Jesse Livermore Bio, Quotes, and Books

Jesse Lauriston Livermore (July 26, 1877 – November 28, 1940) was an American stock operator who made and lost several million-dollar fortunes trading stocks and commodities, and whose career became the template for the modern speculator. He grew up on a Massachusetts farm, left school at fourteen, and learned the market as a quotation-board boy in a Boston brokerage office, chalking prices and studying how they moved. By his early twenties the bucket shops of Boston had barred him for winning too regularly. He moved to New York in 1900 to trade on the real exchange, and over the next four decades he became the most famous trader in America, known to the newspapers as the Boy Plunger and, after 1929, as the man who made a fortune selling the market short into the crash.

His big years were built on preparation rather than prophecy. He kept his own price records from his board-boy days onward, watched for prices to run on form, and preferred to wait until a market declared its direction before committing serious money. The method paid early and often. He shorted Union Pacific just before the 1906 San Francisco earthquake, and in the Panic of 1907 his selling made him about a million dollars in a day, a rout stopped only when J.P. Morgan asked him to hold off. The same years taught him his rules at full price. A cotton trade taken on an expert’s tip in 1908 nearly ruined him, and a bankruptcy in 1915 finished the job. He rebuilt by talking a brokerage into a small line of credit, then waiting weeks for a single certain play in Bethlehem Steel and riding it back to solvency. In 1929 he read the top early, built his short position in stages, and came out of the crash with profits often estimated near $100 million.

What survives of Livermore is the discipline he wrote down. He tested every position with a small first purchase and added only when the market proved him right, cut losses without debate, and spent long stretches sitting in cash while other men felt compelled to trade every day. His rules were aimed at the operator himself, because the chief enemies he kept meeting were hope and fear. The 1930s undid much of the fortune. He went through bankruptcy again in 1934, and new federal rules narrowed the game he had mastered. In 1940 he set his system down in How to Trade in Stocks, and he took his own life in New York that November. Edwin Lefèvre’s Reminiscences of a Stock Operator, published in 1923 with Livermore thinly disguised as Larry Livingston, remains the most read account of how a speculator actually works.

Core Ideas

Sit tight. The big money is made in the main movements, by being right and then doing nothing while the move runs.
Trade the line of least resistance. Let the tape show which way prices want to go, and wait for that moment before putting on a position.
Test first, then build. Start with a small line, and add only when the first purchase shows a profit. Never average down into a loss.
Cut losses while they are small, and review every one to find the mistake in timing or judgment.
Expect repetition. Speculation is as old as the hills, prices move because people do, and people bring the same hope and fear to the market in every generation.

Jesse Livermore Quotes

“Set your own rules and stick to them; never argue with the market; never make a play you can’t afford; never give way to irrational exuberance. Above all, don’t be a sucker.”

“It never was my thinking that made the big money for me. It always was my sitting.”