Jesse Lauriston Livermore

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Jesse Lauriston Livermore (born July 26, 1877 in South Acton , Massachusetts , † November 28, 1940 ), also known as "Boy Plunger" was an American trader of the early 20th century. He gained fame after building and losing multi-million dollar fortunes during the stock market crashes of 1907 and 1929. His short selling strategy is also well known . Some consider him the most successful punter of all time.

overview

Jesse Livermore was born in South Acton, Massachusetts . He started trading at the age of fifteen. With his mother's blessing, he ran away from home to escape the farmer's life his father had intended for him. He began his first (and only) job at the local Paine Webber office in Boston , writing stock values ​​on the chalkboards.

As he worked, he wrote down some premonitions of future market prices to check for accuracy later. A friend convinced him to put money into his first trade. He risked $ 5 and made $ 3.15 in profit on his first trade in Burlington stocks. After this success he started trading himself.

By the age of 15, he had already made over $ 1,000 in profit (over $ 25,000 after inflation in 2017). For the next few years he made his money in the bucket shops . People made trades there, but no real trades were made - they were betting against the house. Most people, however, lost their money to the bucket shops because of fluctuations in stocks that wiped out their narrow profits. Livermore regularly hit the bucket shops and was eventually banned from them. Hence, from then on, he concentrated his energy in reputable markets. This change led him to come up with new rules to beat the market.

During his life, Livermore made and lost several multi-million dollar fortunes. Most notably, he still owned $ 3 million after the 1907 stock market crash and $ 100 million after the 1929 crash. However, he lost both fortunes. He never recovered from the losses of 1929. In addition to his success as a securities - speculator left Livermore traders his work philosophy: increase security positions when they go in the right direction, and cut losses quickly.

Ironically, at times Livermore did not fully follow its own rules. This lack of consistency was the main reason for his losses after building large fortunes in 1907 and 1929.

The well-known book Reminiscences of a Stock Operator by Edwin Lefevre mentions some of these valuable lessons. Livermore himself wrote a lesser-known book: How to trade in stocks; the Livermore formula for combining time element and price ( How to trade stocks: the Livermore formula for combining time and price ). It was published in 1940, the year Livermore committed suicide.

Success on Wall Street

Livermore became a successful trader from a young age. In his book, he says that even after his initial success as a 15 year old, his parents were against trading. They couldn't understand how someone who wasn't working could make such a large sum of money in a short period of time.

Livermore made its money by following the trend in market prices. He would choose a particular stock or item to buy or "short" it depending on its price and sales. Then he set relatively small starting positions. If they made him profit, he increased his stake - otherwise he sold them. This technique resulted in big wins and small losses. He also took advantage of the lingering market in critical positions. For example, in 1907 and 1929, when people were exuberant about the markets near the top, he started short selling .

His favorite book

One of his favorite books was " Extraordinary Popular Delusions and the Madness of Crowds, " by Charles Mackay , published in 1841. His close friend Bernard Baruch , also a successful stock trader, was also taken with the book. Baruch was one of the few people who survived the crash of 1929 well.

suicide

On Wednesday November 27, 1940, 63-year-old Livermore and his wife Harriet, whom he had called "Nina", were at the Stork Club , Livermore's favorite club. The house photographer came and asked if he could take a picture. "Of course you can," said Livermore. "But it's the last picture you'll take because tomorrow I'm going away for a long, long time."

The next day, November 28th, at noon he walked from his office in the Squibb Building at 745 Fifth Avenue to the Sherry Netherland Hotel, where he had lived for years before moving to Park Avenue. He often stopped by for a cocktail on his way home from work. At 12:30 p.m., he sat down alone for lunch, which was not unusual. At 2:30 am, he left the hotel and returned to his office. Shortly after 5 a.m., Livermore shot himself in the head in the men's bathroom. The police, who arrived shortly afterwards, read to the press a passage from a notebook found at Livermore, in which he apologized to his wife for the suicide. Livermore had bipolar disorder . His fortune at the time was over $ 5 million.

Books about Jesse Livermore

  • 1923 - The game of games. Follow the King of Speculation by Edwin Lefèvre , TM Börsenverlag AG, 14th edition 2013. ISBN 978-3-930851-04-1
  • 1923 - Reminiscences of a Stock Operator by Edwin Lefèvre (Livermore's best-selling biography) reissued several times, most recently in 1994. ISBN 0-471-05970-6
  • 1985 - Jesse Livermore - Speculator King by Paul Sarnoff. ISBN 0-934380-10-4
  • 2000 - Jesse Livermore. The story of the stock market legend. by Richard Smitten, TM Börsenverlag AG. ISBN 978-3-930851-50-8
  • 2001 - Jesse Livermore: The World's Greatest Stock Trader by Richard Smitten. ISBN 0-471-02326-4
  • 2001 - How To Trade In Stocks by Jesse Livermore. ISBN 0-934380-75-9 (first published 1940)
  • 2003 - Speculation as a Fine Art by Dickson G. Watts. ISBN 0-87034-056-5
  • 2004 - Trade Like Jesse Livermore by Richard Smitten. ISBN 0-471-65585-6
  • 2004 - Lessons from the Greatest Stock Traders of All Time , by John Boik
  • 2006 - How Legendary Traders Made Millions , by John Boik

Web links

credentials

  1. ^ Edwin Lefèvre: Reminiscences of a Stock Operator . 1923, p. 14 .
  2. ^ Edwin Lefèvre: Reminiscences of a Stock Operator . 1923, p. 12 .
  3. ^ Jesse Livermore - Trading in Bucket Shops. Retrieved May 5, 2020 .
  4. ^ Richard Smitten: Trade Like Jesse Livermore . October 21, 2004, p. 76 .
  5. ↑ Smitten, Richard .: The amazing life of Jesse Livermore, world's greatest stock trader: Wall Street legend, Greek tragedy life: secrets of Livermore's techniques and principles never before revealed! Traders Press, 1999 ( worldcat.org [accessed May 5, 2020]).
  6. ↑ Js: Option Wizard®: The tragic end of Jesse Livermore. In: Option Wizard®. November 7, 2017, accessed May 5, 2020 .
  7. ↑ Js: Option Wizard®: The tragic end of Jesse Livermore. In: Option Wizard®. November 7, 2017, accessed May 5, 2020 .
  8. ^ Richard Smitten: Jesse Livermore: The World's Greatest Stock Trader . September 14, 2001, p. 281 f .
  9. ↑ Js: Option Wizard®: The tragic end of Jesse Livermore. In: Option Wizard®. November 7, 2017, accessed May 5, 2020 .
  10. ↑ This day in history: Jesse Lauriston Livermore rockets to fame. In: FinanceFeeds. October 21, 2016. Retrieved May 23, 2020 (American English).
personal data
SURNAME Livermore, Jesse Lauriston
ALTERNATIVE NAMES Boy plunger
BRIEF DESCRIPTION American stockbroker
DATE OF BIRTH July 26, 1877
PLACE OF BIRTH South Acton , Massachusetts
DATE OF DEATH November 28, 1940