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Great Operators: The Voice of 1922
When the stock market declines, it affects many types of investors. The most popular stocks are usually the first to fall, and then less known ones follow. Small investors can be hit hard by major drops in value because they’re invested in weak stocks that may never recover.
Investors ask stock operators why stocks drop in value. The answer may be that there’s no reason; it could just be a random event. Or, it could be due to the short sellers who want the price of their stocks to fall so they can buy them back at cheaper prices and make money on commissions.
The stock market is a risky place. Some people who buy stocks get hurt when the market goes down, but they don’t listen to their brokers anyway. That only makes things worse for them and other investors. People who are interested in buying stocks usually make some mistakes, but they can learn from those mistakes if they’re willing to accept that hard lessons are sometimes necessary for success.
There used to be speculators who were so influential that they could make markets go up or down. Today, there are few of these people around. Lawrence Livingston was one such person.
Old Masters
Livingston lived in a luxurious house with butlers and artwork. He was rumored to have gone through several fortunes, but this house testified to his current net worth. Livingston himself was tall, straight, and healthy-looking. He showed no signs of being nervous when we met him; he looked like a man who made the best decisions when he had time to think things over before making them happen.
When a market is down, people often blame the big operators. However, this isn’t true. Markets go down when there are too many sellers and not enough buyers. When the selling stops, then it’s time for a recovery to start happening again. It’s better to be a buyer than a seller in any market because being optimistic will help you make money in the long run.
It’s pointless to talk about laws that protect people from their own greed and ignorance. Laws can’t stop people from acting out of greed and ignorance; the same thing happens over and over again, with no change in outcome. The story is always the same: People who are greedy or ignorant come into the market, relying on tipsters or brokers instead of using their own intellect. They trade on margin rather than taking profits when they have them. And when things go bad, they fail to act until it’s too late for them to recover. ”
Trend Following
Livingston preferred to invest in larger market trends. He looked for the direction of larger swings and tried to determine how long they would last. He researched trends in trade publications, such as “Trade Review”. Since some sectors go down faster and further in a bear market, he picked carefully. Livingston provided this example of his investment technique: The U.S. World Trade Corporation (USWTC) owned steamship lines, trolley systems, coffee plantations and banks. It conducted a huge export business after WWI ended. Its stock remained stable during that time period and continued to pay dividends while other stocks fell sharply due to the decline of the overall economy; it was one of those stocks that had been sold by syndicates who were trying to recoup their losses from previous investments gone bad. When the market declined even more, rumors started about USWTC not paying its next dividend; when asked about it by a newspaper reporter, the president refuted those rumors. However, on the day after that interview appeared in print, USWTC’s stock price dropped severely ; investors panicked because they thought there was truth behind all those negative rumors.
