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 cotton advanced 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 short of 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 wait for 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 the capital, 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 fast and 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 the money he 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 accumulated millions, 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 holdings at 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.