Trading & Options · Profile from Trading and Options Research Companion
Jesse Livermore
The Boston-born speculator (1877–1940) who learned to trade in the bucket shops of the 1890s, became the best-known stock and commodity operator in the United States as the "Boy Plunger", won and lost several fortunes — a short sale before the October 1907 panic, a wipe-out in cotton in 1908, bankruptcy in 1915, a ~$10m wheat campaign in 1924–25, a reputed bear fortune in 1929, a fourth bankruptcy in 1934 — wrote down his rules in How to Trade in Stocks (Duell, Sloan & Pearce, March 1940), and shot himself in a New York hotel cloakroom on 28 Nov 1940. His rules — trade with the trend, buy only on strength at "pivotal points", add to winners and never to losers, take half of profits off the table — read like a modern trend follower's manual (Turtle / Donchian breakout). His life is the book's standard case of a trader whose rules were better than his discipline. Almost every figure attached to him is lore: the most famous, "$100m" made shorting the 1929 crash, has no contemporaneous source found by this batch (rule 3), while the best-documented numbers come from Time magazine's contemporaneous reports (1924–40) and his own 1940 book. Reminiscences of a Stock Operator (Edwin Lefèvre, 1923), the source of most Livermore stories, is a fictionalised memoir about a character called Larry Livingston — not a record.
At a glance
- Born / died
- Born 26 Jul 1877, Shrewsbury, Massachusetts (Wikipedia); died 28 Nov 1940 (Thanksgiving Day), Sherry-Netherland hotel, Manhattan, by suicide with a pistol (Wikipedia citing NYT 2001 and Time, 9 Dec 1940; Time's obituary says a ".32-caliber automatic" was found at his feet)
- Type
- Individual trader (stocks, grain and cotton futures) and, briefly, a market operator who promoted stocks for pools and issuers (from memory and Reminiscences, verify); no firm of note — his "office" was a private trading room. This profile has six moves (rule 6 allows 5–7 for individuals): few of his decisions are documented outside his own book and a novel
- Markets
- NYSE stocks (railroads, steels, Piggly Wiggly, Mexican Petroleum), Chicago wheat, rye and corn futures, New York cotton futures
- Scale (dated, reported)
- "A cool million or so" from the 1907 panic short (Time, 9 Dec 1940); ~$3m after 1907 (Time, 19 Mar 1934); ~$10m from a 1924–25 wheat campaign (Time, 9 Dec 1940); "estimated at $20,000,000" at a peak in mid-1925 (Time, 1 Jun 1925, rumour); "approximately $100 million" after 1929 (Wikipedia citing Business Insider, 2015; ultimately Richard Smitten's biography — no contemporaneous source; weak)
- Failures (dated)
- Wiped out in cotton, 1908 (Time, 1940); first bankruptcy 1915 (Time, 1934; NYT 18 Feb 1915 per Wikipedia); fourth bankruptcy Mar 1934: liabilities $2,259,212.48, assets $184,900 "mostly life insurance" (Time, 19 Mar 1934) — Wikipedia, citing Forbes (1999), says the third, with $84,000 of assets and $2.5m of debts (conflict)
- Writings
- How to Trade in Stocks: The Livermore Formula for Combining Time Element and Price (Duell, Sloan & Pearce, New York, 1940; title page and copyright page checked); the subject (not the author) of Lefèvre's Reminiscences of a Stock Operator (1923)
- Regulators
- None in his heyday beyond exchange rules and state bucket-shop laws; the Securities Exchange Act of 1934 and the SEC's rules after 1934 changed his business (Time, 1940: by 1937 the market had become too regulated for his style)
- Signature moves (incl. failures)
- The bucket shops and the "Boy Plunger" (1892–1900); the 1907 panic short; cotton (1908) and bankruptcy (1915); the 1924–25 wheat pyramid; the 1929 crash and the "$100m" lore; the 1934 bankruptcy, the 1940 book and his death
6 strategic moves analysed
Each one gets a full strategy file in the companion: context, the decision, the financing, what happened, and the lesson.
1892
Bucket Shops and the Boy Plunger
Founding of a career / new strategy, product or market
1907
Panic Short
Large trade or position
1908
Cotton Losses and the 1915 Bankruptcy
Loss, drawdown or blow-up response / restructuring (bankruptcy) — failure
1924
Wheat Pyramid and the Rye Test
Large trade or position (pyramided long, then a short)
1929
Crash Short and the 100 Million Lore
Large trade or position (reported) / evidence problem
1940
How to Trade in Stocks and His Death
Restructuring (bankruptcy) / new product (book and advisory) / end of career — failure