Wall Street never changes; speculators change, stocks change, wallets change, but Wall Street never changes because human nature never changes.
The market always has only one direction, and it is neither the bullish nor bearish direction but the right direction.
"In 1907, he accurately predicted the stock market crash, earning $3 million in one day. Financial magnate J.P. Morgan sent an envoy to beg him to stop short-selling to save the market, and he graciously agreed. In 1921, during an economic downturn and stock market depression, he went long. In 1929, he again accurately shorted the market before the great crash, earning $100 million and reaching his peak."
He was the king of speculation, Jesse Livermore, a milestone legend of Wall Street.
Today, we will revisit the life of Jesse Livermore, including what you already know and what you may not.
Jesse Livermore's Life
Started with a weekly salary of $5
Jesse Livermore was born in 1877 in the United States, to farmer parents. As the youngest of three children, Jesse was not favored by his father, but his mother loved him dearly and aimed to teach him the best things in life.
Fortunately, Jesse was a quick learner. By the age of 3 and a half, he started learning to read and write, and by the age of 5, he could read newspapers, particularly the financial sections, with great interest. However, his father, a pragmatist, forced young Jesse to drop out of school at the age of 14 and work on the farm to earn money.
Young and determined, Jesse left home, full of ambition, riding in a horse-drawn carriage.
He tossed aside the note with his mother's address, and when the carriage passed by the Payne Webber Company, Jesse immediately ordered the driver to stop. It was a Boston-based securities trading firm, and from the moment he saw it, Jesse was completely captivated.
With an air of maturity beyond his years, Jesse quickly found a job at Payne Webber and earned the trust of others. As a low-paid trader earning $5 a week, his job was to write numbers on the trading board, officially starting his legendary life.
After working for a while, Jesse filled his notebook with rows of numbers, soon realizing that these trading numbers seemed to follow patterns. At the age of 15, Jesse began using his $5 weekly salary to trade in the market, and within weeks, his profits surpassed what he earned at Payne Webber.
This was Jesse’s first substantial earnings from studying trends. Later, at the age of 16, Jesse left Payne Webber and began trading in Boston's larger markets.
Jesse, always bold and outspoken, quickly made a name for himself, but soon the market took notice of this young man's audacity and repeatedly kicked him out. Cleverly, he grew a beard, but eventually, he was discovered and permanently banned. At that time, he had made a small fortune of $10,000.
In 1899, Jesse decided it was time for a challenge. He moved to New York and met his wife, Nettie Jordan. They married after only a few weeks of acquaintance, but their marriage ended abruptly after a few months.
Due to a 30- to 40-minute delay in real-time data, Jesse lost everything. He had Nettie pawn some jewelry that he had given her as gifts, which angered her.
$5,000 Marking a Comeback
Though devastated, Jesse remained confident and returned to his roots, once again wandering the trading market in St. Louis. Due to his trading ban, he could only delegate others to handle trades for him. Eventually, he earned $5,000, a sum that would later make "Jesse Livermore" a name echoed across Wall Street.
In 1901, Jesse returned to Wall Street during a bull market. At the age of 24, he made $50,000 but lost it all in cotton trading. This failure taught Jesse a lesson, and his trading style became more conservative. He became so worried that he hesitated and missed opportunities.
"I could have earned $20,000, but I only made $2,000," he remarked, while enjoying a life filled with wealth and temptation as a bachelor in the city.
By the age of 28, Jesse had $100,000, but he lost his confidence. His conservatism and the experience of inconsistent wins in the stock market made him question his long-term trading abilities. He decided to take a break in Palm Beach, which turned out to be a turning point in his life.
While vacationing at a luxury hotel, he gambled and socialized with the owner of the beach. He experienced a "psychological shock" like never before and decided to short the stock of the Union Pacific Railway.
Upon returning to town, he heard about the San Francisco earthquake, and Union Pacific stock began to plummet. By this time, Jesse had $250,000. His friends thought he was crazy or had insider information.
Soon after, Jesse decided to buy Union Pacific stock, waiting for the right moment. However, an old friend, Edward Hutton, warned him not to act hastily. Jesse followed this advice, only to regret it later, as Hutton was entirely wrong. Jesse blamed himself for the mistake.
In 1907, Jesse earned a record $1 million in one day. Seeing the market in crisis, he made the right and wise decision to buy, encouraging others on Wall Street to do the same. The market began to recover.
Jesse gained the title of a hero. Many of his colleagues followed his lead and became wealthy.
Within a year, Jesse made a leap from zero to $3 million, entering a new wealth bracket. To imitate Morgan, he bought a yacht for $200,000 and a villa in Manhattan's Upper West Side. From then on, he only frequented New York's most exclusive clubs and had countless mistresses.
However, gradually, the high costs left him in financial trouble, and he returned to the stock market once again.
$5 Million and Fame
In 1908, he lost $5 million in the Chicago commodities market, trusting a "friend." He was in a desperate situation.
In 1915, Jesse went bankrupt. The stocks he bought in 1907 to help save the market gave him a buffer, allowing him to endure the long bear market. Just a year later, he earned back the $5 million in the subsequent bull market.
After a high-profile and lengthy divorce, 40-year-old Jesse finally divorced Nettie and married 22-year-old actress Dorothy Zigfield. In 1919, they had their first child, Jesse Livermore Jr., followed by a second child, Paul, in 1922. They were wealthy, high-status, and mingled in high society. That was Jesse's happiest period with his family.
Famous Livermore often appeared in media headlines, and people eagerly awaited his stock recommendations in the newspapers. He set up an official trading office and made $15 million. Two years later, they moved to a larger office with 60 employees.
To write "Reminiscences of a Stock Operator," Edwin Lefèvre contacted and interviewed Livermore, and after receiving permission, the book was published in 1923. During its release, no one realized that the protagonist was Livermore, and the character was given the alias "Livingston." The book became very popular and went through multiple printings.
Meanwhile, Jesse's fame continued to grow on Wall Street. In 1925, he made a $10 million transaction in wheat and corn on the Chicago trading board, marking a confrontation with the renowned bull trader Arthur Cutten.
In 1927, two robbers broke into Livermore's house, holding him and his wife at gunpoint. Dorothy remained unexpectedly calm and only asked the robbers to leave behind some valuable jewelry. As they left, she even persuaded the robbers not to wake the children.
$100 Million Short-Selling Wall Street
In 1929, Livermore keenly noticed some changes in the market. He decided to leave the office and leave trading until October 29, the infamous Black Tuesday, when the market crashed and countless traders went bankrupt overnight. Dorothy and her mother panicked when they heard the news and cried to Jesse that everything was lost. However, they did not realize that Jesse had made $100 million by short-selling Wall Street.
Jesse had received information about the Bank of England planning to raise interest rates and accurately predicted a market sell-off, causing stock prices to fall. Meanwhile, he had carefully analyzed economic depression warnings through newspaper clippings and began to sell short stocks. His precise judgment and early action earned him $100 million in profits.
However, Livermore’s domestic bliss seemed to come to an end. Dorothy fell into alcohol addiction, and Jesse's numerous affairs and mistresses caused her embarrassment. She demanded a quick end to their marriage, seeking custody of their two children and a $10 million villa. On the same day they divorced, she quickly married a young official.
At 56, Jesse was no longer young or wealthy. He decided to spend all his remaining money on a vacation. He met his third wife, American singer Harriet Mays.
Livermore planned to rest during his holiday and make a comeback from bankruptcy, returning to New York. But mentally, he was overwhelmed.
His ex-wife, Dorothy, still longed for the luxurious Palm Beach lifestyle they once had, but she was drowning in debt. As a result, she sold Jesse’s prized possession—the mansion he had taken great pride in, a house that had been the cornerstone of countless family joys. In an instant, it was liquidated. Jesse was plunged into deep despair.Adding to his humiliation, the jewelry and wedding rings Jesse had gifted Dorothy were sold off at a fraction of their value. The mansion, which Jesse had purchased and renovated at a cost of $35 million, was sold by Dorothy for a mere $220,000.
