A vital stock dealer in the early 1900s was Jesse L. Livermore. Even though he didn’t go to school, he started working when he was 14. Livermore is a Wall Street hero who inspired many generations of stock and commodity traders.

He wrote the books How to Trade Stocks, My Life on Wall Street, and How I Made Three Fortunes in the Stock Market.

On November 28, 1940, Jesse L. Livermore killed himself.

Early Years and School

July 26, 1877, saw the birth of Jesse L. Livermore in Shrewsbury, Massachusetts. Livermore only went to primary school because he grew up poor.

He joined Paine Webber & Co. in Boston when he was 14. Livermore wrote down share prices from stock exchange ticker tapes on a blackboard when he was a board boy.

The Trader of Stocks

Tom Rubython writes in his 1929 book Jesse Livermore Boy Plunger: The Man Who Sold America Short that Livermore was the person who both made and lost the most money in a single day. It was 1900–1940, and Jesse Livermore made and lost three lots of money. Livermore bought and held on to stocks during bull markets and sold them when the market changed direction. His plan seems very strange when you think that businesses don’t release financial data or do core studies.

Livermore made $3.12 on his first trade when he was 15. He quit his job at Paine Webber & Co. when he was 16 and started dealing independently. People often made deals at bucket shops at that time, where they bet on stock prices and often used a lot of leverage. When Livermore’s constant success kicked him out of Boston’s bucket shops, he went to New York City.

The Wall Street Bear

Wall Street analysts praised Jesse L. Livermore for his ability to identify market drops, which earned him the nickname “the Bear of Wall Street.”He made two well-known deals during the Panic of 1907 and the beginning of the Great Depression.

In 1906, as a market bubble grew, Livermore stuck to the long-term trend until his gut told him not to. In a famous deal, Livermore sold short Union Pacific stock. Two days later, when an earthquake hit San Francisco, he made $300,000. In 1907, the market crashed, and Livermore did what J.P. Morgan told him to do: he bought while others sold. Traders did the same thing, and Livermore is credited with helping the market return quickly.

Like many people in 1929, Livermore had a lot of money in the stock market. He watched for the first signs of a slowdown because he knew another market bubble was coming. Livermore got out of his long positions by initiating several small trades that involved short bets. In the process, he lost almost $250,000. But Livermore kept building a short position. On Black Tuesday, October 29, 1929, Livermore allegedly made $100 million on his Great Depression short.

Reports say that Livermore’s top income level is equal to $1.5 billion today. Before the creation of the Securities and Exchange Commission (SEC) in 1934, Livermore could trade without any restrictions. This was the start of the end for him. Livermore had lost all of its money by 1940.

Who Did Jesse L. Livermore Have an Effect On?

The founder of “Investor’s Business Daily,” William J. O’Neil, said of Livermore’s experiences in the book “Reminiscences of a Stock Operator”: “In my 45 years in this business, I have only found 10 or 12 books that were of any real value, and Reminiscences is one of them.” Today, many people in the market know Jesse Livermore from a fake Twitter account with the same name, where people talk about and give advice on his tactics.

What effect did the White House have on Jesse L. Livermore’s business?

When there were no rules on the market after World War I, Livermore had a monopoly on the cotton business. He used intermediaries worldwide to buy cotton; in 18 months, he owned most of the cotton in the U.S. To protect the U.S. economy, President Woodrow Wilson asked Livermore to sell his prominent position, which he did.

What effect did J.P. Morgan have on Jesse L. Livermore?

Because he was short on stocks, Livermore made $1 million in one day during the panic of 1907. Livermore closed his short positions when the famous banker J.P. Morgan told him to do so for the country’s sake. After the market went up, Livermore would make an extra $3 million.

In Short

Investors can still learn from Jesse L. Livermore’s story of how he went from being a board boy to a Wall Street hero. His life is a record of how people traded stocks without rules in the early 1900s.

Conclusion

• For many years in the early 1900s, Jesse L. Livermore was a famous stock dealer.
• When he was 14, he worked for Paine Webber & Co.
• Edwin Lefevre’s book Reminiscences of a Stock Operator tells the story of Livermore’s life.