The splendors and miseries of “The Great Bear”

The life of Jesse Lauriston Livermore, born in 1877, has become a real manual of overcoming difficulties for many generations of traders. He began his journey to success with an escape from his father’s house, and later he became the unstated King of Wall Street.

His story strikes us with the constant, unquenchable thirst for success and his willingness to sacrifice everything to his goal. If you create an idol in trading, it’s Jesse Livermore.


From farmers to brokers

Jesse escaped from his hometown of Shrewsbury, Massachusetts at age of 14. Until then, he had mastered a three-year mathematics program for a year, but the only thing that was waiting for Livermore was work on a family farm. Naturally, such a prospect did not suit the future trading genius at all.

In Boston, where the young Livermore fled, he started working as a simple clerk at a semi-official exchange office. His duty was to record the stock data that came via telegraph, on a chalk blackboard.


First profit

Young Jesse immediately felt at ease in the world of speculation and transactions. As he openly said, from the very beginning he noticed certain patterns in trade. Livermore put his observations into practice during his lunch break in neighboring offices.

The first purchase of shares for $ 5 brought him a profit of $ 3.12. And at 15, Jesse earned his first thousand of dollars, which he gave to his mother without telling her how exactly he received the money.


The Conquest of New York

Having made a rather impressive capital by the age of 20, Livermore went to conquer New York. However, things didn’t develop as smoothly as he wanted. Working at a tiny securities office and trading on the stock exchange turned out to be completely different activities.

Jesse the Prodigy was losing money. And he lost a lot. Livermore’s bids for the deals were executed by brokers with a catastrophic time difference, which cost him, as a result, a loss of $ 50,000 ($ 1.5 million in modern dollars). When he was left with nothing, Jesse returned to Boston, where he began all over again.


Minutes of fame

However, in 1906 he triumphed in the world of trading. At first, pure intuition prompted him to get rid of the shares of Union Pacific.

Friends found him crazy, but a day later the whole world learned about the earthquake in San Francisco that took lives of thousands of people and brought down the West Coast market. This is how Livermore earned $ 250,000.

In October 1907, Jesse went all in again, feeling the debt-load of the main players. The Dow Jones index fell by 50%, and a delegation of New York industrialists and bankers came to Livermore with a request to stop selling, otherwise the stock market was going to collapse.

Jesse listened to them and started opening long positions on October 24. However, he managed to earn more than a million before that.


“Roaring Twenties”

His second bankruptcy followed immediately. Livermore went bust due to unsuccessful investments in cotton, or, more precisely, a betrayal of a friend. Famous cotton trader Teddy Price deceived his trust, deliberately giving Jesse advice that he himself did not follow.

Nevertheless, he celebrated the end of the 1920s with a successful sale of shares. The society was enjoying life listening to the sounds of foxtrot, everyone was dreaming of becoming a successful trader. Why work if you can just trade stocks? Jesse Livermore became the embodiment of the American dream.


The Great Depression

The collapse of the stock market in 1929, which marked the beginning of the Great Depression, not only brought Jessie a profit of $ 100 million ($ 1.5 billion in modern dollars), but also gave him a nickname “The Great Bear”.

By the way, until now there is an opinion that it was the massive sale of shares by Livermore that gave its start to the most terrible period in the economic history of the United States.

Further career Livermore was not so serene. He lost money more and more often, and at the same time he tried to keep his lavish lifestyle.

The trading genius was an honorable guest at all social parties and lived in the Sherry-Netherland, one of the best hotels in New York. Where, he finally declared himself bankrupt and committed suicide on November 28, 1940.


The Legacy of the Great Bear

The techniques developed by Jesse Lauriston Livermore are still relevant. He was the first one to describe the trade within trend channels, as well as the support and resistance levels.

Practical recommendations for traders can be found in his main book “How to trade in stocks”, published in 1940, and in Livermore’s biography “Reminiscences of a Stock Operator” written by Edwin Lefevre.

* * *

Despite all the setbacks, Jesse Livermore always followed his passion for success. The desire to be successful saved him from the hated fate of a common farmer and made him the “Great Bear” of Wall Street. And we can not doubt that even a hundred of years later the spirit of Livermore still accompanies the traders who are the most inquisitive and thirsty for success.

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