Jesse Lauriston Livermore
Jesse Lauriston Livermore ( born July 26, 1877 in South Acton, Massachusetts, † November 28, 1940 ), also known as the " Boy Plunger " was a remarkable American trader of the early 20th century. He became famous when he built in 1907 and 1929 multi-million dollar fortune during the collapse of the stock market and lost. Also well known is his strategy of short selling. Some consider him the most successful punters of all time.
Overview
Jesse Livermore was born in South Acton, Massachusetts. With the trading began at the age of fifteen. With the blessing of his mother he ripped from home to escape the life of a farmer, who had provided his father for him. He began his first (and only ) work at the local Paine Webber office in Boston, where he wrote stocks on the chalkboards.
While working he wrote on some premonitions of future market prices in order to check for accuracy later. A friend convinced him to put money in his first trade. He risked $ 5 and made $ 3.15 profit with his first trade of Burlington shares. After this success he began even with the trading.
At the age of 15, he had already made a profit of over $ 1,000 ( in the early 1890s a lot of money ). In the next few years he made his money in the bucket shops. There, the people gave trades from, but there were no real trades executed - they were betting against the house. However, most people lost their money in the bucket shops because of the fluctuations in the stocks that wiped out their narrow gains. Livermore beat the bucket shops regularly and was eventually banished from them. Therefore, from then on he concentrated his energy into legitimate markets. This change led him to develop new rules to beat the market.
During his life, acquired and lost Livermore several multi-million fortune. Most notable is that he still had $ 3 million after the stock market crash in 1907 and after the crash of $ 100 million in 1929. However, he lost both his fortune. Of the losses of 1929, he never recovered. In addition to his success as a securities speculator Livermore left traders his work philosophy: increase security positions if they are going in the right direction and to limit losses quickly.
Ironically, followed Livermore its own rules sometimes not complete. This lack of consistency was the main reason for his losses after he had built in 1907 and 1929, large fortunes.
The well-known book Reminiscences of a Stock Operator by Edwin Lefevre mentions some of these valuable lessons. Livermore himself wrote a less well-known book: How to trade in stocks; the Livermore formula for combining time element and price ( How to Trade stocks: to combine the Livermore formula for time and price). It was published in 1940, the year in which Livermore committed suicide.
Success on Wall Street
Livermore was a successful trader at a young age. At 15 he had made with shares $ 1,000 profit ( an enormous sum at that time). In his book he says that his parents were against the trading even after his success. They could not understand how someone who is not working, could acquire such a large sum of money within a short time.
Livermore made his money by having followed the trend of market prices. He selected a particular stock or item you wish to buy it or to " shorten ", depending on its price and sales. Then he sat relatively small starting positions. When they brought him win, he increased his share - otherwise he sold them. This technique resulted in large gains and small losses. He also used the residence of the market at critical positions. For example, in 1907 and 1929, when people were exuberant because of the markets near the top, he began with short selling.
His favorite book
One of his favorite books was "Extraordinary Popular Delusions and the Madness of Crowds " by Charles Mackay, published 1841. Even his close friend Bernard Baruch, also a successful stock trader, was impressed by this book. Baruch was one of the few people who survived the crash of 1929.
Suicide
On 28 November 1940 he enters at 16:30 clock the Sherry -Netherland Hotel. After a few drinks he goes to 17:33 on the toilet, takes his 32er Colt and commits suicide. Livermore was 63 years old.
The police announced that a note on 8 small hand slips described in Livermore's notebook was found. It was reported in the New York Tribune on 30 November.
The press wanted to know what was on these notes. The police commented tersely: "We found a leather- bound notebook in Mr. Livermore's pocket. It was addressed to his wife, " a police spokesman quoted from the notebook ". My dear Nina: I can not. Things have been bad with me. I am made from fighting. I can not stand it any longer. This is the only way out. I'm your love is not worth it. I 'm a failure. It really sorry, but this is the only way out for me. Love, Laurie " ..
Remarkably, his fortune was at this time more than 5 million dollars. But he could not regain the confidence in his abilities. A lifetime history of clinical depression had become the dominant factor in his last years.