The following is a guest post by John Douglas, who enjoys intelligent discussions around writing and focuses on portfolio enhancement through options.

Final part in this wilding entertaining and informative 4-part series where through a strange time warp-or perhaps just a dream- the narrator is transported back to the early part of the twentieth century. He is charged with re-discovering the lessons of two of the country’s greatest legends, and revealing these lessons to a new set of traders and odds-makers. Part 1 Part 2 Part 3

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Chapter 8: A time to trade & a time to settle problems

One of the things that became imminently clear as I observed Livermore and Thompson thru the years is that problems and pitfalls followed them, shadow-like, and intruded from time to time. How they handled adversity is, in itself, a testament to guile, cunning and a steadfast belief in their own unique abilities. By Jesse’s own admission, the years 1911 – 1914 were lean years. He constantly complained that there was no money to be made. As he would later note, he tried to force the market to do something it simply wasn’t prepared to do. In fact, he became discouraged for the first time in his life and as he came to realize, he had let his obligations get out of control. In short order, he had racked up debts exceeding a million dollars-quite a sum in those days.

When I asked him how he came to terms with the situation, his reply was vintage Livermore.

“As I studied the problem I saw that it wasn’t a case that called for reading the tape but for reading my own self. I quite cold-bloodedly reached the conclusion that I would never be able to accomplish anything useful so long as I worried, and it was equally plain that I should be worried so long as I owed money. It all simmers down to this: I positively cannot be my old self while I’m harassed or upset by these debts. I have decided to do now what I should have done a year ago.”

When Jesse made the decision to file bankruptcy, he went to the creditors that had supported him. Most of his creditors, particularly the ones he owed the most to, expressed understanding, and an agreement to forego collection efforts. It was a handful of small creditors that created the problem. Jesse eventually paid all but the smaller creditors everything owed, plus interest.

Chapter 9: On being adequately capitalized

It’s a fact that most men over-estimate their ability in just about every conceivable endeavor. And, it’s equally true that a man, fortunate enough to possess some degree of proficiency in something, will be quick to press the advantage. It’s something so ingrained in the vast majority of men that it could be considered a universal law of nature. Once in a great while, though, appears a man that‘s not only blessed with exceptional skill, but happens to be the best that ever was.  There was such a man that strode atop the better part of the twentieth century, much as Caesar did, in his time, centuries ago.  His name was Titanic Thompson.

I’m not exactly sure how my next meeting with Titanic Thompson came to pass. Jesse had bought another yacht, and we were relaxing off the Florida coast. It seemed to me that Jesse wanted to be alone for a while, and I could sense that he was a bit weary with my persistent questions. He loved salt-water fishing. But, there was something else on his mind.

Again, I don’t know what happened, but I found myself in the dining room of some ritzy country club. It was a blazingly hot July day, and a table full of men were discussing why anyone-even the great Titanic Thompson, would be on the driving range, wearing a long-sleeve shirt, with temperatures soaring over 100 degrees.  After a fair amount of speculation, one man finally said “I have no idea why he’s on the driving range, hitting ball after ball, in a long-sleeve shirt-but I can tell you, with absolute certainty, that somebody, somewhere, is getting ready to lose a hell of a lot of money.” The men at the table all laughed and nodded in agreement.

I walked out of the club house, and headed for the practice area. Sure enough, I spotted Titanic Thompson, wearing a wide-brimmed hat, which totally shaded his face, and a long-sleeve dress shirt. He waved me over.

“I’ve been expecting you,” he said pleasantly. He continued hitting balls with a languid, easy motion. Thompson could move the ball right to left, left to right, low, high-it didn’t matter. The sound of the ball coming off the club-face never varied. If you just heard the sound, you would think someone was firing a rifle.

“He was trying to second-guess President Wilson,” Titanic stated. “That’s why Jesse seemed so pre-occupied.”

The puzzled look on my face was easy enough to read. “Jesse is trying to figure whether the German military leaders or Wilson will drive the market on stocks, wheat and cotton. He’ll miss the boat on cotton, but nail wheat and the market-so he ends up in great shape.”

“The guys in the grill think you’re getting ready for a high-stakes golf match. I happen to know that the great Ben Hogan won’t play you for money. Who in their right mind would play against you,” I asked.

“Well, you know I would never play Hogan for money. It would garner too much publicity. That’s not good for business. I rely on the guy with the out-sized corporate ego. That guy will come close to beating me, and that’s what he’ll tell his friends. Of course, I’ll tell him that I don’t want to play him again, ‘cause I was lucky to get out alive. Well, I can almost tell the day of the week, and the time of day that he’ll call me back. He’s had time to take a couple of lessons, and think about how close he came to beating me. There’ll come a day, though, when he’s lost so much money, that I’ll offer him a sure thing. I’ll let him double the bet, and he can make me play with any set of clubs that he wants. Naturally, he’ll pick up a set of left-handed clubs, not knowing that I’m just as good from the left side-maybe a stroke or two better.”

Of course, I already knew that Titanic Thompson would later play the infamous match of the decade in the 1930’s. This was the celebrated match between one of the great touring pros of the era, Byron Nelson, and Titanic Thompson. It was played at a club outside Dallas, Texas, and to this day, remains legendary. Nelson led Thompson on the front side, but Thompson shot 29 on the back, and broke the course record with a 64-winning the match. Byron Nelson went on to become a golfing legend, establishing a winning streak of eleven straight victories. That record stands today, and is widely considered to be a record that will stand the test of time.

Jumping forward to the 1950’s, there is another memorable golf event, involving Titanic Thompson, that’s worth recounting. Titanic had just read an article, which appeared in the Dallas Morning News. The sports writer had proclaimed that a certain NCAA collegiate golf team possessed the best college players in history. The writer had closed his article by stating that the team was so talented that it would remain unmatched in collegiate golf history.

I noted early that Titanic could generally be found relaxing in one of the country’s swank clubhouses-that is, if he wasn’t “working.”  Actually, he was working. He had slowly amassed the sum of several thousand dollars in a high-stakes poker game, which, as usual, had been going on all night. As some of the participants dropped out, the players took a break. They began to talk about college golf. I could tell that the newspaper article had created the basis for the next opportunity.

“Hey Ace. How much in advance do you have to book one of those big party buses that you regularly lease for football games in the fall? Titanic directed the question to Ace Darnell, the owner of the establishment, and one of Titanic’s long-time acquaintances.

Darnell quickly replied that he could have one sent over immediately, if Titanic wanted it badly enough. I watched as Titanic sat motionless for a brief moment, and then he loudly cleared his throat.

“I really don’t know much about college golf, but I know not many of them make it on tour. That doesn’t mean they aren’t talented, but I suspect their popularity and the assessment of their game is hinged more on their college alumni support than actual abilities. I’m about to either make a fool out of myself or I’m about to make my point. Tell ya what my proposition is: if all of ya’ll will rent the bus, and if Ace will set up the match-the time, the home course of the team, and with, of course, the coach’s permission. I’d like to play their three best players-head’s up; my ball against their best ball of the threesome for 18 holes on their course-sight unseen to me before the day of the match. Now here’s the kicker. I’ll entertain a maximum of 50 bets for $1,000 each, but for every $1,000 bet on the four-ball bet-my ball against the other three- every bettor has also got to bet on two out of the three of my opponents against me-you can choose any of the two, but you have to designate the two before the match begins. I’ll have a total of 100,000 bucks riding on my own ball. We’ll play it from the tips-the very back tees for all you non-conforming golf addicts-and we’ll play the ball flat-just like they play their little tournaments, but, we’re going to be playing match play…Do I have any takers, or are you all of the same mindset as me as to how college golf can stand up to an old hustler like me?”


Previous Posts from this Series:

One Night, One Lifetime With Two Legends…

Legends and Masters in the Game of Speculation

Traits of Livermore That Fueled His Success


One Response to “On Capitalization, Golf in Relation to Speculation”

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