Jesse Lauriston Livermore July 26, — November 28, was an American investor and security analyst. Livermore was born in Shrewsbury, Massachusetts , and moved to Acton, Massachusetts , as a child. With his mother's blessing, Livermore ran away from home to escape a life of farming his father intended for him. He then began his career by posting stock quotes at the Paine Webber brokerage in Boston.
While working, he would write down certain calculations he had about future market prices, which he would check for accuracy later. A friend convinced him to put his first actual money on the market by making a bet at a bucket shop , a type of gambling establishment that took bets on stock prices but did not actually buy or sell the stock.
He was eventually banned from most bucket shops for winning too much money from them. He then moved to New York City and devoted his energies towards trading in legitimate markets. This change would lead him to devise a new set of rules to trade the market. During his lifetime, Livermore gained and lost several multimillion-dollar fortunes.
He sometimes played hunches, famously selling Union Pacific railroad short right before the San Francisco earthquake. Apart from his success as a securities speculator , Livermore left traders a working philosophy for trading securities that emphasizes increasing the size of one's position as it goes in the right direction and cutting losses quickly. Livermore sometimes did not follow his own rules strictly. He claimed that his lack of adherence to his own rules was the main reason for his losses after making his and fortunes.
Livermore first became famous after the Panic of when he sold the market short as it crashed. He noticed conditions where a lack of capital existed to buy stock. Accordingly, he predicted that there would be a sharp drop in prices when many speculators were simultaneously forced to sell by margin calls and a lack of credit. With the lack of capital, there would be no buyers in sight to absorb the sold stock, further driving down prices. He violated many of his key rules; he listened to another person's advice he preferred working alone and added to a losing position.
He continued losing money in the flat markets from — He proceeded to regain his fortune and repay his creditors during the World War I bull market , a period during which he was correctly bullish on stocks.
Livermore owned a series of mansions around the world, each fully staffed with servants, a fleet of limousines, and a steel-hulled yacht for trips to Europe. Livermore continued to make money in the bull markets of the s. In , he noticed market conditions similar to that of the market. He began shorting various stocks and adding to his positions, and they kept declining in price.
For unknown reasons, Livermore yet again lost much of his trading capital accumulated through Thus, on March 7, , the bankrupt Livermore was automatically suspended as a member of the Chicago Board of Trade. It was never disclosed to anyone what happened to the great fortune he had made in the crash of , but he had lost it all.
Perhaps the rule changes after the crash that made it harder to short stocks hurt his trading style. This was also a favorite book of Bernard Baruch , a stock trader and close friend of Livermore. He also was one of the few people who did well in the crash of Livermore was married three times and had two children. Less than a year later, he went broke after some reverses in his stock trading; for a new stake, he asked her to pawn the substantial collection of jewelry he had bought her, but she refused, permanently damaging their relationship.
They separated and finally divorced in October Livermore 3 April — 2 May . In , Dorothy Livermore filed for divorce and took up temporary residence in Reno, Nevada , with her new lover and later second husband James Walter Longcope. On September 16, , Dorothy divorced Livermore on grounds of desertion.
She retained custody of the couple's two sons. The two met in Vienna where Metz Noble was performing. Metz Noble was from a prominent Omaha family who made a fortune in breweries. Livermore was Metz Noble's third husband; her second husband, Arthur Warren Noble, committed suicide in after losing all his money in the Wall Street crash. Livermore would also commit suicide in Police found a suicide note of eight small handwritten pages in Livermore's personal, leather bound notebook.
Things have been bad with me. I am tired of fighting. 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.
In late , Livermore's son, Jesse Jr. This brought a flash of life back into Livermore, and the book was completed and published by Duell, Sloan and Pearce in March His methods were still new and controversial at the time, and they received mixed reviews from stock market gurus of the period.
There is some speculation that this partnership between the two men was not their first collaboration. Livermore himself wrote a less widely read book, How to trade in stocks; the Livermore formula for combining time element and price.
Suicide by ballistic trauma. All through time, people have basically acted and reacted the same way in the market as a result of: That is why the numerical formations and patterns recur on a constant basis. 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. Wikiquote has quotations related to:More...