The Second Gilded Age

Huge advances in computing power, artificial intelligence, machine learning and gene editing … are combining with a vast increase in network effects as more of the world comes online … to create a moment in time that looks ready to explode in creativity and entrepreneurship.

This crossroads of genius and opportunity will open up the potential for wealth building like no other in American history since perhaps the 1880s-1920s. That was a stretch when most of what we consider to be modern life was born: railroads, electricity, telephones, the automobile, the airplane, antibiotics, the efficient factory, radio, movies and mass marketing.

Mark Twain called that period The Gilded Age as sort of a mild put-down in part because of the distance it put between capital and labor, or between the wealthy and the working class. But that era laid the ground work for the incredible success of the middle class by the middle of the 20th Century and beyond.

Our Pivotal Point research is custom-built to help you take advantage of this Second Gilded Age as developments in science, technology, culture, industry, finance and social organization unfold.

Our goal is leverage lessons of the past to devise the best wealth-generating platforms you have ever witnessed or experienced, and also one of the most straightforward and single-minded.

We chose the Gilded Age as our guide for Pivotal Point because we believe the coming stretch of Wall Street history will more resemble the zigs and zags of that era than any other.  That was a period of so many booms and busts that it was difficult for independent investors to compete with the likes of Livermore, who knew that markets were always trying to trick people.

Livermore is known today because his life story was featured in one of the best books ever written about the markets, “Reminiscences of a Stock Operator.” Written in the first person by financial journalist Edwin Lefevre and published in 1923 about events of the prior two decades, the book on the surface appears to be  a historical novel recounting the life and times of fictional protagonist Larry Livingston.  Yet “Reminiscences” — for which I created an annotated edition in 2009 — defies many of the conventions of the genre, as it lacks much of a story arc, the emotional development of other characters, a climax, a denouement, or, for that matter, much of a conclusion.

What the book lacks in typical plot points it makes up in psychological depth as Lefevre uses the Livingston character to probe the collective mind-set of all the Gilded Age investors like Livermore he had witnessed and interviewed over the years.
Channeling the voice of Livermore, the author reaches out through time to remind us, with the panache of an artful storyteller rather than with the scolding finger of a professor, that there never is anything new on Wall Street, because speculation is as old as the hills; that in a bull market you must trade with the bulls, while in a bear market you must trade with the bears; that anticipation and fast reaction are the trader’s key assets; that you should never argue with the tape; that you do not know until you bet; that the game teaches you the game; and much more.

The book is often mentioned by billionaire traders today as their bible, or the work that inspired them to go into the investment business, so it is worth noting that the sentiment would most likely dismay Lefevre, as well as Livermore. This is because it certainly appears that they both meant Reminiscences to be as much a cautionary tale as an instruction manual.

The character Livingston laments numerous times that no man can consistently beat the stock market and that human nature condemns virtually everyone to being a sucker. And yet he recognizes that they must keep trying because it is one of the greatest wealth building platforms ever invented. And he argues that people can build permanent, not transitory, wealth by carefully focusing on pivotal points in individual stocks and broad market trends.

Livermore himself ultimately fell victim to the game, as he was never able to adapt his methods to restrictions put in place by the securities regulators in the 1930s. The trader made a fortune by being short stocks in the panic of 1907 and in the 1929 crash — at his peak owning mansions, limousines and yachts. But he was plagued with depression and ultimately blunted his brilliance with bad plays.

Knowing that Livermore’s life slipped into darkness 20 years after the publication of “Reminiscences” should nevertheless not detract from the genius he articulated so elegantly in its prime. The book has lasted because Livermore’s wisdom is timeless, and we look forward to building on that brilliance as the Second Gilded Age emerges and evolves in coming years.