1928: The Rise of Giants

The big shorts are always unanimous in their judgment.

Thinking is similar.

When Livermore heard Yelo talk about the Federal Reserve's data on bank financing of securities firms, he knew that the two of them wanted to go together, and it felt like heroes meeting each other too late.

"Actually, I have felt since 1928 that the rise in U.S. stocks for several consecutive years is unsustainable. From the beginning of 1929, I have always focused my energy on the stock market."

"In January 1929, the Dow Jones index rose 1%, and stock trading volume doubled compared with the same period last year. That was the first time I felt that the opportunity was approaching. In fact, starting from the second half of 7, I had been testing the head on a small scale. Of course, , all ended in losses. From a graphic point of view, the U.S. stock market in January 1928 did not have any sign of a head, and it did not conform to my own defined trading rules. This detail confirmed for me a concept that I used when trading. The experience I rely on is just an ideal state, and it’s actually very difficult for me to achieve that point myself.”

Livermore rambled on about his experience. It is really difficult to find a big short in this era who identifies with himself and has the same ability and consciousness.

Such is the sympathy between heroes.

"But this also means that the probability of being a short seller is very high. Mr. Livermore, your efforts are worth it. Many data cannot be obtained through analysis. Only after entering the field for personal inspection can you have a sense." Ye Luo I was surprised that he had been paying attention to the U.S. stock market since 1928, and even tried to test his head in January this year.

He is indeed a genius.

No wonder he didn't intervene himself. Historically, he still successfully attacked this wave of U.S. stock markets and became the largest short seller in history.

"Yes, a lot of data needs to be collected by actually entering the market. From January to now, I have lost about one million US dollars, and Livermore Group's stock has been falling because of this. My family, friends, and employees have advised me not to continue to be stubborn. , they admire the invincible me once, but they feel that I have lost my way now."

This is also the reason why Livermore came to Ye Luo alone.

The comrades who once fought side by side with him have long been lost in the vast ocean of the stock market, speculating wildly to make money, and simply do not think that short selling can be realized.

It's like when Livermore had nothing and told them that one day he would become a financial tycoon with tens of millions of dollars, all he would get was their ridicule and ridicule.

Genius is always lonely.

The negotiation went very smoothly this time. The harmony of souls and thinking made the two of them like old friends they had not seen for many years. Many problems that Ye Luo thought might happen before Livermore came, did not happen.

It wasn't until the legendary trader left that Huixin lay on his lap again and asked curiously: "Second Young Master, what is the Dow Jones Index, what is short selling, and what is the head? I don't understand it at all. "

"Haha, it's good if you don't understand. But if you understand, you'll find it ridiculous." Ye Luo patted her head, "But you still have to be familiar with the basic knowledge."

The so-called Dow Jones Index, the full name of the stock price average index, is based on a part of representative company stocks listed on the New York Stock Exchange as the compilation object, and is composed of four stock price average indexes.

The four stock price average indexes are:

①The Dow Jones Industrial Average Index is compiled based on the stocks of 30 well-known industrial companies;

②The Dow Jones Transportation Stock Price Average Index is compiled based on the stocks of 20 well-known transportation companies;

③The Dow Jones Utilities Stock Price Average Index is compiled based on the stocks of 15 well-known utility companies;

④The Dow Jones Stock Price Composite Average Index is compiled based on the stocks of 65 companies involved in the above three stock price average indexes.

These indexes can basically reflect the overall situation of the U.S. stock market.

The sharp fall of the Dow Jones Index means that the stock market is finished, and the sharp rise is the current crazy bull market.

The head that Livermore mentioned refers to the high level of the stock price. When the overall stock market situation appears to be artificially high, the stock price will continue to be artificially high, but it will come faster than the high level of the index, that is, It is said that when the Dow Jones index has not yet reached its high point, the stock price may have reached its highest value.

This is also the basic logic of short selling.     Take General Motors' stock as an example.

If the stock market has collapsed at this time, but investors belatedly realize that a large amount of retail capital has not yet withdrawn, the Dow Jones Index will still show an upward trend, showing a false bull market situation, and high-priced stocks are the most sensitive to market conditions. Therefore, it will reach a high value (which is what Livermore said is the head) one or two days after the collapse, and then plummet all the way.

But the collapse of the Dow Jones Index will occur some time after the decline of high-priced stocks.

But when you see the Dow Jones Index plummeting, it's actually too late and too late to retreat.

Smart people would have retreated a day or two after the stock market crashed.

Because these people are basically powerful capitalists, a lot of funds are concentrated in high-priced stocks. Therefore, high-priced stocks are the most sensitive to market conditions. Because the people who buy them run away first, they start to fall first.

In the same way, low-price stocks and penny stocks have the lowest sensitivity. If the stock market crashes for a while, these stocks are still at the top or even rising, and investors are still buying them. They will be the last to leave and the worst to die.

In January, Livermore felt that the head of high-priced stocks was coming, so he tested it. Of course, in fact, the stock market has been rising. Now it is almost the end of May, and there is no sign of decadence. His previous test will inevitably It's blood loss.

During this wave of Federal Reserve investigations, the stock market was falling that day, but the trading volume was normal, indicating that it was not the time before the head came, and it was not time to enter the market for shorting.

Of course, these analyzes are all done by Ye Luo in hindsight.

Because he is the only one in the world who knows that the U.S. stock market will plummet in the second half of the year. He even knows the specific date of "Black Tuesday", so there is no need to worry.

However, if short sellers like Livermore want to draw similar conclusions and estimate the approximate date, they must enter the market again and again at such times, try short selling in a small area, test the head, and use money to look at the data.

This is a waste of money and people.

That's why Livermore said so much.

It was obvious that he couldn't bear it any longer.

The legendary trader of the past is now losing money on every investment. People around him do not trust him, and even his family members doubt him. If his will is slightly less firm, he may give up.

This is why Livermore attaches so much importance to cooperation with Yello.

He found a similar flavor and sense of belonging in Ye Luo, which was not found in any other collaborator.

Ye Luo did some research and found that Huixin had fallen asleep. He smiled helplessly.

Indeed, these things are too difficult for laymen.

But if you can understand these, you will have the basis to enter the market and go short.

He gently picked up Hui Xin. In her sleep, Hui Xin habitually lifted up her nightgown and spread her legs, very skillfully.

Being aroused, Ye Luo didn't care whether she really fell asleep or not, so he picked up Huixin on the sofa and started to greet the baby in her belly.

Huixin woke up from the turbulence, and quickly reached out to hug Ye Luo's neck, her face red as if bleeding. (End of Chapter)