“I had a hard time convincing my mother that I was not gambling, but making money by figuring.”
Jesse Livermore started his star-crossed career as a 14 year old ‘chalk boy’ at Paine Webber. He wrote ever-changing stock prices up on a big board so Boston ‘investors’ could make their bets at what was called a ‘bucket shop.’ Our book deeply discusses bucket shops, but for now think they are basically what we call ‘day trading’ now.
By the time he was 16, we was making more speculating at the bucket shops than his job. He earned the nickname ‘The Boy Plunger.’ By the time he was 20, Livermore had piled up more than $10,000 profit and was banned from every bucket shop in Boston.
Jesse fascinated himself with how crowd mentality affected stock trading. He kept copious notes on market trends, news affecting the market and human nature. Some believe he might be the secret author, or at least the model for the narrator in the investing classic Reminiscences of a Stock Operator .
Career
Livermore bounced from New York to St; Louis, and back to New York, where in the 1900s he made a half million going long on Northern Pacific, a quarter million going short on Union Pacific and finally made a full million in one day when he was short before the Panic of 1907. His friend JP Morgan requested he stop selling short, and true to form he went long on and netted $3 million on the market rebound.
Then the giant pendulum of the stock universe swung against him as he declared bankruptcy twice in ten years. Relying on his sense of the public mass mentality he bet heavily against the market – $6 million short – in 1929. When the crash came, he was worth over $100 million. He now was called ‘The Great Bear of Wall Street,’ and many blamed him for the crash.
Suicide
In the 30s his mental health slipped and he eventually lost his entire fortune. In November of 1940 Jesse Livermore left his cocktail at the Sherry Netherlands Hotel in New York, went into the cloakroom and shot himself. His note to his wife said:
“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 appears as a suave trader in our new book “Speaker of the Street.“