August 26, 2015

Jesse Livermore is one of the great traders of our time, yet few people know about him. He was nicknamed the “Speculator King” and began his journey into substantial wealth at the young age of 15 in the bucket shops of New York City. At his peak in 1929, Livermore was worth $100 million, which in today’s dollars roughly equates to $13 billion. We can all agree that markets have changed since those times, but Livermore’s trading rules still apply. He did not have the modern-day charts to graph his price patterns, instead the patterns were simply prices that he kept track of in his ledger. He only liked trading in stocks that were moving in a trend, and avoided ranging markets. When prices of a stock reached a pivotal point, he watched patiently to see how they reacted. Jesse believed no matter how much we “feel” that we know what is happening, we need to wait for the market to confirm that thesis.

When Livermore wasn’t riding the turbulent waves of the market, he was fishing. He loved to go down to Palm Beach and spent his time fishing the waters of the Gulf Stream. He was interested in the big fish, just as he was only interested in the big swings in the market, “the giant Bluefin tuna; the world-class monster sharks, hammerheads, tigers, and makos; the run of of sailfish; the occasional marlin, wahoo, or king mackerel; and the tarpon down in Key West- these were his prey, the challenging, unpredictable, hard-fighting gypsy fish of the great Atlantic Ocean” (Smitten 80).

The major lessons to take away from Livermore are to aim high and keep your losses small. Do not settle for trout and carp; keep your eyes peeled for a gypsy fish because you may only catch one in your lifetime if you’re lucky. Do not listen to tips or try to win at the stock market popularity contest, it will only distract you from your purpose. And lastly, learn how to lose: learn from your mistakes so you do not repeat them.

Smitten, Richard. Jesse Livermore: World’s Greatest Stock Trader. 1st ed. N.p.: Wiley, 2001. Print.
http://www.amazon.com/Jesse-Livermore-Worlds-Greatest-Trader/dp/0471023264/ref=sr_1_1?ie=UTF8&qid=1440598635&sr=8-1&keywords=world%27s+greatest+stock