Jesse Lauriston Livermore (July 26, 1877 – November 28, 1940) was an American stock trader. He is considered a pioneer of day trading and was the basis for the main character of Reminiscences of a Stock Operator, a best-selling book by Edwin Lefèvre. At one time, Livermore was one of the richest people in the world; however, at the time of his suicide, he had liabilities greater than his assets.
In a time when accurate financial statements were rarely published, getting current stock quotes required a large operation, and market manipulation was rampant, Livermore used what is now known as technical analysis as the basis for his trades. His principles, including the effects of emotion on trading, continue to be studied.
Some of Livermore's trades, such as taking short positions before the 1906 San Francisco earthquake and just before the Wall Street crash of 1929, are legendary within investing circles. Some observers have regarded Livermore as the greatest trader who ever lived, but others have regarded his legacy as a cautionary tale about the risks of leverage to seek large gains rather than a strategy focused on smaller yet more consistent returns.
Early life
Livermore was born in Shrewsbury, Massachusetts, to a poverty-stricken family and moved to Acton, Massachusetts, as a child. Livermore learned to read and write at the age of three-and-a-half. At the age of 14, his father pulled him out of school to help with the farm; however, with his mother's blessing, Livermore ran away from home. at a bucket shop. A bucket shop did not buy or sell the stock, but instead took bets on whether a particular stock's prices would rise or fall. He brought $1,000 home to his mother to repay the $5 she had given him before running away, however she disapproved of his "gambling"; he countered that he was not gambling, but "speculating".
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Following the end of World War I, Livermore secretly cornered the market in cotton. It was only intervention by President Woodrow Wilson, prompted by a call from the United States Secretary of Agriculture, who asked him to the White House for a discussion that stopped his move. He agreed to sell back the cotton at break-even, thus preventing a troublesome rise in the price of cotton. When asked why he had cornered the cotton market, Livermore replied, "To see if I could, Mr. President."
His second divorce in 1932, the non-fatal shooting of his son by his wife in 1935, and a lawsuit from his Russian mistress led to a decline in his mental health, while the creation of the U.S. Securities and Exchange Commission in 1934 imposed new rules that affected his trading. Although it is unknown exactly how it happened,
In 1939, he opened a financial advisory business, selling a technical analysis system.
Marriages
Livermore was married three times and had two children. He married his first wife, Netit (Nettie) Jordan, of Indianapolis, at the age of 23 in October 1900. They had only known each other a few weeks before they got married. They finally divorced in October 1917.
On December 2, 1918, at the age of 40, Livermore married 22–23-year-old Dorothea (Dorothy) Fox Wendt, a former Ziegfeld girl in Ziegfeld Follies. The note was addressed to Livermore's wife, Harriet (whom Livermore nicknamed "Nina") and it read, "My dear Nina: Can't help it. Things have been bad with me. I am tired of fighting. Can't carry on any longer. This is the only way out. I am unworthy of your love. I am a failure. I am truly sorry, but this is the only way out for me. Love Laurie".