“My life is a failure”
Jesse Livermore is one of the great traders in history. His life was adapted into “Flashbacks of a Securities Operator” (1923). The book is rated as a must-read for all traders.
He is known as one of the investing geniuses, having tasted both glory and bitterness. A pioneer of day trading in the stock market, Livermore is known for shorting US stocks. His pioneering trading techniques are still being learned by Wall Street today and incorporated into quantitative trading.
A miserable childhood, I trained a genius
Born on July 26, 1877, Livermore’s parents were just two poor farmers in Massachusetts. As a child, he completed a 4-year school program at the age of 14 and went to work with his father in the fields. Not wanting to continue living a meager life, he left home to work as a reporter for a brokerage firm in Boston.
With just a few dollars in his pocket, Livermore landed a job as a blackboard copywriter at Payne Webber for a meager $6 a week. His job was to jot down numbers on the big blackboard as soon as he heard the price tag scream.
With an unforgettable talent and sensitivity to numbers, Livermore always kept in mind what he heard on Wall Street. He studied the materials he had. He was only 15 years old then.
Jesse Livermore became a price list writer for Paine Webber Securities.
Blackboard recording allowed Livermore to see firsthand what was happening in the stock market, how people received and exchanged information, and how they entered the market. He found that most people behave chaotically, do not follow certain rules and plans, and are not willing to study the stock market and its trends. So investing in the stock market only loses money.
Enter the market with just $5
After observing and researching for a long time, Livermore finally decided to enter the financial investment market.
Jesse Livermore used his price models to join “underground” exchanges. He and a friend put together $5 and bet this meager amount on the Chicago, Burlington, and Quincy Railroad. This bet earned him the first $3.12. In this way, young Livermore entered bets at many other casinos in Boston.
By the age of 20, Livermore had more than $10,000. Even at the age of 22, he was banned from all casinos in Boston. Realizing that it was no longer possible, he turned to Wall Street to find new investment directions.
Thanks to his ability to understand market sentiment, Livermore soon became one of the “old foxes” of the Wall Street market. His fortune sometimes reached hundreds of millions of dollars.
On October 24, 1907, the genius investor made $3 million in one day.
This success put his name on the list of the elite. At the peak of his career, he owned a huge fortune including many real estate, luxury cars, splendid yachts, and attended lavish and luxurious parties. To keep up with his expensive lifestyle, he continued to invest in stocks.
Livermore was at the peak of his career.
Up because of stocks, down because of stocks
Livermore went bankrupt three times. The first and second time was a mistake when investing in the cotton industry, but that time he was still strong enough to get up. He can even regain his form after only 6 weeks.
For the third time, he continued to invest in the cotton market after World War I. However, at that time, the US Department of Agriculture tried to block Livermore’s operations, causing him to fall into bankruptcy for the third time. During this time, Livermore’s life was extremely unstable. After the divorce, he lost 10 million dollars to divide the property to his second wife, the house worth 3.5 million dollars and many expensive jewelry also sold cheaply for 222,000 dollars. He later married his third wife, Harriet Metz.
The series of events caused Livermore’s spirit to completely collapse. He filed for bankruptcy for the third time. In 1934, he was also suspended from the Chicago Board of Trade.
But in this third time, he no longer had the strength to get up like the previous two times. As a result, he faced huge debt at the age of 60.
The last days of life are painful
Despite being bankrupt three times, Livermore still concluded: “Bankruptcy is the best teacher.” Success doesn’t teach you much, because success often has its own reasons. However, failure can teach you a lifelong lesson. As long as you don’t make the same mistake twice, you always have a chance to start over.
Due to being so rich and famous, Jesse became the target of all kinds of criticism. The media constantly criticized him, accusing him of being a short seller and trading against the market trend. Not only that, his pompous lifestyle also angered the public. Tragedy is pushed to the climax when his family falls apart one by one.
Because of public criticism, society and friends, and despair, Livermore was completely broken! He suffered from depression, and began to use alcohol to relieve his sadness. People often see the stock market genius once ragged, drunk, crazy appearing on the exchange. By 1934, he owed $2.26 million.
In November 1940, on a snowy day, the homeowner again came to Jesse to ask for rent. At that time, he drank a lot and went out of the apartment. Livermore wandered the streets, watching the luxury cars pass by, the dazzling array of merchandise in the shop windows, the beggars on the street.
On November 28, 1940, Livermore committed suicide in his room at the Sherry Netherland Hotel in Manhattan, at the age of 63. He died leaving an eight-page suicide note to his wife that read: “My life. was a mistake,” found in the leather-bound notebook.
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