry, he wouldn't be able to raise that many shares, let alone the 2 shares he had left!

"No one's bidding?" Peter Pan raised an eyebrow and surveyed the crowd. Then he slowly raised his right hand, spreading his five fingers towards the traders around the counter—

"Alright. Then I'll place the order! Seventy thousand shares, sell at market price!"

At the same time, in the Reading Company's private box.

Larry stood by the window, not looking at the price display, but instead pulling the double eagle gold coin from his shirt pocket. The coin stood upright on his fingertip, spun, and twirled, drawing a dazzling arc of light in the sunlight.

Fifteen minutes ago, Larry made a commission call, dumping all 7 shares of National Rope Company stock he had raised in one go, albeit through Paine Weber's account.

Baruch burst through the door, the door slamming against the wall with a dull thud. "Livingston—there are almost no orders left for us. If the stock price goes up again—we...we'll have to add margin!"

Larry glanced back at him, the gold coins still twirling in his hand. "Mr. Baruch, have you ever heard the sound of a waterfall?"

"What?" Baruch was stunned.

"Not a creek, but a Niagara Falls," Larry murmured, gazing out the window. "There are a few quiet seconds before millions of tons of water plunge off the cliff. The water keeps flowing, but the sound is gone. Because all the energy is building up for that final leap."

Baruch didn't know how to answer, so he remained silent.

Larry's hand suddenly stopped, and the gold coin fell from the sky, landing steadily in his palm.

"Now, it's those last few seconds of silence!" Larry said with a smile.

As if to prove his point, the price quote machine suddenly went berserk!

Click! Click! Click!

The paper strip was spewing out like it was having a seizure. Larry finally turned around, walked to the table, and picked up the still trembling paper strip with two fingers.

NCC92.5

NCC 91

NCC 90.75

The price skipped several tiers and jumped all the way down to $90.

"This is—" Baruch lunged at the price quote machine, his eyes wide. "A market order! A massive market order—I get it, you dumped all the shares you'd financed!"

No sooner had he finished speaking than the price quote machine started beeping again.

NCC 89

NCC 88.25

Baruch stared at the plummeting numbers, his breath catching in his throat. Just a minute ago, he was worried about needing to add margin. But now, the price had fallen below $90!

At that moment, Larry suddenly turned to Baruch and said, "It's time to place the stop-loss order!"

"Huh? What stop-loss order?" Baruch didn't react for a moment.

"We had so many orders from the National Rope Company that we had accumulated!" Larry said with a relaxed smile, pointing to the price quote machine on the table. "We used it to mislead our opponents the other day, buying up shares for them to drive up the price—but there's no need for that now! Let's sell them all at once."

"Oh, okay!" Baruch felt his mind was always a bit off when he was with Larry, so he quickly confirmed, "We bought 3800 shares on Thursday and 1100 shares on Friday. Shall we sell them all at once?"

"Yes! Close the position! Those 4900 long shares were meant to mislead them, to make them think we also had internal disagreements. Now the show's over, it's time to take the final bow!"

Larry waved his hand and said with a laugh, "We want everyone to see that even the earliest investors are fleeing for their lives regardless of cost! I'm going to pour one last bucket of oil on this fire!"

"Yes, sir!"

Baruch opened the box door and rushed to the trading counter to place an order. Because his previous long positions were spread across more than a dozen different brokers, it was quite troublesome to place an order to sell.

Fortunately, we had already agreed on a secret code!

"Send telegrams to these people, and write only three numbers in the message: 555!" Baruch slammed an address on the table.

The telegraph operator hurriedly pressed the telegraph key and began sending the telegram.

At the same time, the trading floor suddenly fell silent. Someone exclaimed, "It's fallen below $86! How could it be so fast? What happened?!"

National Ropes has fallen again?!

Baruch glanced back and, sure enough, it was the National Rope Company! In the short few minutes that he had rushed to the telegraph room, another major short seller had dumped shares!

"How—is this possible?" Baruch stared at the price chart in disbelief. "—So many short orders flooding in at the same time, are they on Mr. Livingston's orders? And why are they dumping them so hastily?!"

Inside the trading floor, Peter Pan of Paine Weber Securities had just sold 7 shares. A trader who rushed over immediately followed suit and sold 2 shares.

The trader was dumbfounded. He couldn't believe that after someone shorted and sold 7 shares, others would follow suit and sell even more, driving the price down to below $86.

Should I intervene in the market to support my 20,000 shares?

The trader hesitated for a moment, then rushed to the Hanova Bank trader and shouted in his ear, "Your bank has to take this short position! Otherwise, the stock price will collapse!"

The bank trader nodded. "Wait a moment, I'll go and reconfirm the authorization to see how many shares headquarters will give me."

"Alright! You should go now!"

The trader felt slightly more at ease as he watched the trader walk to the next room to make a phone call.

A few minutes later, the trader returned.

"Ready? Authorized? Get in now! The stock price has already fallen below $85!" the trader urged.

The bank trader wore a strange expression. He glanced at the trader and silently walked to the counter.

"Sell 4.3 shares of National Rope Company at market price!"

The trader raised his arm.

Sell?

The trader could hardly believe his ears. He stared blankly at his partner—"Did he just say 'sell'?"

"It seems so, but how could that be?" His companion was also surprised.

The two men rushed ahead of the bank trader, and the trader shouted at the bank employee, "How could you possibly be selling?"

It should be a buy!

The Hanova Bank trader turned pale, but without looking at them, he repeated to those around him, "I'll say it again! 4.3 shares! Sell, market price!"

The price instantly plummeted below the $80 mark.

In that instant, the trader stopped breathing.

He never expected that at the most critical moment, it would be his own ally who broke through the $80 mark.

His partner shouted urgently in his ear, "What do we do? The stock price has fallen below $80!"

The trader gritted his teeth and pulled out a commission form from his suit pocket—regardless of the outcome, he had to carry out his boss's task of stabilizing the market.

"I have 2 shares here! Limit price $80, buy."

The trader stood in front of the bank trader, who glanced at him briefly, then slapped the order book against his chest. "2 shares sold—I still have 1.45 shares left. Anyone else have any? Market price!"

The stock price only paused briefly at the $80 mark before being driven down.

This time, it was the National Rope Company's turn to hear the sound of the dam collapsing.

With just a quarter of an hour to go until noon, and the NYSE nearing its close, the price of National Rope was $76.50!

Larry sat in the private box, looking at the transaction report sent by the trader, the gold coins between his fingers had been rolling happily since 11 o'clock.

"The 4900 shares we used to mislead the other side all successfully triggered stop-loss orders, a loss of $10 per share. Acceptable!" Larry's eyes continued to scan the transaction list, his tone becoming more relaxed. "—2.4 naked short shares, average cost price of $95, so far—well, a profit of $18.5 per share. Net profit is already $44.4. Not bad!"

The trader quickly asked, "Mr. Livingston, should we close our short positions from today?"

"Okay, close them all out!" Larry nodded with a smile. His real heavy position was in 7 shares of short selling, while the 2.4 shares of naked short selling were just a diversionary tactic.

It was exactly 12 o'clock! Time seemed to have been paused.

The ticker tape delivered the last meaningful message of the day—National Rope Company closed at $76.50, a single-day plunge of 18%, with a trading volume of 273,000 shares, a record high!

The problem is, this is only half a day.

Larry did a quick calculation and, after excluding the approximately $50,000 stop-loss loss from the deceptive long position of 4900 shares, he should have made a net profit of $390,000 today!

Of course, this does not include the huge profits from the 7 shares shorted by Larry's real short-selling main force.

The door to the private room opened, and Baruch walked in, his face a mixture of exhaustion and excitement. "They're all sold! Mr. Livingston, the last deal went for exactly $76."

"Great!" Larry put the gold coins into his shirt pocket, picked up his hat and coat, and said, "Let's go! Saturday's half-day trading is over; it's time for lunch!"

"But Mr. Livingston," Baruch couldn't help but ask, "how do you know they'll fall apart internally? And are you going to keep those 7 shares you raised?"

"Keep them! Those 7 shares aren't for today, they're for Monday." Larry laughed. "The weekend paper might be even more exciting than today's, so those 7 shares are a gift for our new readers."

As he spoke, Larry put on his hat, covering his overly bright blue eyes.

>