Key Takeaways
- Started trading at 14 years old with just $5
- Invented pivot points & tape reading
- Made $100 million shorting the 1929 crash
- Went bankrupt 4 times and rebuilt each time
- His book is still required reading at trading firms
The Runaway Boy Who Conquered Wall Street
In 1891, a 14-year-old boy named Jesse Livermore ran away from his family's Massachusetts farm with just $5 in his pocket.
His father wanted him to be a farmer. But Jesse had discovered something that changed his life — a small chalkboard at a local brokerage showing stock prices.
He was mesmerized. Not by the money, but by the patterns in the numbers. He got a job as a "chalkboard boy," writing stock quotes for $6 a week. But he wasn't just writing — he was studying.
"I noticed that in advances as well as declines, stock prices were apt to show certain habits. There was no end of parallel cases. I studied those patterns."
— Jesse Livermore
While other boys his age were playing games, Jesse was filling notebooks with price movements, looking for patterns that repeated. He discovered that markets move in predictable ways — if you know what to look for.
The Bucket Shop Bandit
At 15, Jesse made his first trade with his life savings — $3.12. He made $3.12 profit. His career had begun.
By 16, he was so good at predicting prices that "bucket shops" (illegal gambling houses for stocks) banned him. He had to wear disguises just to keep trading.
By age 20, Jesse had turned his $5 into $10,000 — in 1897 dollars, that's about $350,000 today. All from a boy who never finished high school.
The nickname "Boy Plunger" stuck because of his willingness to make big bets when he saw clear opportunities. While others hesitated, Jesse committed fully to his convictions.
The 1907 Crash: Jesse Breaks Wall Street
In 1907, Jesse saw something others missed. The market was overleveraged. Banks were weak. A crash was coming.
He sold stocks short (betting prices would fall) with everything he had. When the market crashed, he made $1 million in a single day.
The crash was so bad that legendary banker J.P. Morgan himself personally asked Jesse to stop shorting — because he was literally breaking the financial system.
Historic Moment
J.P. Morgan, the most powerful banker in America, personally contacted Jesse Livermore and asked him to stop shorting stocks to prevent a complete financial collapse.
At 30 years old, Jesse Livermore was worth $3 million ($90 million today).
The First Fall: From Millions to Zero
But Jesse's story wasn't just about winning. In 1908, he ignored his own rules. He took a tip from a friend about cotton prices.
Within months, he lost everything. Completely bankrupt.
Most people would have quit. Jesse didn't. He borrowed $500 and started again. Within two years, he was back to millions.
"There is nothing new in Wall Street. There can't be, because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again."
— Jesse Livermore
This pattern would repeat throughout his life — massive gains followed by devastating losses. The same brilliance that made him rich also made him overconfident, leading him to break his own rules time and again.
1929: The Greatest Trade in History
By 1929, Jesse had been watching the market for 38 years. He knew what euphoria looked like. And he saw it everywhere.
Starting in early 1929, he quietly built the largest short position in Wall Street history. His friends called him crazy. The market kept going up.
Then came October 29, 1929 — Black Tuesday.
The market crashed 25% in two days. Billions were lost. Men jumped from buildings. And Jesse Livermore? He made $100 million — equivalent to roughly $1.5 billion today.
He was now one of the richest men in America. Newspapers called him the "Great Bear of Wall Street."
Livermore's Timeless Rules
Jesse Livermore developed trading principles that are still taught today, nearly 100 years later:
Never Average Down
"It is foolhardy to make a second trade if your first trade shows you a loss"
Wait for the Right Moment
"Money is made by sitting, not trading"
Cut Losses Instantly
"I never argue with the tape. Being wrong is acceptable. Staying wrong is not."
Trade Only Leading Stocks
"The leaders of today may not be the leaders of two years from now"
The Tragic End
Despite his success, Jesse's demons followed him. He went bankrupt three more times after 1929, unable to follow his own rules.
Depression consumed him. On November 28, 1940, at age 63, Jesse Livermore took his own life, leaving behind a note that read: "My life has been a failure."
But history disagrees. His book, "Reminiscences of a Stock Operator" (1923), is still required reading at trading firms worldwide. His rules are still taught 100 years later.
"Reminiscences of a Stock Operator" (1923)
This book, written as a thinly-veiled autobiography, is considered one of the greatest books on trading ever written. It's still required reading at major trading firms and hedge funds a century later.
What We Learn From Livermore
Jesse Livermore's story is both inspiring and cautionary:
Skill Can Be Self-Taught
A farm boy with $5 became one of the greatest traders ever
Patterns Repeat
What worked in 1907 works today — human nature doesn't change
Discipline Is Everything
Knowing the rules isn't enough; you must follow them every time
Protect Your Mind
Guard your mental health as fiercely as your capital
"A man must believe in himself and his judgment if he expects to make a living at this game. I am confident that I could make a living even if I started with nothing."
— Jesse Livermore
Jesse Livermore proved that markets can be mastered through observation and discipline. His rules are 100 years old — and still work today.