The Legend of Jesse Livermore

The Legend of Jesse Livermore

Jesse Livermore (1877-1940) is no doubt a familiar name of Wall Street. Some called him the Boy Plunger, some crowned him as the Great Bear. Before he ended his own life with a bullet at the age of 63, he had made and lost multi-million profits not only once, but several times.

Livermore began humbly as an office boy who gambled at bucket shops. He developed an interest in speculation through keeping record of stock prices and anticipating future stock moves. Livermore’s trading philosophy has guided investors over the century and became some of the most influential concepts, e.g. trading at pivotal points, trend following and cashing out to lock in profits. He was also very concerned with the time element of trading, as he put it: “It never was my thinking that made the big money for me. It always was my sitting.”

When he followed the rules he set for himself, he did extremely well, notably winning $3 million and $100 million after the 1907 and 1929 market crashes. When he gave in to impatience and gut feeling, which he often did, he endured bankruptcy. There was a wrong cotton investment that he sat and repeated the losses for five times, just because of self-anger and that he wanted to prove himself capable.

Jesse Livermore’s famous quotes:

  • I learned early that there is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again. I’ve never forgotten that.
  • It is a human trait to be hopeful and equally so to be fearful, but when you inject hope and fear into the business of speculation, you are faced with a very formidable hazard.
  • Real movements do not end the day they start.
  • I never have been able to make a dollar outside of Wall Street. But I have lost many millions of dollars, which I had taken from Wall Street, “investing” in other ventures.
  • Why had I been afraid of losing something I never really had?
  • Livermore’s notebook:

    During his speculation career, Livermore kept pages and pages of record to study stock patterns. He encouraged investors to follow suit so that they can develop insight in market’s behavior and form ideas on when to buy and sell.

    Jesse Livermore Notebook

    Repetitive ups and downs can make even the most talented speculator tired. Livermore’s three marriages were also far from happy. Perhaps that was the reason he wrote his end note:
    “…Can’t help it. Things have been bad with me. I am tired of fighting. Can’t carry on any longer. This is the only way out. I am unworthy of your love. I am a failure. I am truly sorry, but this is the only way out for me.”

     

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