Journey of Jesse Livermore: Trading Genius and Financial Tragedy
Biography of Jesse Livermore:
IJesse Lauriston Livermore (born July 26, 1877) revolutionized stock trading, earning recognition as one of the earliest practitioners of what today is called day trading and technical analysis. He inspired the protagonist in Edwin Lefèvre’s famous Reminiscences of a Stock Operator. Throughout his life, Livermore’s methods and insights would cast a long shadow over the financial world.
Yet his story is not simply one of triumph. At his peak, he
was counted among the world’s wealthiest. When he died by suicide in late 1940,
his debts surpassed his assets—a stark reminder of how merciless markets can
become.
Battling the Odds of His Era
In Livermore’s time, access to timely financial data was
limited, and market manipulation was common. Undeterred, he leaned heavily on
reading price movements, volume, and trends—what modern traders call technical
analysis—rather than relying solely on fundamentals. His understanding of human
emotion—fear, hope, greed—became a core part of his strategy and left a lasting
legacy in behavioral finance.
Roots of Resilience
Born into poverty in Shrewsbury, Massachusetts, Livermore
later relocated with his family to Acton. He became literate by age 3½, and by
his early teens, his ambition was already clear. At 14, his father withdrew him
from school to help on the farm—so Livermore ran away (with his mother’s
blessing) to pursue something different.
The Bucket-Shop Years & Early Breakthroughs
In 1891, at just 14, Livermore began working as a “board
boy” at a Boston brokerage, copying stock quotes for a small wage. Soon he
began speculation via bucket shops—places where one could bet on stock price
movements without owning shares. His first small gamble on the Chicago,
Burlington & Quincy Railroad earned him a modest gain.
By age 16, he was earning far more through trading than his
brokerage job paid, and he quit to trade full-time. Between ages 18 and 20, he
turned a modest stake into $10,000—an astonishing return for that time. Repeated
success led bucket shops to ban him; even disguises and aliases couldn’t save
his participation.
Battling Restrictions, Seeking Bigger Markets
In 1898–1900, Livermore continued trading with Haight &
Freese, the last Boston bucket shop tolerating him—though profit margins
narrowed. At age 23 (September 1900), he moved to New York just as the equity
markets were booming. With $10,000 in capital, he famously turned it into
$50,000 in a matter of days.
Yet in May 1901, timing errors—and delayed data—wiped him
out. He borrowed a fresh stake and moved to trade anonymously in St. Louis.
Explosive Gains and Sudden Losses
In 1901, he invested in Northern Pacific Railway and
multiplied $10,000 into ~$500,000. In 1906, acting on a tip, he bet that Union
Pacific would decline—just before the San Francisco earthquake—and made
$250,000. Later he reversed into the stock and lost $40,000 after a persuasive
broker convinced him to exit.
Booms, Crashes & Market Mastery
During the Panic of 1907, Livermore made over $1 million in
a single day shorting the market. Heeding J.P. Morgan’s request to ease off, he
shifted tactics and later rode the recovery to a net worth of $3 million.
His extravagant lifestyle included a yacht, railcar, and an
Upper West Side Manhattan penthouse. In 1908, a trusted friend misled him on a
cotton play; he went bankrupt but clawed back his losses. In 1915, he filed for
bankruptcy for the second time.
After World War I, Livermore attempted to corner the cotton
market. President Woodrow Wilson stepped in, and Livermore wound down his
position at no profit to avoid disrupting prices.
Between 1924 and 1925, he manipulated grain markets—wheat
and corn—and squeezed Piggly Wiggly stock to generate $10 million.
The Great Crash & Downfall
In 1929, Livermore covertly built massive short positions
via over 100 brokers. Although initially down $6 million, when the Wall Street
Crash struck, he reportedly earned around $100 million. He became known as the
“Great Bear of Wall Street” and faced public vilification and death threats.
Personal life and legal issues compounded his stress:
divorce in 1932, his son shot by his second wife in 1935, and a lawsuit from a
mistress. The establishment of the U.S. Securities and Exchange Commission in
1934 further constrained his strategies, and he declared bankruptcy for the
third time that year with debts reported at $2.5 million and only $84,000 in
assets. He was suspended from the Chicago Board of Trade in March 1934.
By 1937, he had managed to pay off an $800,000 tax bill. In
1939, he launched a financial advisory venture, marketing a technical trading
system.
Journey of Jesse Livermore: Trading Genius and Financial Tragedy / Biography of Jesse Livermore#American stock trader#age#net worth#investor#strategi
The Man Behind the Trader
Livermore was an avid reader. One of his favorite works was Extraordinary
Popular Delusions and the Madness of Crowds by Charles Mackay—also beloved
by his friend, financier Bernard Baruch. He also enjoyed deep introspection and
studied behavioral patterns to manage his emotional biases.
He also loved fishing. In 1937, he reportedly caught a
monster 486-pound swordfish.
Marriages, Heartache & Family
First Marriage — Nettie Jordan (1900–1917)
At age 23, Livermore married Nettie Jordan after a short acquaintance. When he
lost all his wealth, he requested she pawn her jewelry to help, but she
declined—creating tension. They separated and eventually divorced in 1917.
Second Marriage — Dorothy (Dorothea) Fox Wendt
(1918–1931)
In December 1918, he wed Dorothy, a former Ziegfeld Follies performer. They had
two sons, Jesse Jr. and Paul. Their partnership suffered from financial excess,
Livermore’s infidelities, and Dorothy’s drinking. She filed for divorce in 1931
and remarried soon after, receiving a large settlement.
Third Marriage — Harriet Metz Noble (1933–1940)
On March 28, 1933, at age 56, Livermore married Harriet Metz Noble, a singer he
had met earlier in Vienna. Harriet came from a wealthy family, and this was her
fifth marriage.
His Literary Venture
In late 1939, influenced by his son Jesse Jr., Livermore
penned How to Trade in Stocks. Published in March 1940, the book
received lukewarm reception—overshadowed by the onset of World War II and
traders’ shifting priorities. His methods were controversial, and reviews were
mixed.
Meanwhile, Edwin Lefèvre’s Reminiscences of a Stock
Operator (1923) continues to be celebrated—and remains in print—as a
semi-fictional but deeply instructive chronicling of speculation and trader
psychology.
The Final Act & Lasting Legacy
On November 28, 1940 (Thanksgiving), after 5:30 pm, Jesse
Livermore ended his life with a Colt automatic pistol in a cloakroom at The
Sherry-Netherland hotel in New York City. In his leather-bound notebook, he
left an eight-page note to his wife Harriet (“Nina”), expressing exhaustion,
emotional pain, and the sense of being undeserving of love.
Though his life ended tragically, Livermore’s wisdom endures. His observations on market psychology, trend analysis, risk control, and emotional discipline remain foundational in modern trading education and behavioral finance.
