Wednesday, July 15, 2015

Climateer Headline of the Day: I got Lefevre, and the only prescription is more cowbell! Edition

Yes, my headline is a mispronounced disaster, especially compared with FT Alphaville's:
Reminiscences of a Chinese stock operator
Back to my Lefevre story, here's one of my favorite bits, Chapter 6:
The story of Jesse Livermore's (I mean Larry Livingstone's) score on Union Pacific:
IN the spring of 1906 I was in Atlantic City for a short vacation. I was out of stocks and was thinking only of having a change of air and a nice rest....
You know where this is going. "I was in Saratoga for a nice rest..."
"...One morning after we had breakfasted and had finished reading all the New York morning papers, and had got tired of watching the sea gulls picking up clams and flying up with them twenty feet in the air and dropping them on the hard wet sand to open them for their breakfast, my friend and I started up the Boardwalk....

...I was looking-over the quotation board, noting the changes they were mostly advances until I came to Union Pacific. I got a feeling that I ought to sell it. I can't tell you more. I just felt like selling it. I asked myself why I should feel like that, and I couldn't find any reason whatever for going short of UP...."
J.L. is now short 3000 Union Pacific.
"...I had sold as much as I needed to satisfy my feeling, so I followed him without waiting for a report on the last two thousand shares. It was a pretty good jag of stock for me to sell even with the best of reasons. It seemed more than enough to be short of without any reason whatever, particularly when the entire market was so strong and there was nothing in sight to make anybody think of the bear side....
...All I know is that I went out of the Atlantic City branch office of Harding Brothers short three thousand Union Pacific in a rising market, and I wasn't worried a bit. I wanted to know what price they'd got for my last two thousand shares. So after luncheon we walked up to the office. I had the pleasure of seeing that the general market was strong and Union Pacific higher. "I see your finish," said my friend. You could see he was glad he hadn't sold any. The next day the general market went up some more and I heard nothing but cheerful remarks from my friend. But I felt sure I had done right to sell UP, and I never get impatient when I feel I am right.
What's the sense?
That afternoon Union Pacific stopped climbing, and toward the end of the day it began to go off. Pretty soon it got down to a point below the level of the average of my three thousand shares. I felt more positive than ever that I was on the right side, and since I felt that way I naturally had to sell some more. So, toward the close, I sold an additional two thousand shares. There I was, short five thousand shares of UP. On a hunch. That was as much as I could sell in Harding's office with the margin I had up. It was too much stock for me to be short of, on a vacation; so I gave up the vacation and returned to New York...The next day we got the news of the San Francisco earthquake...."
So there you go. The secret to success is: Get Lucky!

Mr. Lefevre also wrote a short story called The Tipster, published in 1901.