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Jesse Lauriston Livermore |
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 Jesse Lauriston Livermore
During the boom, he was lionized by the press, during the bust he was attacked and vilified. He was the Michael Milken of the 1920s with one big difference – Jesse Livermore was a richer. He was the stock market's single biggest titan. As a speculator pure and simple, he made more money than any living human being and just as pure and simply, in the mean years of the early 1930s, he lost every single penny.
The wealthy live well in any era, but to be as rich as Jesse Livermore, in a time of no income tax and the five cent cigar, defies imagination. He had a series of mansions around the world each fully staffed with servants, a fleet of limousines, and a steel-hulled yacht for trips to Europe because, as his daughter-in-law tells us, "Jesse never took public transportation."
Unlike the faceless corporate raiders of the nineties, he was a character. A curious mixture of New England Calvinist and lecher – he could recite the Bible and yet liked to cruise through Manhattan at night in one of his canary-yellow Rolls Royces, picking up girls to satisfy his considerable sexual appetite. His broker reported that, "When Livermore is speculating, he is thinking of screwing and when he is screwing he is thinking of speculating."
He built his fortune entirely on the risky business of short selling – he made money when the market went down. In an age of perpetual optimism, Livermore became the master manipulator of the subterranean depths of fear, with a touch approaching that of genius. He was an expert at sensing the nature and scope of mass hysteria, the threshold levels at which different men began to panic. When everyone else lost money in the crash of 1929, Livermore became still richer. One would have thought that the Depression would have made him even richer.
But in the 1930s, the rules of the stock market had changed. His trades would have to be public and his huge stock manipulations would no longer work under the glare of full disclosure. In 1934, two million dollars in debt, he declared bankruptcy. Several years later in 1940, in the washroom of the Sherry-Netherland Hotel, he took out his ever-present gold pencil and wrote in a notebook, "I am a failure, I am a failure, I am a failure." He then shot himself through the head.
There are photographs of him both as a handsome young "plunger" and a broken old man, one taken hours before his suicide. He is among the most colorful Americans of the 20th century century and yet his story, strangely relevant today, is not known except among Wall Street oldtimers.
Quotes
The following quotes are attributed to Jesse Lauriston Livermore:
- "In a bull market your game is to buy and hold until you believe that the bull market is near its end."
- "My dear boy," said old Partridge, in great distress "my dear boy, if I sold that stock now I'd lose my position; and then where would I be?"
- "It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!"
- "Men who can both be right and sit tight are uncommon."
- "The market does not beat them. They beat themselves, because though they have brains they cannot sit tight."
- "He really meant to tell them that the big money was not in the individual fluctuations but in the main movements that is, not in reading the tape but in sizing up the entire market and its trend."
- "Obviously the thing to do was to be bullish in a bull market and bearish in a bear market."
- "When your security is acting right, you can safely add to your line from then forward!"
- "When I buy stocks for a rise I like to pay top prices and when I sell I must sell low or not at all."
- "When this happens I sell the stock short that is, technically. In other words, I sell more stock than I actually hold."
- "Experience has proved to me that real money made in speculating has been in commitments in a stock or commodity showing a profit right from the start."
- "It is literally true that millions come easier to a trader after he knows how to trade, than hundreds did in the days of his ignorance."
- "If my stock does not act as I anticipated, I immediate determine that the time is not yet ripe – so I close out my commitment."
- "The price pattern reminds you that every movement of importance is but a repetition of similar price movements, that just as soon as you can familiarize yourself with the actions of the past, you will be able to anticipate and act correctly and profitably upon forthcoming movements."
- "From my point of view, the investors are the big gamblers. They make a bet, stay with it, and if all goes wrong, they lose it all."
- "A great many smashes by brilliant men can be traced directly to the swelled head — an expensive disease everywhere to everybody, but particularly in Wall Street to a speculator."
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