Jesse Livermore: The Bear Of Wall Street via Charles R. Morris, The Wall Street Journal
In the 1920s, Jesse Livermore may have been the most famous bear on Wall Street. Because he had started young and more than once wagered his entire capital, he was known as the “Boy Plunger.” He was an early technical analyst, with complex theories about “pivot points” in markets. He made out very well in the long economic boom of the 1920s. By mid-1929 he had some $15 million in capital, and all of his indicators were screaming “sell!” Following his trading formulas, he began to probe for pivot points, using dozens of brokers to conceal his intentions. By September his probes had cost him $6 million. But he stuck to his strategy, and when “Black Monday” and “Black Tuesday” hit in late October, he had short positions worth $450 million.
Trading adroitly into and out of the collapse, he amassed a cash pile of more than $100 million, making him one of the richest men in the world. In “Jesse Livermore: Boy Plunger,” Tom Rubython recounts the life of this remarkable investor, whose market odyssey careened between episodes of near destitution and top-of-the-world gaudy excess.
Jesse Livermore was born in 1877 on a hard-scrabble farm about 40 miles from Boston. He was frail as a child but confident and was considered a math prodigy. When he was 14, he absconded from the farm to Boston. His first stop was at Paine Webber, a pioneer in retail stock brokerage. After demonstrating his math skills, Jesse became a board boy, posting trades and prices on big chalkboards. It was the first time he had seen a ticker tape.............
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Jesse Livermore - Boy Plunger: Description
Livermore went bankrupt for at least the fourth time in 1934. Despite having amassed a fortune of $100 million by1929, Livermore was back where he started at 16. He did not seem to learn from his mistakes." - Victor Niederhoffer
"That was the call of a lifetime, everyone was blind and deep into the crisis and Jesse Livermore made $100 million going short when almost everyone else was bullish and then almost everyone else lost their shirts." - John Paulson
"His stories of making millions, were the financial equivalent of “sex, drugs and rock ‘n roll” to a young man at the advent of his financial career." - Paul Tudor Jones
"It was an amazing day on 24th October 1929 when Jesse came home and his wife thought they were ruined and instead he had the second best trading day of anyone in history." - John Templeton
Who was Jesse Livermore?
Jesse Livermore, was the most successful stock and commodities trader that ever operated on the stock markets. He was both the man who made the most money in a single day and the man who lost the most money in a single day. In fact he made and lost three great fortunes between 1900 and 1940.
Singlehandedly he caused the two great Wall Street crashes of 1907 and 1929, making millions from both. When he speculated he speculated big and was known on Wall Street as the Boy Plunger. For a brief period in the early 1930s he was one of the world’s richest men with a personal fortune believed to be worth over $150 million, $100 million of that earned in just a few days from the Wall Street crash of 1929. In the end it was too extreme a change of fortunes for any man to cope with and Livermore shot himself in a New York hotel lobby in 1940 aged just 63. His legacy continued and his son, Jesse jr later also committed suicide as did his grandson, Jesse III.
In the summer of 1929 most people believed that the stock market would continue to rise forever. Wall Street was enjoying a eight-year winning run that had seen the Dow Jones increase 1,000 per cent from the start of the decade - an unprecedented rise. The Dow peaked at 381 on 3rd September and later that day the most respected economist of the day, Irving Fisher, declared that the rise was “permanent”. One man vigorously disagreed and sold $300 million worth of shares short. Two weeks later the market began falling and rising again on successive days for no apparent reason. This situation endured for a month until what became famously known as the three ‘black’ days: On Black Thursday 24th October the Dow fell 11% at the opening bell, prompting absolute chaos. The fall was stalled when leading financiers of the day clubbed together to buy huge quantities of shares. But it was short-lived succor and over that weekend blanket negative newspaper commentary caused the second of the ‘black’ days on Black Monday 26th October when the market dropped another 13%. The third ‘black’ day, Black Tuesday 29th October saw the market drop a further 12%. When the dust had settled, between the 24th and 29th October, Wall Street had lost $30 billion. Only much later did it became known that the man who had sold short $300 million worth of shares was Jesse Livermore. Livermore had made $100 million and overnight became one of the richest men in the world. It remains, adjusted for inflation, the most money ever made by any individual in a period of seven days. This is the story of that man.