Livermore is famous for making and losing several multimillion-dollar fortunes and short selling during the stock market crashes in 1907 and 1929.
Jesse Livermore ran away from home to escape a life of farming (workforce was primarily employed in agriculture even during the Industrial Revolution) and at the age of fourteen, he started his trading career.
Jesse Livermore would place bets on the market at a “bucket shop” a gambling establishment that took bets on the market but didn’t actually own the stock.
But Livermore had more than a gambler’s lucky streak. Within the first year, Livermore earned profits of over $1,000 ($26,700 in today’s money). Jesse Livermore was so good at betting where the market was heading that eventually he was banned from the bucket shop.
Livermore then headed for the bright lights of New York and started trading in the legitimate market.
By 1929 Jesse Livermore net worth was approximate $100 million (that is $1.39 billion) in today’s money.
But the fortunes he amassed in 1907 and 1929 were wiped out in a few big losses. Jesse Livermore didn’t follow his own trading rules.
After the crash and its aftermath, he was worth $3 million and lost 90% of that 1907 fortune on a cotton trade that went bad. He continued losing money in the flat markets from 1908–1912.
Jesse Livermore ended up with a $1 million in debt and was soon declared bankrupt.
“The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor” – Jesse Livermore.
But Jesse Livermore would soon meet the gambler’s hand of fate. On November 28, 1940, Livermore fatally shot himself in the cloakroom of the Sherry Netherland Hotel in Manhattan.
There was a suicide note of eight small handwritten pages in Livermore’s personal, leather-bound notebook addressed to his wife Harriet. The note read, “My dear Nina: 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. Love Laurie”.
Jesse Livermore’s life was truly a rags to riches story, back to rags again with an unhappy ending.
The fortunes he amassed in 1907 and 1929 were wiped out in a few big losses
No trading plan or if he did he would not stick to it. Jesse Livermore would tend to double down (double his stakes) on a losing trade instead of cutting his losses.
It is a very dangerous strategy with a typical end result of financial ruin. No matter how smart you think you are, eventually you are going to get it wrong.
It is like a game of Russian roulette if you keep pulling the trigger.
“I’m only rich because I know when I’m wrong,” George Soros (net worth of $24.9 billion).
The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor – Jesse Livermore
Jesse Livermore wrote a book entitled, “How To Trade In Stocks” published by Duell, Sloan and Pearce in March 1940. But the book did not sell well. World War II was underway, and the general interest in the stock market was low.
The only thing to do when a person is wrong is to be right, by ceasing to be wrong – Jesse Livermore
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