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Jesse Livermore

Terminology

Short

In stock trading, 'Short' refers to the direction of the trade (which is profitable if the stock price declines). In order to enter a 'Short position', stock must be borrowed from a stock loan provider which is arranged through the stock broker. The borrowed stock obtained can then be sold in the normal manner through the stock market. To exit the 'Short position', stock is bought from the stock market and this stock is handed back to the loan provider where the stock was originally borrowed from.

Stock Trader

Stock Trader's buy shares in companies where the stock price is expected to increase in the short term (usually days to weeks) and then sell the stock either at a predetermined price level or when a stop-loss is triggered.

The Life of Jesse Livermore

The Investing Style of Jesse Livermore - The Life of Jesse Livermore; Picture of a wealthy stock investors large luxury yacht sailing on the open ocean waters on a clear blue sky day.

Jesse Livermore

Jesse Livermore was born in 1877 and died in 1940. He was a wealthy flamboyant character who was renowned for making multi-million dollar fortunes and then losing a large portion of his wealth which he did several times over.

Jesse Livermore was known as the "Great Bear of Wall Street" who shorted the market crashes of 1907 and 1929 where he mostly made his fortunes.

Jesse Livermore was a self taught stock trader and commodities trader utilizing his own investing style and approached the markets with the attitude of a businessman operating a business.

He lived the life style of the rich and famous and lived in a mansion, owned a yacht and even owned a private railway car fully furnished.

The amazing life of Jesse Livermore begins in Massachusetts where he was raised on a farm.

At the age of 14 Jesse realized this was not the life for him and he ran away from home. He ended up in Boston where he worked for a brokerage firm posting stock quotes.

This gave Jesse an inside view of the operations of the stock market which he used to his advantage.

At the age of 15 he started betting on stock price movements through the bucket shops (which were a form of betting over stocks as opposed to actually buying stocks through a broker).

Jesse Livermore had a natural talent for picking the right stocks to bet on and was a rationally thinking trader even at the age of 15.

Jesse Livermore profits accumulated and by the age of 20 was already becoming quite wealthy.

He was subsequently banned from most of the bucket shops as he was winning too much money. The money Jesse was making was the money the bucket shops were losing as they operated as a betting agency.

Jesse Livermore then moved to New York City and was now trading on actual stock and commodities markets. Jesse Livermore married the first of his three wives at the age of 23 in 1900 and during this time his trading turned for the worst and he lost his accumulated wealth.

Jesse Livermore slowly re-accumulated his wealth and became famous after the crash of 1907 where he short sold the market and reportedly was now worth $3 million (that's in 1907 dollars).

It was Jesse Livermore's investing that attracted the attention of Wall Street as he had his own unique style of trading for his day. Brokerage firms were not used to customers withdrawing profits from their accounts as most speculators of the time were forced to deposit additional funds to meet margin calls.

It was Jesse Livermore’s unique investing style

that attracted the attention of Wall Street

In 1917, Jesse and his wife Nettie divorced. He then married Dorothy and they had two sons named Jesse Jr. and Paul.

Jesse Livermore correctly called the market crash of 1929 and short sold. His worth was now reported to be $100 million dollars (which is several billion dollars in today's money).

In 1932, Jesse and his second wife Dorothy divorced with Dorothy retaining custody of their two boys. In 1933 Jesse married Harriet his third wife.

In 1934, Jesse Livermore once again managed to lose the fortune he accumulated through the market crash of 1929.

Jesse Livermore struggled from here on and never managed to recoup his previous fortune even though he was still relatively wealthy compared to most people during the great depression.

His son Jesse Jr. suggested in 1939 that Jesse Livermore write a book about the trading tactics he used in the stock and commodities markets.

The book was titled How to Trade in Stocks and was published in 1940 during World War II, however interest in financial markets was low during this period and his book was not well received.

Jesse was suffering from clinical depression and in 1940 he committed suicide tragically ending his life. At the time of his death Jesse Livermore's wealth was reported to be $5 million.

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