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Market Lab Report - Dissecting Jesse Livermore's Century Mark Rule - Part 2

Published : April 20 2017 at 13:15 ET

Dissecting Jesse Livermore’s Century Mark Rule – Part 2

By Dr. Chris Kacher & Gil Morales, Managing Directors
MoKa Investors, LLC

Applying Jesse Livermore’s Century Mark Rule to today’s market environment likely requires more than just a rote application to any and every stock moving up through a double-zero round-number or century mark. If we consider the example of Anaconda Copper in Reminiscences of a Stock Operator, we might recognize the fact that the company likely played a big role in what was known as the “Second Industrial Revolution.”

This revolution, which is also referred to as the first “Technological Revolution,” saw the enormous expansion of rail and telegraph lines after 1870 through the introduction of electrical power and telephones. Copper was a key input for these new industries, particularly in the form of copper wire for electric generation systems and phone lines. It would therefore stand to reason that Anaconda Copper, as a producer of copper was positioned on the cutting edge of economic progress during its heyday.

In fact, the Anaconda Copper Mine was the largest copper-producing mine in the world from 1892 through 1903, and produced more than $300 billion worth of copper over that period. In 1899 the Amalgamated Copper Company, made up of two directors of Standard Oil Co. including William Rockefeller (brother of John D.) acquired a majority interest in Anaconda Copper Company.

Interestingly, John D. Rockefeller, the founder and Chairman of Standard Oil did not take part in the acquisition, as he didn’t care to be involved in what he saw as a stock-promotion operation. Copper eventually reached a “golden age” in the 1920’s, but by 1899 the stage was set for Anaconda Copper shares to take a leading role in the stock market of the early 1900’s.

There is no doubt that Anaconda Copper was a “big-stock” leader of its era. This was where the action was, and where the big money was trafficking. So, we might conclude that limiting our search for modern-day applications of Jesse Livermore’s Century Mark Rule to current big-stock leaders might improve the profitability of this rule, assuming that it is valid in the first place.

Now let’s look at some examples in Part 3 and beyond in this series of articles dissecting Livermore’s Century Mark Rule.


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