1928: The rise of giant merchants

August 15, the 18th year of the Republic of China (1929).

After recuperating for more than a week, Huixin was discharged from the hospital after regaining her strength. Her daughter Li Siye stayed in Ye Mansion and was raised by her godmother Bai Xiuzhu personally. She and Ye Luo and others came to the garrison headquarters to prepare for Chennault to fly the plane. Return to the United States.

When he returned to China this time, Ye Luo brought good news about the overheating of the U.S. stock market, which attracted a group of celebrities to rush to invest money in shares. By the time they left, Huixin had already absorbed approximately US$15 million in equity capital in the name of Hongxing United Group.

In addition to the nearly 11 million U.S. dollars of equity that Ye Luo had previously "returned", the two of them made more than 26 million U.S. dollars in just over a month in the Republic of China, and returned to New York with a huge amount of money.

During this period, the more than 38 million U.S. dollars held by Ye Luo compounded to 40 million, making him the largest speculator on the New York Stock Exchange.

Because of this, the investment of Hongxing United Group has attracted much attention, and every move has been infinitely magnified in the spotlight, making it difficult to make easy profits.

Of course, Ye Luo, who had already anticipated this, first dispersed part of the stock capital, and it was operated by more than 200 brokers carefully selected by Livermore. In addition, there were also Joseph Sr., Franklin, Little John, Ma Murray, etc. With the help of others, you will not lose everything on the New York Stock Exchange.

During the time that Ye Luo left New York, some not-so-pleasant things happened.

In mid-July, the U.S. stock market entered a period of consolidation, but the trading volume during this period was not small. However, Livermore felt that the BOE (U.S. Tax Code Review Board) had the possibility of raising interest rates. More importantly, the new housing data and auto sales data, an important leading indicator of the U.S. economic cycle, have slowed.

This means that the stock overheating may be slowing down or even heading downwards.

On July 18, Joseph Sr. and Livermore couldn't help themselves and short-sold 1M shares. The reason for their short-selling was that even the shoe shine guys on Wall Street recommended them to buy railroad stocks, which meant that the stock was already too hot. .

However, in fact, the stock continued to rise, and the two people's positions suffered a book loss of more than 10% during the short sale. This time, Livermore and Joseph Sr. lost a total of US$8 million in the first test transaction.

This is a very trying time.

The summer in New York is very hot. Since the short-selling failure, Livermore almost never goes home and lives in the office or his apartment in New York.

He maintains the habit of arriving at the office at 5 or 6 o'clock every morning and preparing for the day's work according to the established procedures.

He was also very upset about his rash actions and hoped to use new transactions to recover these losses so that Ye Luo would not lose confidence in himself.

The strange behavior of the two people was actually within Ye Luo's expectation.

If a legendary trader like Livermore is willing to become his own puppet and fight wherever he wants, then he is no longer Livermore.

Return to New York and come to Franklin's villa.

Several people were very worried, fearing that Ye Luo would terminate the cooperation and cause huge losses.

Franklin was even mentally prepared to be a peacemaker, and he had to do anything to reconcile the conflicts between Ye Luo and them.

Unexpectedly, as soon as Ye Luo sat down, he said "nice transaction! (Nice transaction)"

Several people were confused when they heard it, but they finally understood it after his explanation.

Ye Luozheng needs someone to be such a fool and lose some money, so that the leading companies can relax their vigilance and fall into the false trap of the hot stock market.

Whether he was trying to stabilize the morale of the army or he really expected this step, Livermore was extremely grateful for Ye Luo's carelessness.

This boat of friendship was able to continue sailing.

"The current mainstream view on Wall Street is that the economy is developing well, monetary policy is moderate, and the P/E valuation (price-to-earnings ratio) of stocks is only 10% higher than the historical average. They do not believe there are signs of a collapse. The only thing that makes What worries them is that the P/B valuation (price-to-book ratio) is double the average."

The price-to-earnings ratio (P/E valuation) is one of the most commonly used indicators to evaluate whether the stock price level is reasonable. It is a very valuable stock market indicator. If the price-to-earnings ratio is too high, it means that there is a bubble in the stock market. The price-to-earnings ratio is now higher than in history. The average fluctuation is about 10%, which is a very reasonable fluctuation.

The price-to-book ratio (P/B valuation) refers to the ratio of the share price per share to the net assets per share.

The price-to-book ratio can be used in stock investment analysis. Generally speaking, stocks with a lower price-to-book ratio have higher investment value. On the contrary, stocks with lower investment value.

The overall price-to-book ratio is already twice as high as the average, which means that all stocks in the U.S. stock market have more than doubled their share prices. Will they continue to rise after this?

I'm afraid many people will panic because of this.

If we speculate based on past experience, the stock market may indeed crash.

But this was 1929, not long after Hoover took office, and all the experts and politicians had just finished promoting the stock market myth two months ago. They would not let the stock price fall quickly.

"It is conceivable that many people will use many reasons to rationalize this high valuation of 1 times in the future."

Ye Luo crossed his legs and talked. Thanks to Livermore and the others' behavior of testing the head this time, he had a greater say in the small group.

"So throughout August, I don't need to say it, everyone should also understand that the stock market will continue to surge to a staggering level."

Everyone nodded in agreement.

"So our strategy in August is to continue to follow the footsteps of others, promote the stock myth, invest all the funds in stock trading, and let the principal grow more and more."

This was the first combat order officially issued by Ye Luo after his return.

Now that he had gained enough prestige, no one would doubt him anymore. Several people nodded and took the battle plan he had drawn up to check what they should do.

This small group has already raised nearly US$120 million in capital. By then, including leverage, it will not be a problem to pry open the entire U.S. stock market.

In fact, in the original history, Livermore did exactly this.

And this month's crazy investment is also the last carnival that the military and political dignitaries of the Republic of China can enjoy.

It was the last piece of honey before they fell into the abyss.

Early next morning.

As Ye Luo expected, many well-known newspapers such as the New York Times began to advocate the U.S. stock market and claimed that it was normal for the price-to-book ratio to be higher than 1 times the average. Last year, there was even a situation where it was 1.5 times higher than the average. Investment Investors do not need to panic, just continue to buy stocks with confidence.

For this reason, the well-known economist Fisher personally came out to explain, saying that according to the current market conditions, there is no need to worry even if the price-to-book ratio is higher than 3 times the average, and the overall rise of stocks is an inevitable trend.

Ye Luo also arranged for the stock salesmen of the Hongxing United Group to help publicize it. For a time, the whole city was very excited, and everyone was eager to dig out their money and put it into the stock market.

At the opening of the market that morning, the stock market surged again, making countless people ecstatic.

This is the beginning of the craziest August in history. (End of chapter)