Time Value of Money
Kinds of Interest Rates
Future Value of an Uneven Cash flow
Probability Distribution
Standard Deviation
Security Market Line
Bond Valuation
Stock Valuation
Cost of Capital
The Balance Sheet
Capital Budgeting
Hall of Fame
Credit Report
Financial Terms
Financial Charts
Fuel Mileage
Energy Efficiency

Jesse Livermore

Jesse L. Livermore was born in 1877 in South Acton, Massachusetts and died in 1940. He left home in his early teenage years in order to get away from life on the farm. He moved to Boston and began his career in finance working at the Paine Webber brokerage firm posting stock quotes. He started trading for himself and reportedly earned over $1,000 profit before he turned fifteen.

He then began to make money by betting on stock price movements against the house. He was so successful at this that he was eventually prohibited from this activity anywhere in Boston. This prompted the 20 year old Livermore to move to New York and begin speculative trading on Wall Street. He had a series of financial successes and failures which made him a local and international celebrity.

Livermore had little education and no trading experience, so he relied on his experiences to develop an investment style. The successes and failures that he experienced in the market enabled him to cement specific trading principles that can still be seen in practice today. The major ideas that he utilized include:

  • Avoid day trading based on fluctuating prices. Livermore focused on the entire market rather than individual stocks. He believed that success results from realizing the direction of the market as a whole rather than an individual stock.

  • Have an exit strategy. Livermore adopted a buy-and-hold strategy when the market was good and sold as it lost momentum. Understanding this is explained in the following Livermore quote: "When it comes to selling stocks, it is plain that nobody can sell unless somebody wants those stocks. If you operate on a large scale, you will have to bear that in mind all the time.”

  • Put a lot of effort into studying the economy, the market and the basic fundamentals of particular companies. He believed in the importance of research and was once quoted as saying that "The average man doesn't wish to be told that it is a bull or a bear market. What he desires is to be told specifically which particular stock to buy or sell. He wants to get something for nothing. He does not wish to work. He doesn't even wish to have to think."

  • Focus on the long term. Short term investors will lose their capital.

  • Rely on your own independent analysis and ignore insider information. Livermore also recommended using multiple sources when it comes to getting information.

  • Be open to change and adapting your investment strategies in response to changes in the market.

Livermore continued trading for around 50 years during which time he made and lost several fortunes. He tragically committed suicide at age 63.

Jesse Livermore’s publications include:

How to Trade In Stocks

Publications about Jesse Livermore include:

Reminiscences of a Stock Operator Annotated Edition

Jesse Livermore Speculator King

Trade Like Jesse Livermore (Wiley Trading)

About the author

Mark McCracken

Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English".

Copyright © 1997 - 2009 by
Mark McCracken , All Rights Reserved