The Life & Death of Jesse Lauriston Livermore

If you are a stock trader and don’t know who Jesse Lauriston Livermore was you don’t know your stock market history. In short, no pun intended, Mr. Livermore was primarily known as a stock market short seller who short sold the market in 1929 amassing a fortune of around $100 million.

 

However, to truly understand the Boy Plunger, the nickname he was given for his ability to profit from falling prices, you have to understand day trading and the stock market era he lived in. It was the early 1900’s where stock analysis and trading didn’t see the likes of any of the conveniences we have today.

There was no TV, no computers and no Internet to make trading decisions. Jesse, the savvy stock trader he was becoming, used an old investing technique applied by day traders of his time to analyze the price and volume of a particular stock in order to execute trades: tape reading.

Through his techniques, Jesse Lauriston Livermore, made and lost 4 fortunes over his lifetime. And those successes and ultimate failures took him on a course that contributed to his decision to commit suicide.

This is a glimpse into the life and death of Jesse Lauriston Livermore: A man who we can all agree was gifted, unique and very very (un) lucky.

Jesse Lauriston Livermore – Early Years

Jesse Lauriston Livermore was born on July 26, 1877 in Shrewsbury, Massachusetts. At a young age, the family moved to Acton Massachusetts.

His family consisted of:

• Father – Hiram Brooks Livermore.
• Mother – Laura Esther Livermore.
• Sister – Mabel Loraine Blethen.
• Brother – Elliot Livermore.

During his youth Jesse was fascinated by numbers. He loved math, writing, reading, and various subjects school had introduced him to. However, Jesse’s father who was a strict man, intended for him to follow in his footsteps and become a farmer.

Jesse had other plans.

With his mother’s blessing and $5 she gave him, Jesse, ran away from home to begin his career in stock trading at the age of 14 years old.

Jesse Lauriston Livermore – Trading Begins

Jesse Livermore settled in Boston Massachusetts and started working in Paine Weber & Co in 1891. He was working at the offices transferring prices from ticker-tape to quotation board. While there, Jesse starts learning to read the tape and discovered that he could speculate at the many bucket shops (unauthorized office for speculating in stocks) around town.

His first trade was in Burlington stock making a total of $3.12 (equivalent to $80.77 today) and quickly accumulated a total of $1000.00 trading profits (equivalent to $25,889.25 today).

Jesse was hooked and pushed his luck even more and by 1893 he amassed a total of $10,000.00 (equivalent to $258,892.54 today).

Paine Weber & Co, not happy about what Jesse was doing, gave Mr. Livermore an ultimatum: either quit speculating in bucket shops or quit his job.

He quit his job.

Jesse Lauriston Livermore – New York City

Jesse moved to New York City to start trading on the NYSE with legitimate stockbrokers. Unfortunately, without the comfort of the bucket shops, he lost 3/4 of his fortune and was left with $2,500.

He continued and his losing streak completely wiped out his bankroll. However, he attributed his loses to slow execution of his trades. So, being the stock trader that he was, Jesse borrowed $500 and relocated to St. Louis to trade in virgin territory that didn’t know the successful bucket shop trading skill of Jesse Lauriston Livermore.

After a successful run, he returned to New York with $2,500, repaid his $500 loan and decided to trade on both the NYSE and the bucket shops.

On May 9th 1901, Jesse started the beginning of the trading day with $50,000. However, due to horrendous trading, Jesse ended the day completely broke.

Once again Jesse Livermore, without a dime to his name, returned to the bucket shop scene with a mission to make another fortune.

Through his bucket shop skill and trading he successfully accumulated enough money to buy an automobile and start a lifestyle that would even make the rich envious.

Jesse Lauriston Livermore – Highs & Lows (Pre 1929)

• Shorted stocks in 1906 on a hunch that the market would go down and made a profit of $250,000.
• Jesse lost $40,000 trading on a tip from a trusted friend named Ed Harding.
• On October 24, 1907, Jesse decided to short the stock market during a market panic and made his first $1 million.
• Shortly after he surpassed a million dollars he lost $200,000 trading cotton.
• In 1908 Jesse added to his losing position in cotton and sold his winning position in wheat and goes broke again.
• Jesse left to Chicago for a trading opportunity and then is asked back to NYC by Dan Williamson, owner of a trading house Stock Exchange, who gave him $25,000 to start trading again.
• 3 weeks later Jesse Livermore made a profit of $112,000.
• Jesse and Dan end their relationship after Williamson began trading on Livermore’s behalf and took substantial loses.
• In 1914 Jesse declared bankruptcy due to debts that exceeded over $1 million (equivalent to $24,452,400.00 today).
• With nowhere to turn Jesse Livermore asked Dan Williamson for help who offered him the facility to trade 500 shares.
• Needing to be perfect, after several months of successful trading, Jesse made a profit of $145,000.
• In 1917 Jesse is a multi millionaire again and paid back all his debts.
• He bought an $800,000 dollar annuity to protect his family with income should he ever go broke from the markets again.
• In 1922 Jesse Lauriston Livermore gave interviews to Edwin Lefèvre for a series of newspaper articles which would later be turned into the classic – Reminiscences of a Stock Operator.
• 2 years before the stock market crash, in 1927, two burglars broke into his home and held him and his wife at gunpoint.

Jesse Lauriston Livermore – The Stock Market Crash of 1929

During the 1920s, the stock market grew exponentially, reaching its top in August 1929. On October 29, 1929, known as Black Tuesday, 16 million shares are wiped out on the NYSE in a single day. Billions of dollars were lost, destroying thousands of investors except for Jesse Lauriston Livermore.

Jesse shorted the stock market during the great crash of 1929 and made a profit of around $100 million (equivalent to $1,429,964,912.28 today).

When Jesse Livermore’s wife Dorothy heard about the crash she told all their servants to move the furniture out of the house and into a small cottage on the estate. When Jesse got home he was surprised to walk into a totally vacant house. She told him she moved everything out because she was sure they had lost all their money. He proceed to ease her mind telling her he had made more money than he had ever made before.

Jesse Lauriston Livermore – Highs & Lows (Post 1929)

• In 1933 the police are called when Jesse Livermore didn’t come home.
• One day later he returned to his home feeling very weak and unsteady. He said he returned because he read a newspaper headline about his disappearance bringing him back to his senses.
• Jesse’s doctor told him he had an “amnesia nervous breakdown.”
• Unbeknownst to all, Jesse Livermore went bankrupt again and lost his entire trading fortune.
• He and his wife sailed to Europe using the family annuities he set up years earlier. He is quoted as saying, “I hope to relieve my mind of some of my troubles.”
• In 1939 Jesse Livermore wrote How to Trade in Stocks.
• It is published in 1940.
• Later that year In 1940, Jesse was reportedly suffering from clinical depression.

Jesse Lauriston Livermore – Death

On November 27, 1940 Jesse Livermore and his wife Harriet were at his favorite club: the Stork club in New York City. A photographer asked if he minded if he took his photo. Jesse replied, “not at all but it’s the last picture you’ll take because tomorrow I’m going away for a long long time.”  Harriet, naturally shocked, looked at Jesse. He smiled and said, “only a joke, darling, only a joke.”

24 hours later, on November 28, 1940 (aged 63) the famed stock speculator shot himself in the cloakroom of the Sherry Netherland Hotel in Manhattan. The Police discovered an 8 page handwritten suicide note in his personal leather bound notebook.

The suicide note that was addressed to “Nina,” his pet name for Harriet stated:

“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”

At the time of his death, Jesse Lauriston Livermore’s estate was valued at over $5 million (equivalent to $87,330,000.00 today).

Jesse Lauriston Livermore – Other Facts

• Jesse learned to read and write at 3 1/2.
• He was kicked out of several bucket shops for always winning.
• Jesse Livermore had 3 wives: Nettie Jordan, Dorothea “Dorothy” Wendt and Harriet (Nina) Metz Noble.
• He had 2 children with Dorothy: Jesse Livermore Jr. & Paul Livermore.
• Jesse was also know as the Boy Plunger and The Great Bear of Wall Street.
• When he had money he lived a lavish lifestyle similar to Hollywood’s biggest stars.
• Mr. Livermore once bought a $200,000 yacht.
• He smoked cigars.
• As his popularity grew in the media, people bought and sold stock based on his recommendations in the papers.
• His hobbies were fishing (favorite), hunting and playing golf.
• He was a womanizer.
• In 1935, Jesse’s wife Dorothy shot their son Jesse Livermore Jr. while in the middle of a drunken spat. He lived.
• Unfortunately, Jesse Lauriston Livermore went bankrupt 3 times in his lifetime.
• Jesse Livermore Jr. committed suicide in 1975.

Jesse Lauriston Livermore – Quotes & Trading Rules

“He really meant to tell them that the big money was not in the individual fluctuations but in the main movements that is, not in reading the tape but in sizing up the entire market and its trend.”

 

“After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this:  It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!”

 

“Experience has proved to me that real money made in speculating has been in commitments in a stock or commodity showing a profit right from the start.”

 

“It is literally true that millions come easier to a trader after he knows how to trade, than hundreds did in the days of his ignorance.”

 

“There is only one side to the stock market; and it is not the bull side or the bear side, but the right side”

 

“The market does not beat them. They beat themselves, because though they have brains they cannot sit tight.”

 

“The average man doesn’t wish to be told that it is a bull or a bear market. What he desires is to be told specifically which particular stock to buy or sell. He wants to get something for nothing. He does not wish to work. He doesn’t even wish to have to think.”

 

“I can’t sleep” answered the nervous one. “Why not?” asked the friend. “I am carrying so much cotton that I can’t sleep thinking about. It is wearing me out. What can I do?” “Sell down to the sleeping point”, answered the friend.

 

“I never hesitate to tell a man that I am bullish or bearish. But I do not tell people to buy or sell any particular stock. In a bear market all stocks go down and in a bull market they go up.”

 

“Big movements take time to develop.”

 

“I don’t know whether I make myself plain, but I never lose my temper over the stock market.  I never argue with the tape.  Getting sore at the market doesn’t get you anywhere.”

 

“Instead of hoping he must fear and instead of fearing he must hope. He must fear that his loss may develop into a much bigger loss, and hope that his profit may become a big profit.”

 

“Few people ever make money on tips. Beware of inside information. If there was easy money lying around, no one would be forcing it into your pocket.”

 

“The desire for constant action irrespective of underlying conditions is responsible for many losses on Wall Street even among the professionals, who feel that they must take home some money every day, as though they were working for regular wages.”

 

“One should never permit speculative ventures to run into investments.”

 

“Remember this: When you are doing nothing, those speculators who feel they must trade day in and day out, are laying the foundation for your next venture. You will reap benefits from their mistakes.”

 

“Never average losses.”

 

“If I buy stocks on Smith’s tip I must sell those same stocks on Smith’s tip.  I am depending on him.  Suppose Smith is away on a holiday when the selling time comes around?

 

“A man must believe in himself and his judgement if he expects to make a living at this game.  That is why I don’t believe in tips.”

 

“Losing money is the least of my troubles. A loss never troubles me after I take it. I forget it overnight. But being wrong – not taking the loss – that is what does the damage to the pocket book and to the soul.”trend.”

 

“A man must study general conditions, to seize them so as to be able to anticipate probabilities.”

 

“As long as a stock is acting right, and the market is right, do not be in a hurry to take profits.”

 

“I did precisely the wrong thing. The cotton showed me a loss and I kept it. The wheat showed me a profit and I sold it out. Of all the speculative blunders there are few greater than trying to average a losing game. Always sell what shows you a loss and keep what shows you a profit.”

 

“If you can’t sleep at night because of your stock market position, then you have gone too far. If this is the case, then sell your position down to the sleeping level.”

 

“A prudent speculator never argues with the tape.  Markets are never wrong, opinions often are.”

 

“Professional traders have always had some system or other based upon their experience and governed either by their attitude towards speculation or by their desires.”

 

“Don’t take action with a trade until the market, itself, confirms your opinion. Being a little late in a trade is insurance that your opinion is correct. In other words, don’t be an impatient trader.”

 

“Never sell a stock because it seems high-priced.”

 

“It is foolhardy to make a second trade, if your first trade shows you a loss. Never average losses. Let this thought be written indelibly upon your mind.”

 

“Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money.”

 

“People who look for easy money invariable pay for the privilege of proving conclusively that it cannot be found on this earth.”

 

“It is what people actually did in the stock market that counted – not what they said they were going to do.”

Jesse Lauriston Livermore – Further Reading

• Reminiscences of a Stock Operator Paperback –  by Edwin Lefèvre (Click here to check out a copy)
• Jesse Livermore – Boy Plunger: The Man Who Sold America Short in 1929  –  by Tom Rubython (Click here to check out a copy)
• How to Trade In Stocks –  by Jesse Livermore (Click here to check out a copy)
• Jesse Livermore: World’s Greatest Stock Trader –  by Richard Smitten (Click here to check out a copy)
• The Best Trading Lessons of Jesse Livermore –  by Frank Marshall (Click here to check out a copy)

Jesse Lauriston Livermore – Resources

• Wikipedia (2005, January, 13th). Jesse Lauriston Livermore [Blog Post]. Retrieved from URL: https://en.wikipedia.org/wiki/Jesse_Lauriston_Livermore
• Unkown (Unknown). The Trading Career of Jesse Livermore – Notable Events Jesse Livermore’s Timeline [Blog post]. Retrieved from https://jesse-livermore.com/jesse-livermore-timeline.html
• Hansen, Matthew. (2015, October, 27th). Hansen: Tale of Omaha’s ‘black widow’ is too tempting to not investigate [Blog post]. Retrieved from http://www.omaha.com/columnists/hansen/hansen-tale-of-omaha-s-black-widow-is-too-tempting/article_ef518d6f-cba2-5ed0-af4d-e855255e03ec.html
• Shen, Lucinda. (2015, July, 17th). Why Wall Street traders are obsessed with Jesse Livermore [Blog post]. Retrieved from http://www.businessinsider.com/the-life-of-jesse-livermore-2015-7/#jesse-livermore-was-born-in-1877-to-a-family-of-farmers-and-learned-to-read-and-write-by-the-time-he-was-3-12-1
• Catalano,Jai. (2015, May, 19th). 21 Trading Rules By Jesse Livermore [Blog post]. Retrieved from http://beyonddebt.net/trading-rules-by-jesse-livermore/
• Will. (2011, December, 11th). The Top 30 Quotes From Jesse Livermore On Trading And Investing [Blog post]. Retrieved from http://www.asxmarketwatch.com/2011/12/the-top-30-quotes-from-jesse-livermore-on-trading-and-investing/
• Lefèvre, Edwin. (1923). Reminiscences of a Stock Operator [Book]. Retrieved from https://archive.org/stream/JesseLivermoreReminiscencesOfAStockOperato/Jesse%20Livermore%20Reminiscences%20Of%20A%20Stock%20Operator#page/n0/mode/2up
• Albersheim’s (Unknown). Jesse Livermore Great Bear of Wall Street Last photo ever taken before suicide – original 1940 photo [Blog Post]. Retrieved from URL: http://www.albersheims.com/Jesse-Livermore-Great-Bear-of-Wall-Street-Last-photo-ever-taken-before-suicide—original-1940-photo-ITEM3760.aspx

This post was written with great care and respect for Jesse Lauriston Livermore. Everything above was fully researched and should be true, but it may not be entirely factual as the evidence and facts on the life of Jesse Livermore were not always well documented. Please know that the facts above are, to the best of my knowledge, accurate. Any discrepancies, inaccuracies or misprints that are discovered can be changed if you send me an email with proof of your facts here.

Disclosure:

Some of the links in this post are from my sponsors. I thought you should know because honesty is better then sugarcoated bullsh*t.