Jesse Livermore's trading

Discussion in 'Trading' started by cane1214, Mar 9, 2006.

  1. Aapex


    Again, you are not comparing apples to apples here.
    The subject matter is about the Trading of J.L. not about Donald Trump who has made his fortune in Real Estate.

    Also, The Donald - Did go broke and lost it all and YeS he did make a come back. But this thread is not about comebacks in Real Estate. It is about the failures and Success of one the best traders of all time.

    Also, Richard Dennis - "BLEW UP" long ago so I don't see the relevance to the topic. Also, he was a Trend Follower who no doubt got inspiration for J.L.

    He is not better than J.L.
    He just came waaaaaaaaaayy after the fact.
    #31     Mar 10, 2006
  2. Folklore is not just Paul Bunyon, Daniel Boone and Davey Crockett. There is a distinction between skill/money management and 10% margin, no upticks, outside capital, acts of God, press releases, and insider information.

    For clarification, here's a sketchy chronology:

    By 1900, aged 23, he had amassed roughly $50,000, from the bucket shops.

    Fall of 1905 Thomas Lawson of Boston provided all partnership capital for Livermore to raid Union Pacifc stock. Actively traded by Harriman. pool.
    Losing his ass up until April 18, 1906 San Franciso earthquake. Stock took two days to respond lower. Lawson got the proceeds and Livermore pocketed $300,000 Took off for Saratoga.

    On an unknown date soon after Livermore made the mistake of going short the SAME stock. Harriman pool was prepared. Livermore watched a quarter of a million vanish on upticks.

    Another 50/50 deal with Lawson to short Great Northern. Made a second killing. .

    Made his FIRST million in shorting Anaconda in the summer of 1907. Market panic as much as his skill. Banks calling existing loans. October 24, 1907 J.P. Morgan forced his fellow capitalists to start supporting stocks. Livermore knew better than to buck the Morgan crowd. Bought his first yacht, the Anita Venetian.

    Had an epihany that commodities posed less “problems” because prices depended upon supply and demand (rather than synthetic measures). Long 120,000 bales of cotton. First used the power of the press release. in the New York Hearld “July Cotton Cornered by Jesse Livermore”. Shorts covered, suckers (his term) rushed in, Livermore unloaded. New nickname, Cotton King.

    Spring of 1908, Desperately trying to stem a dropping price by buying in both New Orleans and Liverpool, found himself long 500,000 bales. Simply put, the Anita Venetian went under the hammer.

    For Livermore 1911-1913 appear to be lean years.

    In 1914 he was living Bretton Hall Hotel at 86th & Broadway.

    Filed bankruptcy in 1915 with $102,474 in professed liabilities.

    The Bethlehem Steel trade in LeFevere's book was in here somewhere.

    December 20, 1916, somehow became alerted to a telegram to Finlay Barrel & Co. in Palm Beach from a Washington reporter named W.W. Price leaking of Wilson warning the warring parties. Figuring there’d be a market collapse, Livermore approached Lawson again. With capital, shorted the “four horsmen” US Steel, American Can, Baldwin, and Anaconda. E.F Hutton made a flash wire to its offices hours before Wilson’s note was publicized. Bids melted away. Livermore bought a half million annuity to throw off $30,000 per annum Also rushed out and bought a speed boat called the ‘sub-catcher” and a $120,000 platinum and emerald ring.

    Unloaded his first wife via Reno in October 1917 and the 40 year on December 2, 1918 old married the 18 year old daughter of a wealthy Brooklyn merchant named Wendt. Rented a furnished townhouse at 8 West 76th Street. January 1920, bought a seat on the Curb (today the AMEX). 1919, first son.

    1921 had a pool agreement with the Lewisohn Brothers to ramp Seneca Copper. After running from $12 to $25, the brothers cancelled the (then legal) agreement.

    Summer of 1922, Livermore was reported to have lost $8.5 million on the short side of Mexican Pete. June 1922, Clarence Saunders, owner of the Piggly Wiggly chain hired Livermore to “kill the bears”. By November, Livermore had amassed 105,000 of 200,000 shares outstanding at an average of $35. March 1923, stock was over $70. Livermore had 198,872 of the float. March 19th, Saunders asked Livermore to spring the trap demanding delivery from short sellers. Livermore reneged. Suander’s somehow succeeded anyway. From an open of 75 ½ skyrocked to $124, and closed the day at $82. Same year, ran the Mammoth Oil pool involving Harry Sinclair.

    In 1924, Arthur Cutten forced wheat to over $2 per bushel for the first time. Livermore was short and lost a considerable amount.

    In 1927, Livermore ran a pool to ramp Freeport Texas stock from $19 to $74 ½. Also a dirrector of Minter & Assoc, selling $9 miilion worth of Florida lots and filing BK two years after inception. Robbed at gunpoint in his home in May 1927.

    April 1929, sued for $1,450,000 over the 1926 Boca Raton RE crash.

    July 1929 refused to make a court appearance in a $525,000 suit against him by the Carbonite Corp for an alleged breach of agreement.

    October 1929, details sketchy but even though Livermore “won” millions on the short side, he lost $6 million in his long positions in the crash.. Arthur Cutten purportedly lost $50 million.

    August 16, 1932. Divored his second wife. March 28, 1933, married his third wife at age 56. May 30, 1933. Security Legislation enacted. Pool operations outlawed.

    March 4, 1934, Livermore filed BK. $2,259,212 liabilities/$184,000 assets.

    Thanksgiving Eve 1935 his divorced second wife shot his first son. Non-fatal.

    Summer 1937 charterd a yacht (Nina) rather than owning it outright.

    Apparently from 1934 to 1940 he was an investment advisor/broker. Apparently to acquire capital for a comeback, he decided to write a book (in two versions) The office that’s frquently mentioned in awe appears to have been a facade to promote the book. The “legendary” market key, is patterned after Dow Theory confirmation, but using two companies in each of about 5 leading industries. Not original, basically the opposite of pairs trading.

    November 28, 1940, shot himself in the head in the hat check room of the Sherry-Netherland hotel after wrting an 8 page note to his wife with the recurrent theme “My life has been a failure”
    #32     Mar 10, 2006
  3. bitrend


    Success in Wall Street has nothing to do with technology. Those, computer, server, etc. are just weapons. Winning on Wall Street is about strategy, not weapon. Weapon changes but strategy remains the same. Today, we are using different weapon and at Livingstone's time they were using another kind of weapon. If we have powerful weapon comparing to Livermore's time, so do our opponents. The same as Jesse Livermore, he was using the same weapon as his opponents. He didn't win with the weapon used at that time but he won with his strategy.

    We were discussing about Edge in other thread. That Edge is not about having a super computer or ESignal, ... it's about having a sound strategy.

    #33     Mar 10, 2006
  4. RedDuke


    Jessie Livemore was a great speculator, but not the greatest, just one of the most famous ones. If you read Market Wizards, Schwager mentions few times that his interviews are with traders that he was able to find or was introduced to, but there are many more that are not known to general public.

    Also, John Bogle Vanguard founder, is another great financial icon, if you look how small he started and what Vanguard became, it is just amazing. The list will go on and on.

    The point is that there were, are and always will be ways to start small and make big money in financial market. But like in most other very difficult areas, many start few succeed.

    #34     Mar 10, 2006
  5. I agree, but believe the reason Livermore is talked about so much is because he was the first "great" trader to use TA so effectively.
    #35     Mar 10, 2006
  6. Richard Denis' approach - back when he was successful - was very much like big-money period Livermore. His Turtles are a pretty damn good approximation of the basic rules Jesse laid out nearly 100 years ago (this is obviously seperate from the pool-running parts of his trading career, which are fascinating in and of themselves, and relevant even today despite the changing details.)

    Assuming the attribution is even correct, I rather suspect Richard Denis is/was trying to make himself appear more original than he was.
    #36     Mar 10, 2006
  7. He gave a lot of his estate to his family before actually dying with 100k in 1941. He did distribute his wealth quite generously toward the end of his life as he was realizing a lot of his personal & social mistakes in life.
    Let's not forget his very extravagant lifestyle through which he probably spent most of his earnings.
    #37     Mar 11, 2006
  8. bitrend


    That's a raison d'être for trading when you are very successful. You should recompense yourself. I wonder why Mr. Buffet don't understand or ignore this benefit.

    #38     Mar 11, 2006
  9. Do a search and save your breath.
    #39     Mar 11, 2006
  10. Really just a few of Jesse's lessons are enough to make a living on -

    -Wait until all market conditions are in your favor i.e. market/sector/stock/pivot reversal

    -Millions are lost on the first and last 1/8th, i.e. anticipating signals prematurely

    -Big moves do not start and end on the same day i.e.

    anyone who is serious in any profession will study history's winners and losers
    #40     Mar 11, 2006