CHAPTER XVI
Robert Gordon's Great Campaign in Cotto
AfterRobert had sold out his October cotton at 17.30 and his December cotton at 17.50 on June 10th, he decided to watch the market very closely for a few days because he thought it would go lower. His forecast indicated last buying level around June 25th. He figured that after this time the market would go higher until September 5th to 6th, when he figured it would be final high.
On June 25th October cotton declined to 16.80 and he bought 500 October at 16.83 and 500 December at 17.15. He figured that it would run up for about thirty days so on July 25th he sold 500 October cotton at 19c and sold 500 December at 19.20 and went short of 500 December at 19.20. The decline followed as he expected. On July 30th he sold 500 more December cotton at 18.60 and on August 6th he bought 1000 December at 17.40 to cover his short contracts. He figured that the Government report on August 8th would be very bullish and that cotton would go up very fast and continue until around September 5th to 6th, or until the Government report in September. On August 6th he bought 1000 December at 17.35. On August 8th he bought 500 December at 17.30. The Government was very bullish as he expected and cottonadvanced 200 points on August 8th. On August 9th he sold out his 1500 December at 20.30 and sold 1000 December short at 20.30. A big decline followed and on August 13th he bought 1000 December cotton at 19.10 and also bought 1000 December at 19.10 for long account. He started in to pyramid on the way up. On August 19th he bought 500 more December at 20.10; on August 22nd he bought 500 December at 21.10; on August 27th he bought 500 December at 22.30 and on August 29th bought 300 December at 23.30. On September 8th the Government report was very bullish as he had forecast and the market went up. This was the time when he expected the market to make final top for a big decline. On September 8th he sold 2800 bales of December at 24.40 and on the same day sold 2000 bales of December at 24.50 for short account. On September 9th he sold 500 more December at 23.30; on September 11th sold 300 December at 22.30. On September 13th he bought 2800 December at 21.60 to cover his short contract. On September 14th he sold 1000 December at 22.60. On September 17th sold 500 December at 21.60 and on September 21st sold 300 December at 20.60. September 23rd he figured that the market was bottom for a rally and bought 1800 December at 20.60, and on the same day bought 1000 December at 20.60 for long account. On September 28th he sold 1000 December at 22c and also went short 1000 December at 22.10. On September 29th he bought 1000 December at 21.30 and on September 29th bought 1000 December at 21.30 for long account. On October 3rd he sold 1000 December at 21.50 and also went shortof 1000 December at 21.50. On October 6th he bought 1000 December at 20.75 and went long, because he figured the market would be higher for the Government report on October 8th.
Robert Gordon's Great Campaign in Major Motors
On Sunday, June 19, 1927, Robert Gordon spent the day studying his charts and working out his cycles for stocks, cotton and grain. He was short of Major Motors and was watching it very closely. On this day he made a new and great discovery of a time factor from which he figured that Major Motors would decline until about June 30th and then start an advance which would last until about September 16th, 1927, when the Company would be 19 years old and at that time the stock would reach final high and would then go down to February to April, 1929. He figured that the stock should advance to around 270 by September 16th and made up his mind to watch it closely and cover his shorts if it went down around June 30th, and then start buying the stock. On June 30th it declined and he bought in his short contracts and bought for long account 500 shares of Major Motors at 192-1/2. He decided to pyramid it all the way up. On July 15th he bought 500 shares at 204; on July 21st he bought 300 at 214 and on July 26th bought 300 more at 224. On August 5th the stock advanced to 230 and he raised his stop on 1600 shares to 225. On August 8th his stock was sold out at 225. He still believed that the stock would go up to around 270 by September 16th but he expected a reaction of about 12 to 15 points so he decided to waitfor a few days and watch his charts to see how the stock acted. On August 12th Major Motors declined to 218, being down a little over 12 points as he figured, and he bought 1000 shares at 218. He placed a stop at 212, a point which he figured it would not decline to. The advance started, and on August 20th he bought 300 shares at 228; on August 24th bought 300 shares more at 238 and on August 26th bought 300 shares more at 248. When he started pyramiding, his plan was to buy or sell the largest amount first and then gradually decrease buying and selling smaller amounts on the way up or down, and always using a stop loss order. On September 7th the stock advanced to 253 and he raised his stop on his entire amount to 243. This stop was never reached but on September 14th a rapid advance was on and he bought 300 shares more at 258, giving him a line of 2200 shares of stock. He figured that it should advance on September 16th to around 270. When the market advanced to 272 at this time he sold out his 2200 shares at 272.
He cleaned up a profit on this deal of over $80,000.00, and as he figured that the stock would make final top around this time he decided to put out a line of short stock and pyramid all the way down, remaining short for the long pull. On September 17th he sold 500 shares of the new Major Motors stock at 138 and 500 shares at 137 and placed a stop on it at 147.
He had made it a rule that after he had made a large amount of profits that he would never risk more than 10 per cent of his profits on the first new deal, and that if that deal went wrong and he lost 10 per cent of thecapital, he would decrease his trading so that the next loss would only be 10 per cent of his remaining profits. In this way he figured that the market would have to beat him ten consecutive times for him to lose all the profits he had made, and his studies of past records showed that this could never happen. He placed orders to sell more Major Motors at 128, 118, 108 and 98 because he expected the first decline to run until the latter part of December, 1927, and after that time he would put out shorts again on a rally to hold and pyramid on the way down into the Spring of 1929. His great discovery of what stocks would do at a certain age enabled him to make enormous profits when stocks reached the age where they would have fast moves up or down in a very short time.
October, 1927, was a beautiful month in New York. The weather was warm and the sun shone brightly every day. It reminded Robert of the Fall of 1926 when he had gone to Sherman, Texas, to visit Marie. He thought of what a great change had taken place in one year, of the fortune that he had made in the market, but money would not buy relief for his aching heart.
Days, weeks and months had drifted slowly by, but no word from Marie Stanton. She seemed to be lost as though the earth had swallowed her up.
The great decline in stocks which he forecast for the Fall and Winter of 1927 took place and he made money rapidly on the short side of stocks. He was selling short Central Steel and Major Motors and other stocks. He had bought Corn and Wheat in October and made big profits later in the year. Money was piling up fastand in the latter part of October, 1927, he had made over $300,000. He had kept Marie's money in a separate account from his own and her original $400.00 was now over $20,000. Robert continued to keep her account separate; he wanted to make all themoneyhe could and have it as a surprise for Marie, to prove to her his faithfulness and thoughtfulness when she was away, and also to prove his confidence in her return.
Robert became known as "The Boy Wizard of Wall Street." His fame became known and old men of Wall Street talked about his marvelous success. Robert refused to be interviewed by the newspapers or tell anything about his method of working in the market. Seldom ever visited a broker's office and made very few friends. He worked upon his invention, and Walter was his sole companion. Walter had met an old man by the name of Henry Watson who was a veteran of Wall Street, now over 70 years of age, had made and lost many fortunes and had seen the biggest and best plungers go on the rocks in Wall Street. Walter introduced Mr. Watson to Robert and he became very much interested in the old man's reminiscences. He told Robert the history of Daniel Drew and got him to read the book of Drew's life, which showed how Drew, after making $13,000,000 lost it all and died practically a pauper. Also told the history of Daniel Sully; how he made $10,000,000 to $15,000,000 in the Cotton market, but by violating natural laws lost it all in a few days in the crash of Cotton in March, 1904, and then disappeared from the financial horizon. How Livermore, the boy wonder of 1907 and 1908, had accumulatedmillions, owned fine yachts, lost everything, had gone thru bankruptcy, but had later recouped his fortunes. How Eugene Scales, another striking example, who at one time had over ten millions dollars paper profit in the Cotton market, had lost all of it. How Allen A. Ryan, at the height of his fame, when he defied the Gods of Chance and the unwritten law of Wall Street with the result that his millions were all lost, had to go thru bankruptcy and paid only about twenty cents on each one hundred dollars.
Mr. Watson also told Robert how Durant had become the giant motor magnate and formed the General Motors Corporation in 1908 and had made a great success, accumulating millions before the war days and afterwards. He was in full control of General Motors and was reputed to be worth over a hundred million dollars when the stock was selling at $410.00 in the Spring of 1920. Durant was very bullish and talked of General Motors going very much higher. Deflation started in the Summer of 1920, and all stocks declined rapidly. He remained bullish, continuing to buy General Motors all the way down. The stock had been split up on a ten for one basis and the new stock which sold at $42.00 in March, 1920, an equivalent of $420.00 per share, declined to $14.00 per share in December, 1920, and finally in the Spring of 1922 sold at $8.25. He had refused to sell; in fact had bought all his brokers would let him have all the way down. When the stock declined to $15.00 per share, Durant was ruined. His fortune of over one hundred millions dollars was wiped out. The Morgans and Duponts took over his holdingsat a figure reported to be around $5.00 per share, and he lost control of the gigantic corporation which had made him famous. Later Durant organized a new company and came back fast. He went back into the stock market and in the great Coolidge Bull campaign from 1924 to 1927 was again a dominant factor in General Motors and other stocks and was reputed to have made fifty millions, or more.
The old man said that Durant was one of the very rare exceptions of men who had gone broke in Wall Street and had been able to come back after they were 60 years of age. Told Robert that Wall Street was a place of ups and downs—mostly downs, and that the time to quit was when you were young and had made your money.
Robert explained to Mr. Watson that he was not guessing and gambling on hope but was following science and not trading on human judgment as he followed the law of cycles as laid down in the Holy Bible. Mr. Watson said, "I wish you success, and for your benefit I will give you my opinion as to the cause of most of the failures in Wall Street, for I know the history of the men who have made the greatest amounts of money, and know most of them personally. Selfishness and greed were the cause of the fall of Daniel Drew. He was not loyal to his associates. His idea was to get the money and look out for himself regardless of whom he hurt. Conditions changed and Drew failed to change with them. The result was that he died a pauper. Thomas W. Lawson, the man who wrote, 'Friday the 13th,' was one of the most daring traders that WallStreet has ever known, worth at one time probably forty to fifty million dollars. He, too, died practically penniless. At one time Lawson had the backing of the Standard Oil crowd and turned against them after they had helped him to make millions. In my opinion, he cut off the hand that fed him and his ruthless attack on men who had been his friends, was the cause of his downfall. Men must be loyal to positions of trust and not reveal secrets of great financial deals by which they profited." Robert said that was his idea. As long as a man remained loyal to his mother, his country, his associates; above all his wife or sweetheart, success was bound to crown his efforts. He believed in the law of compensation; that when a man broke faith with others, he had broken faith with himself, and that failure would follow.
Mr. Watson told Robert that Sully made his money in cotton, and after accumulating millions, quit specializing in cotton and began to trade in stocks and various other commodities, which divided his attention and he was unable to concentrate on cotton alone, the thing that brought him the great success. "I could go over the history of Scales, Livermore, Durant, Ryan and the balance of the great men of Wall Street, and in analyzing their trading, the one weak point would be found in all of them. They diversified too much. Did not specialize in one commodity or a few special stocks, but spread all over the board. The result was they had too many irons in the fire and when one thing started to go wrong and they began to lose money, they would invariably get out of stocks and commodities on which they were makingmoney and keep those that were going against them. Another weak point was that when luck turned against a man in Wall Street, he kept on trying to recoup his losses instead of stopping just as soon as there was an indication that the tide had turned against him. Most men at the heights of prosperity lose their sense of good judgment, become inflated with their success, think they are infallible, refuse to follow science or the advice of anyone, with the result that they continue to buck the tide till all their money is gone."
"Mr. Watson," said Robert, "I believe that if a man starts out to make money for unselfish purposes, he will succeed. That is what I am going to do. Your experience is very valuable to me. Your intimate knowledge of the cause of the failures of other men is a good lesson. I have studied the Bible very carefully because I believe it is the greatest scientific book ever written. The laws are plainly laid down how to make a success. There is a time and a season for everything, and if a man does things according to the time, he will succeed. The Bible makes it plain that not all are born to be prophets, nor to be farmers, doctors or lawyers, but that each can succeed in his own special line, according to time and place. If men would only follow the Bible and know that there is a time to stop trying to make money and to keep what you have, then wait for another season when the time is ripe, they could continue to succeed indefinitely. Has any man ever made a large fortune out of Wall Street and kept it, Mr. Watson?" "Oh, yes," he replied, "if there were not exceptions to the rule, business would not continue to run. I could tell you of dozens of them, but one striking example is that of thelate E.H. Harriman who died worth about three hundred million dollars. He had probably made out of the market a hundred million dollars in the last three or four years of his life." Robert asked, "How did he do it?" Mr. Watson answered, "He stuck to one class of stocks—railroads. He studied them day and night, never diverted his attention to other lines. I believe that he possessed some mathematical method which enabled him to forecast stocks many months and years in advance. I have gone over his manipulations and the stocks he traded in, and found that they conform closely to the law of harmonic analysis. He certainly knew something about time and season because he bought at the right time and sold at the right time. He paid a great price for his success, because he neglected his health, sacrificed everything to make his railroads a success and died too young. Such men are the backbone of our country's prosperity. Constructive geniuses of this kind are few and far between and we need more of them. Man's greatest enemy in speculation is 'hope.' He refuses to face facts, and facts are stubborn things. Hope spurs us on. It may be an anchor to the soul, but a very slim anchor in speculation, when facts are against us."
Mr. Watson told Robert that his friend Walter had related to him all about his love affair and the disappearance of Marie. He said, "My boy, the great love you have for her is now furnishing the hope which will carry you to success. When that hope is gone, you will have to find a new one or you cannot go on." Robert told him that Marie had said that anticipation was greater than realization. "Robert," he said, "I want to tellyou the story of my love affair. I have made and lost many fortunes in Wall Street, and when things have gone wrong and I have reached the depths of despondency, have seen my last dollar fade away, been deserted by friends of my prosperous days, then when there seemed nothing else to live for, nothing to make me fight on, there would come a hope, the angel of memory would steal over me and I would again hope that some day, somewhere, I would find my Katie." Here the old man's eyes grew dim with tears. He drew an old wallet from his pocket, took out a package, slowly unwrapped it. In there was a picture in a little gold frame. The aged hands trembled, his voice grew weak as he handed the picture to Robert with some faded flowers which he had pressed out and kept and said: "These flowers were picked by her own little hands over forty years ago." He then broke down and wept bitterly. Robert was deeply moved by the old man's great devotion to his long-lost sweetheart and begged him to tell more of the story.
The old man dried his eyes and went on—"Over 50 years ago when I was a young man, I lived near St. Joseph, Missouri. I went to school at a country schoolhouse. Katie Larson was a beautiful young girl. We grew up together. I don't really know when I fell in love with her, but I know that in my school days I loved her and always intended to marry her. The years went by. I had never told Katie of my love. She had grown to be a woman and I kind of took it for granted that she knew and understood that I loved her and intended to marry her. Time went by and we were often together. There was never any trouble or disagreements.I was anxious to succeed and decided that I should make some money before I proposed to Katie. Time drifted swiftly by, I was not as successful as I hoped to be, and finally one day I received the saddest news of my life—Katie had married. I realized that she had probably waited and hoped for me to make known my intentions but my financial affairs had held me back. I knew it was all my fault. I should have confided my plans to her and asked her to have patience and wait. From that day I was a changed man. My heart was broken and if no hope had been left for me, I would never have gone on, but from that day on, hoped and prayed that I might one day have her, even if for only a few years or weeks, in my declining years. Katie moved away after marrying and probably it was the hope for her love some day that spurred me to action. I worked harder than ever. Success crowned my efforts. I studied medicine, moved to Dallas, Texas, became a very successful doctor. There I met a woman whom I thought I loved. We were married and lived seemingly happy for a few years, but the spark of love for Katie in my heart never died. We had a little girl born and I named her Katie, which proved later a very foolish thing to do. She was the pride of my life, my hope was centered on her. Finally I made the mistake that many men make. I told my wife of my great love for Katie. After that time, she lost faith in me and we slowly drifted apart. Then came separation and divorce. I had accumulated considerable money and now being very unhappy, I decided to leave Dallas and go to New York and try the speculative markets. Success and failure have followed alternately, like the rising andfalling of the tides. There has never been a day when I have come to Wall Street that I have not hoped to one day meet Katie again. That hope has kept me alive. I have often tried to find her, but the years have brought changes. She moved away to California and I have never been able to find out whether she is living or dead. I hope that you will never have to go thru the years that I have gone thru without the love and comfort that the woman you love can give. Your faith is supreme and that will carry you safely thru, and even if you never find Marie, it is better to live for that ideal because it will make you a better man, as love always brings out the best."
Robert was very much interested in the old man's story, but very sorry that it had never ended as he had hoped it would with him and Marie. Mr. Watson told Robert that he thought he had wonderful ideas about speculation, and that if he would only stick to them and not be swept off his feet by success, that he would eventually reach the greatest height. He quoted Kipling's "If."
If you can keep your head when all about youAre losing theirs and blaming it on you;If you can trust yourself when all men doubt you,But make allowance for their doubting too:If you can wait and not be tired by waiting,Or being lied about, don't deal in lies,Or being hated don't give way to hating,And yet don't look too good, nor talk too wise;If you can dream—and not make dreams your master;If you can think—and not make thoughts your aim,If you can meet with Triumph and DisasterAnd treat those two impostors just the same:If you can bear to hear the truth you've spokenTwisted by knaves to make a trap for fools,Or watch the things you gave your life to, broken,And stoop and build 'em up with worn-out tools;If you can make one heap of all your winningsAnd risk it on one turn of pitch-and-toss,And lose, and start again at your beginningsAnd never breathe a word about your loss:If you can force your heart and nerve and sinewTo serve your turn long after they are gone,And so hold on when there is nothing in youExcept the Will which says to them: "Hold on!"If you can talk with crowds and keep your virtue,Or walk with Kings—nor lose the common touch,If neither foes nor loving friends can hurt you,If all men count with you, but none too much:If you can fill the unforgiving minuteWith sixty seconds' worth of distance run,Yours is the Earth and everything that's in it,And—which is more—you'll be a Man, my son!
He told Robert the greatest test of a man would come when he reached the stage of great prosperity. That almost any man could stand reverses but very few could stand prosperity. Money could buy so many things which were not necessary to a man's happiness and attracted so many people who would do him harm rather than benefit him that most men started on the down grade as a result of too much money and too great prosperity. Robert agreed that this was right. Said that with him money was only a means to an end and said that he wanted it so he could help others and benefit his country. Mr. Watson told him that as soon as his success was generally known and he was well established in New York many selfish women would be attractedto him and that if he possessed the weak point which had been the undoing of many men, he would be lost. That was being influenced by flattery from beautiful women. He said, "Remember, my boy, they are attracted to the money and not to the man, but few men can keep their heads at a time when women and men crowd around to praise their success. I remember a poem that I used to read when I was a boy, part of which runs something like this:
'They crowd around me, those stately dames and belles,And pay to me the royal homage that all great success compels;But where is she, that sweetheart of my former years,Who stood by me, when others could see nothing in me.'
You will find it so, Robert. Men desert you when money is gone, like pirates fleeing from a sinking ship. I admonish you not to put your trust in money or men. Continue as you have, trust God, have faith in him, stick to your first love, and happiness and success will be your reward."
When the old man had finished talking, Robert noticed that the eyes had become still, his cheeks were pale, his hand dropped limp at his side. Robert rushed to him and soon realized that the old man was very ill. He hurriedly summoned a doctor. Soon after laying the old gentleman on the couch and making him comfortable, the doctor arrived. After hasty examination, he told Robert that the end was near. They decided to send for a minister and when he arrived, the old man was clutching the picture in his hand. The minister bent over him and asked him if he realized that the end was near and if he had made his peace with God,adding, "Will you die in the faith of a Christian?" The old man sprang up from the couch suddenly, as tho new strength had been instilled in his frail old body. He raised his hand and showed the doctor the picture and said, "Will that faith bring me back Katie, the only woman I have ever really loved?" The doctor knew that his strength was fast waning and got him to lie down on the couch again. The minister whispered consoling words to him, told him that "God so loved the world that he gave his only begotten son that whomsoever believeth on him should not perish, but have everlasting life." Again he asked, "Do you believe in Jesus Christ? Will you accept the faith?" Again the old man replied, "Will that faith bring back to me my Katie?" His voice was growing weaker, the doctor knew that it was a matter of but a few moments. The minister again bent over him and whispered slowly, "Will you accept Jesus Christ as your saviour and die in the faith of a Christian?" With a faltering weak voice he answered, "Will that faith give me back Katie, the greatest love of my life?" The doctor turned to the minister and said, "He has gone to his reward." "With a love like that, such loyalty and faith to a long-lost love must receive its reward in heaven and a just God will extend mercy to a soul like that," said the minister. Robert was in tears. He felt that he had not only lost a friend, but a very dear friend, and that while the old man's going had taken something from his life, yet the example was one that would be of great comfort and benefit to him. He knew that he would live faithful to Marie, and that he would die, as the old man died, longing for Marie, no matter what happened.