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. [p. 201-202]
[Letter to Mr. Kennelworth in January 1927] “I am anxious to make some money in my cotton deals and get into wheat for the big advance that I figure is coming this Spring and Summer. Then I want to be in position to buy some Right Aeroplane and Sell Major Motors and other stocks short, because I believe that in the next few years I can make a fortune buying Right Aeroplane stock and selling short Major Motors.” [p.90]
Robert looked over the stock page and noticed the heading; “Major Motors advances above 200, a new high level.” Robert had figured out that Major Motors would not advance much above 200 before it would be a short sale for big profits. He figured out from the cycle of Major Motors that it would hold until along in June and July and that it would decline to a very low level in 1928, so he decided he was going to go short to hold for a long campaign and make a fortune. [p.146]
[On July 9] After having his breakfast, he waited for the first mail, but there were no letters for him and up to this time no telegrams had been received. He decided to go down to a brokerage office and see how the market opened. Cotton and wheat had advanced the day before and cotton opened higher and was strong this morning, and wheat was also holding up well. Robert found that Major Motors was selling around 203 and he knew that his broker must have sold 500 shares short for him at this price. He figured that Major Motors would not advance above 205 1/2 before it started on a big decline. So he said to himself, “This is going to be a real happy birthday. I am making money fast now in wheat and cotton and will soon be making money in stocks.” [p.161]
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 192½. 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. [p.197-199]
A few days before Christmas [in 1927] there was a big decline in the stock market. All kinds of unfavorable rumors were afloat. Business conditions were bad. War clouds were gathering thick in Europe. Newspapers talked of the uncertainties in the new year due to the coming presidential election. The public had lost confidence and were selling stocks. Robert decided that this was the time to cash in so he covered a big line of Shorts in Major Motors, Central Steel and others. [p. 223]
During 1928 he had closed a successful bear campaign in Major Motors and was still holding his Right Aeroplane stock, which had continued to advance, and he figured that it would have a big rise during 1929. His fortune was piling up rapidly, despite all the money he was spending on his new inventions. The new ship “Marie, the Angel of Mercy,” was now about perfected, but Robert intended that this should never be made known to the public until he had it in perfect working order and it was a success beyond doubt. [p.239]
[April, 1930.] They decided to confiscate the large manufacturing plants and start them on making new inventions and the manufacture of airplanes. Central Steel was confiscated; also Major Motors and Major Electric Co. [p.279]
Pages: 201-202, 90, 146, 161, 197-199, 223, 239, 279
Place: New York City, NY, 40.7128° N, 74.0059° W
Keywords: General Motors, Major Motors, Central Steel
Dates:
- 16 Sep 1908: founded General Motors
- March 1921: selling at $42
- Summer 1921: declined rapidly
- December 1921: selling at $14
- Spring 1922: selling at $8.25
- ??: Morgan and Dupont took over
- January 1927: start of bear campaign
- December 1927: end of bear campaign
- 1930: confiscated (fictional event as the book was written in 1928)
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