Chapter Guides

PART 1: STOCK OPERATOR: THE ORIGIN STORY

CHAPTER 1: ON THE DISCOVERY OF MY GAME (TEENAGE YEARS)

The story of Larry Livingston begins in Boston, 1891, where he is a fourteen-year-old farm kid working as a quotation-board boy at the Paine Webber brokerage office, chalking up stock prices. His unique asset is an exceptional memory for figures, which allows him to perceive the stock quotations not merely as prices, but as numbers that were always changing. By observing the tape closely, Livingston began spotting recurring patterns and anticipating price movements, forming the foundation of his trading system. He concluded early on that "there is nothing new in Wall Street" and that speculative movements repeat themselves.

This obsession led him to create a "dope book," a scientific ledger in which he meticulously recorded a stock's past behavior, predicted its next move, and checked his forecasts against the actual tape transcriptions. This rigorous self-study convinced him that the market possessed a "memory and a language he could learn to read". The opportunity to test his theory came when an older office boy introduced him to the bucket shop, described as a rough-and-tumble gambling den where one could bet on price movements with as little as five dollars, without actually owning the stock.

Livingston took this revelation, using his data on a stock called Burlington for his first trade, which yielded a profit of $3.12—proof that his theory worked in practice. Operating solely on fluctuations printed by the ticker, he quickly transitioned from a quotation-board boy to a full-time speculator, accumulating his first $1,000 by age fifteen. This consistent success, however, led to his being blacklisted and forced out of various bucket shops (including The Cosmopolitan), which either refused his business outright or imposed punitive handicaps, such as requiring three-point margins and charging a point-and-a-half premium on his trades. This early success and subsequent banning earned him the nickname, the "Boy Plunger".

CHAPTER 2: TO FAILURE ON WALL STREET (EARLY 20s)

At age twenty-one, Livingston moved to New York with $2,500, seeking out legitimate Stock Exchange brokers where he could trade without limits or fear of being banned. However, his successful bucket shop system failed completely in the real market, as he quickly discovered the crucial difference: execution. In a bucket shop, he could scalp successfully and move like lightning because the price he saw on the board was the exact price he received for his bet; but in a real brokerage, the ticker tape lagged behind the actual floor price by significant amounts, meaning the tape was talking "ancient history" to him.

This lag meant that his buy or sell orders were executed at much worse prices than anticipated, rendering his entire fluctuation-based system ineffective for actual stock speculation. Within six months, trading actively with A. R. Fullerton & Co., Livingston lost his entire $2,500 stake and ended up owing the firm money. Despite this defeat, he maintained his discipline, noting that he "never lose[s] [his] temper over the stock market" or "argue[s] with the tape," but correctly realized that his system was wrong for the setting.

To rebuild his stake, Livingston borrowed $500 from A. R. Fullerton and returned to the only game he knew how to win: beating the bucket shops. He traveled to St. Louis, where he used a fictitious name ("Horace Kent") at J. G. Dolan Company, successfully making a $2,800 profit in two days before being recognized and told to leave. After being outright rejected by H. S. Teller & Co. in the same city, he returned to New York, paid back Fullerton, and resumed trading with his renewed stake, recognizing that there was much more to the game than his initial system allowed.

CHAPTER 3: THE RIGHT SIDE OF THE MARKET (EARY 20s)

Following his failures, Livingston began studying the core distinction between gambling on small fluctuations and genuine speculation based on market conditions, realizing that there is only one side to the market: "not the bull side or the bear side, but the right side". He understood that he had to fight "a lot of expensive enemies within himself," particularly the urge to trade constantly, a characteristic of the "Wall Street fool". His focus shifted from pure tape reading to analyzing external factors like business reports and economic trends, anticipating big movements rather than small ticks.

During the powerful bull market of 1901, driven by industrial consolidation and public stock mania, Livingston successfully built his account up to $50,000 through careful position-taking, including a correct long position in Northern Pacific. Despite this success, he continued to struggle with capturing the full scope of major trends, often taking small profits instead of "sitting tight". This failure to hold positions proved devastating during the famous Northern Pacific corner on May 9, 1901, when the market broke violently due to a battle between financial giants.

Livingston correctly anticipated the crash and entered selling orders, but the extreme speed and volume caused the ticker to lag horribly, leading his orders to be executed far worse than the tape indicated. This resulted in crushing losses, totaling thirty-five points in a single day, wiping out his entire $50,000 stake. This experience taught him that "tape reading is not enough" and that successful speculation requires beating "the market, not the particular price". He concluded that his trading methods were still fundamentally flawed, and by the fall of 1901, he was "cleaned out again" and decided to leave New York.

CHAPTER 4: SKINNING THE SKINNERS (MID 20s)

Returning home, back to Boston, broke, Livingston found he could not trade with bucket shops due to his notorious reputation as the "Boy Plunger". He resolved to raise capital by targeting "bucketeers" or "wire houses"—firms that were not traditional bucket shops but pretended to be legitimate brokers while secretly bucketing customer orders. These firms used elaborate camouflage, sending out conflicting tips and selectively executing orders to convince customers they were honest before wiping out their shoestring margins.

Livingston then devised his "sugar trap," an elaborate scheme to exact revenge and profit from these fraudulent firms. He utilized his one legitimate broker to affect the price of an inactive stock momentarily by selling a small amount, forcing the bucketing firms to honor that brief, lower tape price on his large buying orders. He would then cover his legitimate short position (causing the price to tick up slightly) and sell his profitable line held by the bucketing firms.

Through these systematic revenge operations, which sometimes yielded $600 to $800 profit per execution, Livingston slowly built up his trading capital. One successful trick, involving an unexpected ten-point swing, infuriated a bucketing manager who swore the market was "fictitious" and initially refused to pay, forcing Livingston to demand the cash. This strategy ultimately led these firms to become wary of his tactics, allowing Livingston to return to New York with a replenished stake, having also taught the dishonest "skinners" a costly lesson.

CHAPTER 5: THE OLD TURKEY WISDOM (LATE 20s)

Back in New York, Livingston resumed trading but soon recognized that, despite winning on balance, he still failed to capture the major trends, constantly taking small profits and missing larger moves. He realized his biggest impediment was his failure "to grasp the vital difference between stock gambling and stock speculation". While trying to refine his approach, he encountered an elderly customer nicknamed "Old Turkey" Partridge.

Partridge's constant advice, regardless of market movements, was simply: "Well, this is a bull market, you know!". Livingston realized the profound wisdom in this statement after observing that Partridge refused to sell profitable positions because he understood that cashing out meant losing his "position". This meant the biggest money was "not in the individual fluctuations but in the main movements". Livingston learned that success relies on identifying major trends and having the discipline to maintain positions throughout their duration, an idea he summarized: "It never was my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight!".

He concluded that a speculator's chief enemies are "always boring from within"—namely, fear and hope. Most traders fear that profits will vanish and hope that losses will recover, leading them to do the exact opposite of what they should: they cut their profits short and let their losses run. This chapter marks the transformation of Livingston’s thinking from a short-term tape-reader to a patient, strategic position-holder.

CHAPTER 6: MY FIRST BIG KILLING (LATE 20s)

In the spring of 1906, while vacationing in Atlantic City during a strong bull market, Livingston experienced a powerful, inexplicable "hunch" to sell Union Pacific short. Despite having no rational reason for the trade and against the advice of his friends and the market sentiment, he initially sold 3,000 shares and then doubled his position as the market showed resistance to advances. Days later, the San Francisco earthquake occurred, severely damaging railroad properties and validating his prescient move.

The market initially resisted the news, but Livingston doubled down again, selling a total of twenty thousand shares, realizing this was a "heaven-sent opportunity". He cleaned up within a few days, making $250,000—his largest score to date, proving the value of trusting his own instincts over general market sentiment. However, this success was immediately followed by a costly lesson: later that summer, he correctly read the tape that Union Pacific was being accumulated and began buying long.

His broker, Ed Harding, called him on a "hot line" and urged him to sell, claiming that insiders were "shoveling out" the stock and that Livingston would be a "plain sucker" if he didn't get out. Against his tape-reading conviction, Livingston followed the tip, not only selling his long position but going short four thousand shares. The next day, Union Pacific declared an unprecedented 10% dividend, causing the stock to soar. In scrambling to cover his shorts and re-establish a long position, Harding's well-intentioned tip cost Livingston $40,000. This mistake served as the "final, crucial lesson" about trusting his own analysis over outside advice, completing his education as a disciplined speculator.

CHAPTER 7: MY THINKING CHANGED

This chapter marks the profound shift in Livingston's speculative strategy, where he realized his past failures stemmed from "flawed thinking rather than mere misfortune". He understood that the average person seeks easy answers and tips to avoid the rigorous analysis required for independent conviction, which strengthened his resolve to practice self-reliance. He began implementing his key strategy for building a position: buying (or selling) on a rising scale, known as pyramiding.

Under this new method, if he was bullish, he would buy an initial lot; he would only add to that position if the stock showed a profit, confirming that he was "at least temporarily, right in my operation". Conversely, if the initial trade showed a loss, he would cut it quickly and refuse to add to the position. This methodical approach ensures the "big bet" is placed only when the trader is already winning.

He also learned to apply the principle that "stocks are never too high for you to begin buying or too low to begin selling," preferring to pay top prices for a rising stock to confirm the continuation of the move. Ultimately, he realized the importance of timing, which means waiting patiently for the market to define its trend before taking a position, a realization he claimed cost him "some hundreds of thousands of dollars".

CHAPTER 8: COCKSURE (LATE 20s)

"The Lawrence Livingston Trucking Corporation"

After the Saratoga incident, Livingston achieved complete independence from outside opinions, realizing that the "big money must necessarily be in the big swing". He realized that the continuance of any major trend depends upon fundamental "basic conditions," not the manipulations of pools. The primary task was to "anticipate probabilities" by studying the general list rather than specific stocks, allowing him to trade the entire market in accordance with the main current.

Applying this new framework, Livingston studied the financial environment in 1906, concluding that massive destruction of global wealth (like the Boer War and the San Francisco earthquake) made a severe "smash" due to money scarcity "inevitable". He began selling short too soon, however, and recurring rallies repeatedly wiped out his paper profits, teaching him that his "position was right but my play was wrong," because he failed to wait for the proper timing signal.

The definitive warning signals came in early 1907: an announcement by Northern Pacific and Great Northern of a new stock issue payable on the installment plan, showing that powerful banks doubted stockholders could afford cash, and a subsequent announcement by St. Paul for an earlier payment date, revealing a fear of competition for the limited available money. This confirmed the money panic was imminent, and he began his massive bear campaign, profiting from declining prices. Despite warnings, he even attacked stubborn stocks like Reading, which were supported by bull pools, knowing that the "inexorable logic of events" would prevail once the money stringency worsened. He covered his entire short line in February 1907, believing the market had fully discounted the immediate future, and went to Florida for a vacation, refusing to make the mistake of having profitable positions wiped out by a rally, as had happened before.

CHAPTER 9: MY FIRST MILLION (AGE 30)

While fishing in Palm Beach, Livingston received news of a strong market rally, compelling him to return to the brokerage office, determined to sell stocks as he knew the bear market was not over. Although fundamentally bearish, he acted on an old trading theory: when a stock, like Anaconda Copper, crosses a major round number (300) for the first time, it usually continues to climb quickly. He bought 32,000 shares of the quarter-stock as a "quick thirty points" profit to "pay himself wages for waiting" before resuming his bear position. The stock failed to advance strongly the next day, and when it fell back to 301, he quickly concluded the movement was a "fake" and dumped his entire long position at the market, narrowly avoiding a substantial loss of nearly one hundred thousand dollars.

Resuming his bearish stance, Livingston returned to New York and continued selling short as the money market tightened throughout 1907. The climax came on October 24, 1907, when money effectively vanished from the Money Post, creating absolute market chaos, with hundreds of brokers swarming the post. The market was saved only by the decisive intervention of J.P. Morgan, who commanded the banks to use their reserves to lend money to the Stock Exchange, stabilizing the situation.

On that critical day, Livingston’s paper winnings exceeded one million dollars. He realized the power he wielded: the market was, for a moment, "at the mercy of anybody who wanted to hammer it". A major banker, associated with J.P. Morgan, sent a friend to ask Livingston, the feared "Boy Plunger," not to sell any more stocks, appealing to his "patriotism" to avert a devastating panic. Having already covered most of his shorts, Livingston agreed and began buying 100,000 shares for the long account. This moment confirmed his dream of having the market "eat out of my hand" and cemented his status as a strategic speculator, putting him permanently "out of the gambler class".

PART II: STOCK OPERATOR: THE CRUCIBLE YEARS

CHAPTER 10: MY FIRST MILLION-DOLLAR MISTAKE (EARLY 30s)

Reflecting on his new status as a millionaire, Livingston noted that a financial loss never bothered him once it was taken; the true damage comes from "being wrong—not taking the loss". He revealed his preference for trading commodities (like cotton, wheat, and corn) over stocks, viewing it as more legitimate because success relies on the economic law of demand and supply, insulating him from unpredictable "inside cliques".

His core principle for timing a trade is the line of least resistance: prices will move in the direction that offers the least opposition, and the intelligent trader must patiently wait for this line to define itself. He warned that millions are lost by traders who buy stocks because they "look cheap" or sell because they "look dear," rather than waiting for the trend to confirm itself.

Livingston recounted his "first million-dollar mistake" when trading cotton, driven by impatience. Bullish on cotton, he grew tired of waiting in a "narrow market" (where prices move in a small range) and tried to "start" the move himself by repeatedly buying large amounts (50,000 bales). As soon as he stopped buying, the price settled back, an error that cost him about $200,000. This experience taught him the inviolable rule for narrow markets: wait until the price breaks through the limit in either direction, confirming the line of least resistance, before committing capital. He emphasized that the big money is made not through rash bets, but by having the "big bet down only when you win," which his methodical pyramiding system ensures.

CHAPTER 11: THE COTTON KING CROWN (EARLY 30s)

Returning to 1907, just as he was about to depart on his yacht cruise, Livingston was short ten million bushels of corn in Chicago, only to find the market had been cornered by a rival operator named Stratton. To cover his massive short position without pushing the price up against himself, he devised an intricate strategy. He put in orders to buy five hundred thousand bushels of corn every eighth of a cent down, and simultaneously sold two hundred thousand bushels of oats short through four different houses.

This sudden short selling of oats created the illusion that the powerful Armour interests were "gunning for Stratton," causing Chicago traders to panic and rush to sell their corn. This allowed Livingston to buy back six million bushels within ten minutes and cover his entire ten million bushels within one-half cent of the starting price, minimizing his loss to only $25,000 after covering the oats short (which cost $3,000).

Later, in 1908, Livingston became bullish on July cotton and accumulated a huge line of 140,000 bales, but faced the problem of how to unload such a massive position without "sacrificing the greater portion of [his] paper profits". The solution arrived by accident: a New York paper, The World, published a front-page story with the headline "JULY COTTON CORNERED BY LARRY LIVINGSTON". This article instantly created a massive, wild buying market, providing the volume he needed. Ten minutes after the market opened, he had unloaded every one of his 140,000 bales at top prices, receiving millions in profit and admitting the story gave him an "utterly unearned reputation" as the Cotton King. The ultimate lesson was that on a large scale, a trader must be ready to get out "when you can, not when you want to," as opportunities to liquidate a massive line are rare and must be seized instantly.

CHAPTER 12: FINANCIAL RUINATION (30s)

Shortly after his cotton coup, Livingston met legendary cotton speculator Percy Thomas, a brilliant and magnetic figure, who proposed a working alliance. Livingston initially refused, insisting he must "play a lone hand" and trade only on his own judgment. However, Thomas, who was extremely bullish on cotton, gradually convinced Livingston of his superior data and analysis. Livingston "ceased to do my own thinking" and, accepting Thomas's facts, covered his bearish position and went long on cotton.

This proved to be the "most asinine play of my career" and violated every one of his hard-earned rules. He sold profitable wheat (which later soared twenty cents a bushel) while holding and doubling down on losing cotton. Crucially, he bought more cotton to "keep the price from going down," which he recognized as a "supersucker play". He ultimately accumulated 440,000 bales before finally selling out, losing nearly all the millions he had made in previous years.

This colossal mistake taught him that a dangerous enemy to a speculator is his susceptibility to the urgings of a "magnetic personality" when persuasively expressed by a brilliant mind. Following this defeat, he was "not completely cleaned out" but suffered further loss when he tried to make the market pay for a specific sum of cash he urgently needed ($200,000), violating the rule that trying to make the market act as a "fairy godmother" is the "busiest and most persistent" hoodoo in Wall Street.

CHAPTER 13: THE MONEYLESS PERIOD (MID 30s)

After losing nearly everything and finding himself "once more broke, which was bad, and dead wrong in my trading, which was a sight worse," Livingston was also deeply in debt, sick, nervous, and unable to trade calmly. He concluded that his main trouble was worrying over the money he owed, which fundamentally inhibited his ability to trade successfully.

To free his mind, he made the painful decision to go through bankruptcy, though he assured his major creditors he would pay them back when he recovered. His largest creditors, many of whom were friends, understood his position and generously gave him releases on over a million dollars in debt, realizing it was "good business" to allow him to trade freely again.

During this period, Dan Williamson, partner in the prestigious firm Williamson & Brown and brother-in-law to railroad magnate Alvin Marquand, approached Livingston. Williamson gave Livingston $25,000 cash to open an account, explaining he wanted to use Livingston's reputation as a "plunger" as a "smoke screen" to cover the massive liquidating operations of his rich customers, particularly Marquand. Livingston quickly turned the $25,000 into a $112,000 profit but, feeling immense gratitude, he did not insist on repaying the stake, a decision he regretted more than any other mistake.

Livingston subsequently allowed Williamson to trade for him, often to mask the liquidation of Marquand's holdings, violating all his trading rules and costing him his profits and accumulating a debt of $150,000. He eventually realized he was being used as a "smoke screen" and that his "gratitude... interfere[d] with [his] play," costing him the opportunity to make millions in a thriving market. Williamson’s goal was later revealed: to neutralize the dangerously successful bear operator (Livingston) while liquidating the enormous estate of the powerful and soon-to-die Alvin Marquand.

CHAPTER 14: BANKRUPT (MID 30s)

After leaving Williamson's firm, Livingston endured "four mighty lean years" (1911–1914), a "moneyless period" where opportunities for profitable trading were scarce. During this time, he continued losing money by trying to "force the market" and accumulated over a million dollars in debt. Finally, recognizing that his financial troubles severely impaired his ability to trade rationally, he concluded he must go through bankruptcy to free his mind.

With the generous releases from his major creditors, his bankruptcy schedule amounted to only about one hundred thousand dollars. In February 1915, broke but debt-free, he approached Dan Williamson for a stake, but was only offered credit to carry 500 shares—far too small a line to allow him the necessary financial and psychological "leeway" to trade intelligently.

Recognizing this was his most critical period, Livingston made a plan: he must wait for the "exact psychological moment" to ensure his first trade was profitable. He refused to go near Williamson's office for six "strenuous and wearing" weeks, patiently watching the tape for his target stock, Bethlehem Steel, to cross par ($100). His long-held trading principle was that a stock crossing 100, 200, or 300 for the first time usually continues for 30 to 50 points.

When the stock reached 98, he was morally certain the move was imminent and bought his 500 shares, which quickly shot up to 114–115. This profitable first move gave him the stake he needed. He proceeded to trade successfully throughout the booming war market of 1915 and 1916, amassing millions. By early 1917, he paid off all his original creditors, including the over million dollars of debt he had been legally released from, proving his integrity and concluding his long comeback.

CHAPTER 15: A HORROR OF WHINERS (AGE 40)

After recovering his fortune, Livingston continued trading, but learned of a new speculative hazard: the "whining welsher" who uses external forces (like the government) to avoid honoring a losing trade. In 1917, he grew bullish on coffee, which was selling below pre-war prices due to a surplus, anticipating that German submarine warfare would reduce imports and drive the price up, making it an "investment" rather than a speculation. He initially lost money waiting nine months, but then trebled his position, confidently anticipating millions in profit.

The sellers of his contracts were German-affiliated roasters who had sold short and now faced ruin. These shorts rushed to Washington and appealed to the US Price Fixing Committee, claiming Livingston was running a "corner" and threatening the "American breakfaster". The committee, aiming to curb profiteering, set a maximum price for raw coffee and a time limit for closing out contracts, effectively destroying Livingston's position.

This committee ruling forced Livingston to sell out, costing him the anticipated millions in profit. He noted the profound irony: the committee protected the public from "profiteering before it started," even though all other commodities were selling far above pre-war levels, and the price was bound to rise due to genuine supply reduction from submarine warfare. This episode taught him a hard lesson about the "unexpectable"—the risk of losing money when both right and playing fair, due to opponents using external forces to avoid paying their losses. He concluded that his trading views were consistently accurate, but against such hazards, a trader is powerless.

PART III: STOCK OPERATOR: THE GAME OF SPECULATION

CHAPTER 16: THE PROBLEM WITH STOCK TIPS

Who Can Resist A Tip?

Livingston explores the universal human weakness for stock tips, explaining why even intelligent people cannot resist the allure of "inside information." He recounts several cautionary tales, including his wife's secret trade in a Borneo tin pool (where she lost money following a seemingly perfect tip), and the story of a man who received what appeared to be the "prize tip" of his collection—advance knowledge of a railroad merger—only to lose everything because the tip was genuine but his execution was terrible. Livingston explains the psychology of tip-taking: people want to make money without doing the work of independent analysis, and they mistake the source of information for the quality of the trade. He shares Old Baron Rothschild's famous recipe for wealth: "Buy cheap and sell dear," which sounds simple but requires the discipline that tip-takers lack. The chapter establishes that tips are dangerous not because they're always wrong, but because they short-circuit the rigorous thinking process that successful speculation demands. Even when a tip is correct, the tipster rarely tells you when to sell, leaving the recipient to make the most critical decision—the exit—entirely on his own.

CHAPTER 17: THE SCIENCE OF TRADING

No Black Cats, Just Basic Conditions

Livingston dismantles the mythology of trading "hunches" and superstitions, arguing that successful speculation is a science based on observation, experience, memory, and mathematics—not mysticism or lucky charms. He uses a detailed comparison of two stocks, U.S. Steel and Utah Copper, to demonstrate how group behavior patterns reveal the true character of a stock's movement. He explains that stocks don't move in isolation; they move in groups based on underlying business conditions, and the intelligent speculator must learn to read these group movements like a doctor reads symptoms. The chapter includes his famous insight about the wheat market, where he recognized that a strike of dock workers would prevent wheat from being shipped, creating artificial scarcity that would drive prices up—not because of a hunch, but because of logical deduction from observable facts. He also describes reading insider behavior in Guiana Gold, where the stock's peculiar tape action revealed that insiders were accumulating shares, signaling an impending move. This chapter establishes that what appears to be intuition is actually the subconscious processing of countless observations, and that the professional trader must train himself to recognize these patterns through disciplined study rather than relying on luck or supernatural guidance.

CHAPTER 18: CAPITALIZING KNOWLEDGE OF THE GAME

History Repeats Itself All The Time In Wall Street

Livingston recounts his experience trading Tropical Trading stock, demonstrating how the lessons learned in one market situation can be applied to entirely different circumstances. He describes TT as a volatile stock controlled by an inside coterie led by President Mulligan, who had perfected a method of encouraging bears to sell short and then squeezing them "with business-like thoroughness" and "no more vindictiveness than a hydraulic press—or no more squeamishness, either." While vacationing in Florida during a general market weakness, Livingston observed TT rising and decided to sell it short, anticipating a squeeze. The critical moment came when he was short 10,000 shares and suddenly recognized genuine insider support entering the market at 153. Rather than stubbornly holding his short position, he immediately covered and actually went long, following the line of least resistance. The stock soared above 200, and contrary to market rumors that he'd been squeezed out of millions, Livingston made money all the way up by reading the tape correctly and abandoning his bearish bias when the evidence changed. This chapter demonstrates his core principle: trade the condition you see, not the theory you believe. The title phrase—"History repeats itself all the time in Wall Street"—captures his fundamental insight that while stocks and circumstances change, the underlying patterns of human behavior and market mechanics remain constant.

CHAPTER 19: THE OLD MANIPULATORS AND THE HUMAN FACTORS

"His Touch Is Death!"

An old broker educates Livingston about the legendary manipulators who dominated Wall Street before his time, beginning with Jacob Little, the pioneer of short selling, and Daniel Drew, known as "the Old Man of the Street," who used his position as director of the Erie Railroad to manipulate its stock ruthlessly. But the most feared was Jay Gould, of whom Daniel Drew said with a shiver: "His touch is death!" The old broker explains that Gould was fundamentally different from other manipulators because he understood that the real money wasn't in rigging stock prices but in controlling the actual properties—the railroads themselves. Gould was a master of adaptation who "varied his methods of attack and defense without a pang" because he was more concerned with long-term control than short-term speculation. Livingston learns that Gould manipulated for investment rather than quick market turns, recognizing early that owning the railroads was more valuable than merely trading their securities. The chapter includes Livingston's observation that "vision without money means heartaches; with money, it means achievement; and that means power; and that means money; and that means achievement; and so on, over and over and over." These stories serve as Livingston's education in the history of his profession, showing him that the greatest operators weren't just clever traders but strategic thinkers who understood business fundamentals. The old broker's tales reveal a rougher, more blatant era of manipulation, providing context for understanding how the game has evolved—and how it remains fundamentally the same.

CHAPTER 20: THE GOAL OF MANIPULATION AND THE ROLE OF A STOCK OPERATOR

The Word Manipulation Has Come To Have An Ugly Sound

Livingston directly addresses the moral and practical dimensions of stock manipulation, arguing that the word itself has been unfairly demonized and "needs an alias." He explains that manipulation, when properly understood, is simply the professional process of creating marketability and distributing stock to the public—no different from any other form of merchandising. The chapter opens with Livingston asserting that he never spoke personally to the great manipulators like James R. Keene, "greatest of them all," but studied their methods carefully. He explains that modern manipulation must be based on sound trading principles because "the tape should tell the story the manipulator wishes its readers to see," and the truer that story, the more convincing and effective it will be. Livingston reveals the fundamental rule that Keene and his predecessors understood: "Stocks are manipulated to the highest point possible and then sold to the public on the way down." He describes how a syndicate or pool with a block of stock to sell will hire a professional manipulator just as they would hire a physician or engineer—seeking expert skill for a specific problem. The manipulator's job is not merely to push the price up but to develop genuine marketability, ensuring the stock can be bought or sold freely without violent fluctuations. Livingston emphasizes that he has no sympathy for speculators who blame manipulators for their losses, noting that these same people consider themselves clever when they win but cry "manipulation!" when they lose. The chapter is fundamentally about professionalizing and legitimizing what he does, arguing that skilled manipulation serves a genuine market function by creating liquidity and enabling efficient distribution of securities to the investing public.

CHAPTER 21: A BEAUTIFUL PIECE OF MANIPULATION

Unhonoured, Unsung, and Untipped

Livingston reveals the mechanics of professional stock manipulation through a detailed case study of his work with Imperial Steel, demonstrating the legitimate market-making function of a skilled operator. The chapter begins with his engagement by the original syndicate that controlled 70% of Imperial Steel, an unhyped but fundamentally sound company whose stock traded around $70 with minimal activity. His assignment: create genuine marketability for their holdings at higher prices. Refusing cash payment, Livingston instead accepted call options on 100,000 shares at prices from $70 to $100—ensuring his interests aligned perfectly with his clients.

After thorough investigation of the company's value, Livingston implemented a methodical campaign based on sound trading principles. He first protected himself by having the syndicate place their shares in trust, preventing them from dumping stock while he worked. He then began systematically absorbing all available stock at $70, which naturally revealed the "line of least resistance" was upward. As floor traders recognized this and began buying, he supplied their demand with the stock he had accumulated. When buying subsided and prices retreated, he repurchased shares at lower levels, establishing a rhythm of buying on weakness and selling on strength while always working higher.

The process created both steady price appreciation and, more importantly, genuine marketability—ensuring investors could always buy or sell reasonable amounts without violent price swings. After months of this controlled campaign, Imperial Steel reached $100 per share, having gained 30 points. Livingston had accumulated only 7,000 shares at an average price of $85, while creating a liquid market in which his 100,000 shares of options could be sold. Before completing his distribution, however, a prominent banking house decided to acquire control of the company, buying out Livingston's options for "an enormous profit" which he "instantly took," keeping several thousand shares as a long-term investment.

The chapter contrasts this textbook manipulation with the Petroleum Products fiasco, where promoter John Prentiss hired Livingston to manage a troubled stock pool. Despite Livingston's warning that the bull market was ending, Prentiss refused to allow liquidation of the pool's 100,000+ shares below par ($100), insisting instead on futile price support that ultimately resulted in much greater losses when they were finally forced to sell at much lower prices. This cautionary tale demonstrates that manipulation, no matter how skillful, cannot succeed against the primary market trend or overcome fundamental supply/demand imbalances. Livingston concludes by explaining how his reputation for successful trading naturally led to opportunities in stock manipulation, just as James R. Keene's earlier victories had made him the preferred operator for banking syndicates in earlier years.

CHAPTER 22: DON'T ARGUE WITH THE TAPE

The Consolidated Stove Syndicate

At the request of his friend and broker Jim Barnes, Livingston reluctantly agrees to help market a large block of Consolidated Stove stock that Barnes' firm was heavily involved with. The stock was created during the war boom through a consolidation of three well-known stove companies, promoted by Barnes' firm with financing from the "boy bankers" of the Marshall National Bank, who had loaned the syndicate $3.5 million against 100,000 shares of the new company. The promoters had made two critical errors: they launched the deal when the market was already saturated with new issues, and they underallotted the stock when it was oversubscribed by 25%—a strategic error that prevented them from having a natural short position to support the market.

As the bull market waned, the stock became waterlogged at 37 (maintained only by Barnes' desperate support), while the banks began demanding repayment of their loans. Livingston's analysis revealed an additional problem: three major players—Clifton P. Kane, ex-Senator Samuel Gordon, and the famous trader Joshua Wolff—collectively held another 200,000 shares they couldn't sell without collapsing the price. Livingston devised a creative solution, forming a syndicate with these holders where they would escrow their shares, give him a call option at 40, and raise $6 million in cash to support his market operations.

Before Livingston could begin his manipulation, a remarkable development occurred: Consolidated Stove began rising dramatically on heavy volume, climbing from 37 to 42 in just days. Taking advantage of this unexpected strength, Livingston sold 30,000 shares without depressing the price. He soon discovered the cause: Joshua Wolff had been aggressively tipping floor traders that Livingston was about to launch a massive bull campaign in the stock. This generated a buying frenzy as speculators nationwide rushed to get in ahead of Livingston's supposed accumulation. Recognizing this golden opportunity, Livingston continued selling, disposing of the entire 100,000 share bank position at favorable prices without having to spend a penny of the syndicate's money.

When the stock subsequently declined without Livingston's support, Wolff, Gordon, and Kane confronted him in anger—they had each bought additional shares expecting Livingston to drive the price higher. In a heated exchange with Wolff, Livingston exposed the trader's scheme: Wolff had planned to profit at Livingston's expense by buying ahead of him and selling into the strength Livingston was expected to create. Instead, Livingston had turned the tables by selling into the strength created by their own tips. Despite their bitterness, the three eventually returned and engaged Livingston to sell their pooled stock at 25½, which he accomplished by selling on the way down—the only viable strategy in a declining market. The chapter ends with the poignant discovery that Mrs. Livingston's dressmaker had lost money buying Consolidated Stove based on the widely circulated tips about Livingston's supposed bullishness, reinforcing his policy of never giving tips himself.

CHAPTER 23: STORIES WE TELL TO SELL

The Public Always Wants To Be Told, And The Public Always Pays

Livingston opens with the fundamental assertion that speculation will never disappear, nor should it—but warns that certain stock market practices remain "indefensible morally as well as commercially." While acknowledging improvements in market regulation since his early days, he identifies a particularly insidious threat to investors: the deliberate misinformation spread through financial media, often attributed to anonymous "insiders" or "prominent directors." These unnamed sources systematically manipulate public perception by remaining silent when accumulating stock and becoming voluble with optimistic projections when distributing it.

Livingston meticulously dissects the standard playbook used by corporate insiders: When business conditions improve, they quietly buy stock without any public statements. Once fully positioned, they suddenly become talkative, providing anonymous bullish comments to news agencies about the company's brilliant prospects. This manufactured enthusiasm drives public buying, allowing the insiders to distribute their holdings at inflated prices. Conversely, when business deteriorates, these same insiders sell silently while publicly attributing price declines to "bear raids" rather than fundamental problems.

He specifically debunks the myth of the bear raid, asserting that "I do not recall an instance when a bear raid caused a stock to decline extensively." Prolonged declines, he explains, invariably signal genuine problems with either the company or market conditions—never merely short-selling pressure. He cites the New Haven Railroad's collapse from $255 to $12 as a classic example where management blamed "reckless bear selling" while insiders themselves were liquidating their holdings ahead of the company's deterioration.

The chapter concludes with a pointed warning about accepting anonymous "explanations" designed to keep the public invested during declines. Livingston emphasizes that in bull markets, especially during booms, the public initially profits but ultimately loses by staying too long—often encouraged by manipulative narratives about bear raids and imminent squeezes that never materialize. His ultimate message is that investors should be deeply skeptical of market explanations that conveniently serve the interests of unnamed insiders who wish to dispose of their holdings at the public's expense.

CHAPTER 24: NO ASPHALT BOULEVARD

Livingston articulates his most mature philosophy about market operations, focusing on how the market discounts future conditions rather than present ones. He explains that today's stock prices reflect expectations about business conditions 6-9 months ahead—not current earnings—which is why broker recommendations based solely on present fundamentals are inherently flawed. This forward-looking nature of markets explains why stocks often decline while companies are still reporting record earnings, as the market has already begun anticipating deteriorating conditions months in advance.

The chapter offers a penetrating analysis of stock distribution tactics used by corporate insiders and manipulators. Livingston details how insiders collaborate with brokerage houses to distribute large blocks of stock, providing brokers with options and "puts" that guarantee them profits while they recommend the stock to their unsuspecting clients. He exposes the "grateful insider" scheme where corporate executives cultivate relationships with customer's men at brokerage firms by giving them shares at favorable prices, knowing these brokers will then enthusiastically recommend the stock to their clients, creating the liquidity needed for the insider to sell his larger holdings.

Livingston criticizes several industry practices he considers detrimental to investors, including the manipulation of capital structures through stock splits designed solely to make shares appear cheaper and more marketable to retail investors. He also highlights the legal imbalance that punishes bearish rumors while permitting bullish falsehoods to circulate freely, arguing that "if a law were passed that would punish bull liars as the law now punishes bear liars, the public would save millions."

The chapter concludes with Livingston's famous advice about reading the tape: when a stock rises steadily with only minor reactions, one should follow its upward trend; conversely, when it begins a gradual decline with only occasional small rallies, the line of least resistance has clearly changed to downward, requiring no elaborate explanation. This leads to his ultimate insight—there is "no asphalt boulevard to success in Wall Street," emphasizing that despite his decades of experience, he remains convinced that no one can consistently beat the market, though profits can be made on specific occasions when conditions align favorably.