Star Traders

Jesse Lauriston Livermore: The Great Bear of Wall Street


Jesse Livermore was born on July 26, 1877. He is one of the greatest traders who ever lived who lost and made millions of dollars while shorting the stock market in the early part of the 20th century.

The man who became later one of the American stock market legends has escaped from farming life in his early teens. He went to Boston and started trading for himself and by the age of fifteen, he made gains of over $1,000, which was big amount in those days.

At the age of 23 in October 1900, he married his first wife, Netit.  In 1901, he asked her to pawn the jewelry he had bought her to cover his trading after making huge losses but she refused and thus, they divorced in 1917.

After that, he married Dorthea Wendt and they had two sons. His third wife was Harriett Metz Noble.

Jesse Livermore had no formal education or stock trading experience. He learned from his winners as well as his losers. Livermore first became famous after the Panic of 1907 when he sold the market short as it crashed.

He gained and lost several multi-million dollar fortunes during his lifetime. He was worth $3 million and $100 million after the 1907.

Livermore left traders the most important philosophy that emphasizes increasing the size of one’s position as it goes in the right direction and cutting losses quickly.

He again lost much of his trading capital, accumulated through 1929. Therefore, on March 7, 1934, the bankrupt Livermore was automatically suspended as a member of the Chicago Board of Trade. Nobody knew what happened to the great fortune he had made in 1929, but he had lost it all.

His financial ups and downs finally ended tragically with his suicide death at the age of 63 but the most notable thing that, he and his third wife Harriet Metz Noble married without a honeymoon as it was her fifth marriage while her four husbands had committed suicide!!

His best quotes:

1) The stock market is never obvious. It is designed to fool most of the people, most of the time.

2) Play the market only when all factors are in your favor. No person can play the market all the time and win. There are times when you should be completely out of the market, for emotional as well as economic reasons.

3) Do not use the words “Bullish” or “Bearish.” These words fix a firm market-direction in the mind for an extended period of time. Instead, use “Upward Trend” and “Downward Trend” when asked the direction you think the market is headed. Simply say: “The line of least resistance is either upward or downward at this time.” Remember, don’t fight the tape!

4) The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor.

5) The only thing to do when a person is wrong is to be right, by ceasing to be wrong. Cut your losses quickly, without hesitation. Don’t waste time. When a stock moves below a mental-stop, sell it immediately.

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