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The Secret Trader Who Made BILLIONS (and Lost it THREE TIMES)!
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Dec 11, 2024
Discover the untold story of the secret trader who built a multi-billion dollar fortune, only to lose it all three times in the high-stakes world of finance! ✉️ Learn the secrets of legendary traders and investors: https://bit.ly/47pcTJT --- Videos are intended strictly for information, education, and entertainment purposes. Do not base any investment decisions based upon these materials. Please read the disclaimer: https://analyzingalpha.com/disclaimer
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24 hours before the greatest traitor in modern history put a bullet through his head a photographer asked to take his
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picture to which he replied it's the last picture you'll take because tomorrow I'm going away for a long long
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time but why would an influential billionaire a man who traffic light operators would switch the lights to
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Green for a man capable of singlehandedly controlling the American economy kill
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himself this is the story of Jesse Livermore a tale of Triumph and tragedy
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a warning about the Perils of chasing wealth at any cost and a guide to making billions out of thin
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air Jesse Livermore Story begins on a small farm in Shrewsberry Massachusetts
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he grew up in a family that knew the meaning of hard work but always seemed to come up short on cash while Jesse's
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father did the best to keep food on the table there came a day when even and that wasn't enough eventually he was
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forced to make the difficult decision to sell the farm as the weight of their financial troubles became too much to
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bear in the face of his setback the liver Moores found support in the loving Embrace of Jesse's grandparents their
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home became a sanctuary for the family providing a stable environment while Jesse's father worked tirelessly to save
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enough money for a fresh start their new beginning yet another small farm but
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this time in Acton Massachusetts roughly 30 m away from Jesse's birthplace
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although Jesse was a poor Farm Boy by circumstance there were early signs that he was destined for greatness by the age
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of three Jesse had already mastered the basics of reading and writing as he grew older and began his formal education
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Jesse became an exemplary student who managed to pull off three years of work in just
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one but if you think this is your typical story about a bright-eyed bushy tailed school boy studying his way up to
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the top guess again when Jesse was just 14 years old his dad pulled him out of
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Academia to help on the farm full-time it seemed to Jesse that his shot of escaping the banalities of Rural Life
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were forever Out Of Reach however Jesse's mother saw that her son was destined for more than just raising
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livestock and growing crops she encouraged Jesse to run away from home giving him $5 to start a new life less
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than $200 by today's metric [Music] and so acting on a leap of faith Jesse
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Livermore took himself to the bustling city of Boston a cultra shock compared to the farm life he'd known
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before While most small town teens would Blan at the thought of having to make it on their own in a strange city Jesse was
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not your typical teen he had something to prove and a debt to repay to his mother naturally Jesse's first order of
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business was to look for a job and in the 1800s it wasn't as easy as logging into indeed and uploading your
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resume he scoured the city for opportunities striking out until he came across a small stock Brokers firm called
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pain Weber one of the choc boys had called out sick that day and the higher ups
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just so happened to be looking for someone to fill in had Jesse Livermore shown up in Boston a day later perhaps
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he would never have become one of the richest men in America had Jesse Livermore shown up in Boston a day later
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perhaps that life-ending may never have been fired but Jesse showed up that day
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and he quickly found himself employed in head over heels in love with that Cutthroat world of trading but let's not
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get ahead of ourselves Jesse entirely new to the finance business first started out as a LLY chalkboard boy
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copying down share prices from ticker tape recordings the Ever Changing digits
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fascinated him and Jesse quickly developed a unique perspective on stock prices seeing them as far more than just
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dollar values per share he kept a small notebook where he could record his own predictions about the stock market and
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then he Compares notes to how the numbers actually moved it was here that Jesse learned that nothing is ever new
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in Wall Street anything that happens in the stock market has happened before and
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you can bet that it'll happen again based on this observation Jesse realized
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the reason the majority of stock Traders don't make profits they act randomly instead of looking for patterns of
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course Jesse had no real way of putting his new found knowledge to use that is
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until an older office boy introduced him to the world of bucket shops now you might be wondering what is
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a bucket shop and what role do they play in Livermore Story bucket shops allowed
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Everyday People to gamble on stock prices without making any real trades in a bucket shop you'd bet against the
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house who would more often than not profit from customers losses these
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sleazy gambling shops encouraged their customers to use high leverage which meant bigger bets bigger losses and in
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Jesse livermore's case bigger wins his first bucket shop bet the Burlington
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railroad the same office boy who' introduced him to these now illegal trading shops had also coughed up a hot
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tip the Burlington stocks were on the rise and now was the perfect time to buy in Jesse who would later warn against
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accepting stock market tips from friend cracked open his notebook to check out his own observations on the
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matter he immediately saw a promising pattern and invested all the money he had which was just a measly few dollars
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into Burlington shares talk about a risky move luckily the move resulted in
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dollar signs for Livermore he began using his insightful stock predictions to rack up insane profits even earning
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himself the nickname the boy plunger due to his bold trades
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at just 16 years old it's rumored that Jesse made over a quarter of a million dollars by today's metrics just from
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gambling on Market movements in bucket shops at first Jesse's family
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disapproved on how he was making his money but it was hard to turn down the
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perks that came along with it just a year after leaving the farm Jesse returned home to repay his mother's debt
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except he'd increased her initial investment by nearly 20,000% that's right what started as a
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$5 gift had become a $11,000 repayment all thanks to Jesse's astute stock price
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analysis and what would become a lifelong belief in the importance of paying back his debts yet livermore's
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bucket shop Saga was not one that would last forever it wasn't long before every shop in Boston was Banning the notorious
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boy plunger the more he made the more they lost and they were fed up with getting swindled by a teenager who
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hadn't even finished high school while Jesse tried several workarounds including making up fake names wearing
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disguises and even intentionally losing the powers that be weren't F so out of
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necessity Jesse started traveling to other bucket shops moving on only when they'd catch wise and give him the boot
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it wasn't long before there were virtually no bucket shops in that area that would take his business that is
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except for one the largest and richest bucket shop in New England the cosm mopolitan stock brokerage
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company unlike the smaller firms the Cosmopolitan didn't reject Livermore
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outright but they did make him jump through crazy Hoops like forcing him to
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trade at a three-point margin with a continually Rising premium but even with
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these challenging conditions Livermore prevailed managing to churn out profits left and right yet one day he felt a
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nagging feeling growing in his gut his inst were screaming at him to close his short position of sugar stock despite
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having no good reason to do so so Livermore a Traer who'd always based his
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moves on patterns did something highly out of character he closed out his position based on nothing more than
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intuition it wasn't long after that that Sugar stock prices started surging
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proving livermore's instincts had been correct he suspected that Cosmopolitan
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had illegally manipulated the stock price PR of this commodity to screw over Jesse now 21 years old Livermore decided
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that his impish days of bucket shop betting in Boston had come to an end so
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with 2500 to his name and a desire to be the greatest stock Trader in the world Jesse Livermore moved to New York City
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to try his hand at the real thing the New York Stock
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Exchange Frank Sinatra once sang about New York City if you can make it here you'll make it anywhere but Livermore
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was having a hard time making it in a city that never sleeps the strategy that had worked in bucket shops wasn't
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cutting it in New York and Livermore was struggling to adapt to his new environment but why was trading on the
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stock exchange so much harder than betting in bucket shops in the Lawless land of bucket
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shops which were essentially unregulated gambling dens Livermore had used
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extremely high leverage while trading with minimal capital on the New York Stock Exchange his
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aggressive tactics and supersized positions were kept in check by rules and regulations but it wasn't all doom
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and gloom it was during this time that Limer also met his first wife Netty Jordan from
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Indianapolis the two only knew each other for a few weeks before they decided to tie the knot in hindsight
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probably a red flag but Livermore was a man in love and he showered his new wife
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with expensive gifts using the money he' made throughout his teens to no one's surprise this wouldn't end well
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Livermore made a series of bad trades and within just 6 months of moving to New York City he'd lost all his
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money with no more cash left to trade Livermore had to start once again from
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nothing after explaining the situation to his wife he asked her if she'd Pawn
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off some of the jewelry he'd given her so that he could use it to trade Netty was immediately understanding and gave
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Livermore a great big hug just kidding she kept the jewelry and ditched Livermore leaving him not just pennil
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but also entirely alone so with nothing to his name no romantic prospects Livermore borrowed
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$1,000 from a broker to whom he was already in debt and decided to give bucket shops one more go the shops in
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New York were out of the question as Livermore didn't think they were trustworthy instead he traveled to St
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Louis only to be banned from every shop in the city within 4 days now that has
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to be some kind of record luckily his subsequent trip to hoken bore more fruit
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and Livermore was able to turn his initial $1,000 into a $10,000 windfall
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he then returned to New York City ready to learn from his mistakes and find a strategy that would work in the markets
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he delved deep into studying trade reports railroad earnings and financial
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statistics seeking to make more informed decisions rather than relying on
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Instinct however despite often correctly predicting the General market Trend
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Livermore realized his profits were not as impressive as they should be why not
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because his conservative strategy of taking small gains in a bull market was limiting his ultimate potential
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Livermore also came to understand the crucial difference between gambling and speculating he concluded that the most
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important role in trading was not to be sucker to avoid falling for common market pitfalls and to have the
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conviction to follow through on one's analysis once he learned these valuable
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lessons Livermore finally started to see some successful trading with the New
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York Stock Exchange but in 1906 Livermore decided to take a break from
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the intense world of trading to go on a fishing vacation in Atlantic City yet even there he couldn't resist the pull
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of the market while strolling the boardwalk Livermore noticed a branch office of his Brokers Harding Brothers
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as if magnetically drawn he found himself studying the quotation board focusing on the price of the Union
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Pacific Railroad stock without any clear reason or Insider information Livermore
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felt an overwhelming urge to sell his current Union Pacific shares of course
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this move would go against everything he just learned about only making informed decisions and despite his friend who was
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bullish on the stock telling more he was crazy Livermore followed his instincts
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and sold 3,000 shares he couldn't explain his decision logically only that
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he had an unshakable feeling and it was the right move even as Union Pacific stocks
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continued to rise Livermore doubled down and sold more shares then in a stroke of
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incredible timing the San Francisco Earthquake of 1906 struck sending shock
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waves through the economy and most importantly tanking Union Pacific stocks
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needless to say livermore's instinctive selloff had proved remarkably and
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inexplicably preent in the span of a few days he pocketed his biggest earnings to
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date a staggering $250,000 this windfall dramatically increased livermore's capacity to trade
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even larger blocks of stock so how can we replicate a trade
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like this one using our gut instincts to make a small fortune well the answer is
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we can't just like Livermore didn't actually predict the Earthquake of 1906
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we can't predict exactly how the market is going to move and while livermore's
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Union Pacific stock story is an interesting one it's proof that some of the best moves in trading are just based
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on dumb luck Fresh Off His stunning success Livermore soon found himself in
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Saratoga Springs a popular summer Resort Town known for its horse racing in high Stakes
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gambling while there livermore's Keen Eye noticed something new about Union
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Pacific there was this sudden surge in its trading volume indicating possible
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Market manipulation in insider trading trusting his instincts Livermore started
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buying the stock back again sensing an opportunity however his friend Ed Harding cautioned him against this move
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Harding suspected that insiders were deliberately feeding Livermore the stock planning to pull the rug out from under
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him later on despite his own gut feeling Livermore listened to Ed and sold all of his Union
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Pacific Holdings the very next day Union Pacific made a stunning announcement a 10%
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dividend on the stock the news sent the market into a frenzy with Union Pacific's price
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soaring Livermore immediately realized his error he had let outside influence
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Cloud his judgment and override his own Market instincts acting swiftly he bought back the stock covering his
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losses and even managed to eek out a small profit but more valuable than any
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monetary gain was the lesson Livermore learned from his experience he learned that tips and
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advice from others no matter how well intentioned could lead him astray the market was a complex beast and only by
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reading its movements and following his own convictions could he hope to tame it
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and in 1907 Jesse did more than just tame the Beast he turned it into his lap
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pet as gold flowed out of the United States and the banking systems weakened
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brokerage firms were collapsing like dominoes money if available at all came
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with staggering interest rates of 100 to 150% amidst this financial meltdown now
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known as the Panic of 1907 Livermore saw opportunity he was shorting stocks with
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a Vengeance adhering to his tried and true systems of selling more and more stocks short as the market
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plummeted as the Panic reached a crescendo Livermore experienced his most
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Triumph trading day to date in a single trading session he pocketed a cool
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million dollars equivalent to around 33 million in today's money word of
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Livermore success quickly reached the highest echelons of power one day JP
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Morgan himself the legendary financier dis a messenger to livermore's office
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with an urgent request stop selling stock for the sake of the markets and the nation it was a tough choice if
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Livermore were to continue shorting the market he could indeep reap immense personal wealth but it what
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cost the economy already on the brink could be pushed into a full-fledged depression with far-reaching
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consequences for millions of Americans in a decisive moment Livermore made his
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choice rather than double down on his short positions he began to buy he poured his resources into the market
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providing a much needed influx of capital and confidence as other investors saw
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Livermore buying they too began to follow suit slowly but surely the tide
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began to turn the market which had seemed on a forever downward trajectory
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started to stabilize and then tentatively to climb in that instant Livermore had not
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only secured his own fortune but had also played played a pivotal role in staving off a complete economic collapse
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this was the day that Jesse Livermore truly became Jesse Livermore but the story has only just
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begun in 1908 Jesse decided to turn his attention to the Commodities Market
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particularly cotton as he immersed himself in the data Livermore noticed a peculiar Trend everyone was rushing to
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sell their July cotton and to the untrained eye it appeared to be a Sure Fire path to
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profits but Livermore with his Keen instincts and contrarian streak saw opportunity rather than following the
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herd he made a bold decision he would buy July cotton instead slowly Livermore
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began to accumulate his position he started with 50,000 Bales at 12 cents a piece but soon increased his Holdings to
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140,000 Bales soon the price of cotton had increased to a whopping $125 a piece
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yet his triumphs were not without controversy a leak story about limore and the cotton Market made its way into
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the Press which many believed was an intentional move by Livermore to manipulate the market despite Livermore
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denying any responsibility for the leak many of the financial World believed that he'd engineered the entire event we
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can never know for sure whether or not Livermore actually leaked the story but we do know that he made substantial
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gains from his Fay into Commodities yet fate took a turn when Livermore acted on
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a bad tip from Percy Thomas the so-called cotton King to buy even more a
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decision that would have disastrous consequences and when the price of cotton eventually plummeted Livermore
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saw 90% of his fortune evaporate forcing him to declare bankruptcy and sell off
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most of his belongings it took Livermore a full year to pay off his debt and rebuild his
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fortune and the moment he did he had love on the brain at the age of 40
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Livermore found himself drawn to the charms of Dorothy a 22-year-old beauty of the famed zeigfeld Folly an ensemble
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of dazzling Broadway Beauties the two were a study in contrast the seasoned financier and the young Starlet but
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their connection was undeniable and they eventually had two sons together flushed
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with success and determined to give his family the very best Livermore set his sights on a magnificent property and
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Great Neck it was a grand house befitting of the world's greatest Traer
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his loving wife and their two small children he even handed Dorothy an empty check entrusting her with a task of
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entirely Furnishing their new home and as Livermore stardom continued to rise so did his
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influence newspapers hung on his every word and investors Across the Nation
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began to buy and sell based on his recommendations a single mention of Jesse Livermore could move markets
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sending stocks soaring or plummeting with the force of a Title Wave it was a heat time a period when
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livermore's power and Prestige seemed almost without limit fast forward to 1929 and things
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only got better as Livermore found himself riding the crest of a Raging Bull Market he leveraged his profits to
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borrow heavily increasing what were already substantial bets yet by summer livermore's instincts
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told him that the party was nearing its end with characteristic foresight he quietly liquidated his positions and
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compiled a list of stocks he believed were overextended initially livermore's timing seemed off
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he established a handful of small short positions but the market continued its Ascent making him appear mistaken
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however as late summer melted into early fall his bet began to pay off 10-fold operating in the shadows
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Livermore amassed an enormous short position spreading his trades across hundreds of Brokers to avoid detection
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he understood that if his plan were to leak it could upset the delicate balance he had so painstakingly cultivated then
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on Black Tuesday October 29th 1929 the hammer fell as the market plunged into
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an unprecedented crash livermore's secret short position paid off in a
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single historic trading session he netted an astonishing 100 million a sum
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that would equate to 1.8 billion today eager to share the news Livermore
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returned to his Long Island estate but as he crossed the threshold he was greeted by an eerie silence the once
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vibrant home was now deserted the paintings were stripped from the walls and the safe was completely empty Panic
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Rising Livermore frantically searched the house until he discovered his terrified family huddled in the servants
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quarters in their fear they had assumed the worst that the market crash had rendered them penniless and
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destitute but Livermore explained the incredible truth far from being poor they now possessed Wealth Beyond their
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wildest dreams the crash that had ruined so many had only catapulted the Livermore family to the Pinnacle of
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prosperity so at this point you're probably wondering how did it all come crashing
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down before we get into how Jesse Livermore blew his wealth and tarnished his legacy let's talk more about what
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his lifestyle was like at the height of his success Jesse Livermore lived a life
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of unparalleled luxury one of his most prized possessions was a
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magnificent $200,000 yacht a floating palace from which he would embark on deep sea fishing Expeditions attended by
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a dedicated 14 member crew such was his power and Prestige that even traffic
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light operators would switch the lights to Green as he drove by meanwhile livermore's wife was renowned for the
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lavish party she would throw glittering Affairs filled with a lead of society of course Livermore who always put trading
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first preferred these sores to take place when the markets were closed the couple's home was a Showcase
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of opulence filled with expensive Antiques and a gleaming Rolls-Royce in the driveway yet there was a dark side
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to Jesse's influence newspapers were filled with stories of scandals in his love for women driving Dorothy to
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develop a dependency on alcohol she began making strange purchases that put a strain on their
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Fortune one of her most bizarre decisions was to hire a fully French staff so their children could learn the
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language she spared no expense in recruiting native French speakers as chefs maids and
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nannies however the language barrier proved to be a significant problem Livermore and his wife struggled to
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communicate even the simplest instructions to their new employees and Dorothy eventually had to fire the
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entire French staff the constant overspending and erotic Behavior took a heavy toll on livermore's mental well
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being plunging him into a deep depression and driving Dorothy to hit the bottle even
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harder and in 1914 Livermore found himself a staggering million dollars in
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debt to his Brokers but how did he get there well
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first off Livermore was trading in what he called a flat Market a market with little opportunity for making money
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second of all he was repeatedly violating his own trading roles while going rogue had worked worked for
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Livermore in his early days his luck had since run out he was taking bad advice
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from Pals doubling down on losing bats and bailing on promising investments in both cotton and wheat combined this with
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his love for overspending and it's no surprise that Livermore had once again lost his
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fortune however even in The Darkest Hour his innate sense of Honor Shone through
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Livermore made a promise to his creditors that he would repay them in full when his for
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allow so after the markets reopened and the bankruptcy court cleared his debts
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Livermore threw himself back into trading with renewed Vigor determined never to face such
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hardship again he took the prudent step of securing half a million dollars in a trust fund ensuring that he would always
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have a financial safety net but just when it seemed Livermore had found stability once more fate dealt him a
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series of cruel blows in 1925 money hungry criminals attempted to abduct his
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children for ransom two years later a terrifying home invasion further
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shattered any sense of security these traumatic events plunged
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Livermore into yet another deep depression and the Relentless vilification he faced in the Press
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didn't help his wife struggling to cope with the aftermath of the invasion
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sought further soulless in alcohol her drinking habit spiraling out of control
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meanwhile the children found themselves floundering in school their education taking a backseat to the chaos at home
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The Strain on livermore's marriage eventually proved too much to bear and in 1932 the couple Divorced with Dorothy
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swiftly remarrying Livermore 2 sought a fresh start marrying a new wife whose tragic
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past seems to foreshadow his own fate all of her previous husbands had taken their own lives yikes and as if this
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wasn't enough livermore's professional world was only further thrown into
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disarray on May 30th 1933 the Securities of exchange act came into effect
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outlawing many of the tricks that had been instrumental in building his fortune one such trick was called
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painting the tape this involved Livermore placing trades in bucket shops than trading the real shares on Stock
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Exchange to move the price in any direction he wanted with Maneuvers like this outlawed
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Livermore found his toolbox suddenly empty in his ability to rebuild his wealth greatly
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diminished in 1934 Livermore once a financial God was forced to declare
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bankruptcy for the third time this time however he had no tricks up a sleeve to
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pay back his debts for a man who had prided himself on always honoring his debts this was a devastating blow to his
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ego lawsuits piled up including one from a mistress putting strain on what was
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already a less than perfect marriage and Livermore soon found himself suspended
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from the Chicago Board of Trades his reputation in tatters despite his best efforts
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Livermore never managed to rebuild his Fortunes in 1940 he published a book
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titled how to trade in stocks but it barely sold only adding to his sense of
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defeat on November 27 1940 a photographer asked to take livermore's
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picture he replied it's the last photo you'll take of me tomorrow I'm going
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away for a long long time the next day after stopping for a cocktail Jesse
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Livermore walked into a cloak room and ended his life with a single gunshot he was only 63 years old so what to make of
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this story filled with both success and failure with the highest of highs and the lowest of lows well first off as we
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reflect on the extraordinary life of Jesse Livermore it's clear that his trading methods while brilliantly
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effective in his time are now largely illegal we cannot replicate his exact strategies in today's market however
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there are still valuable lessons we can learn from the triumphs and tragedies of the boy plunger one of the most
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important takeaways is the significance of trusting your own instincts rather than relying on tips from others
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livermore's success was built on his ability to analyze patterns and make bold independent decisions based on his
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own convictions in a world where information is constantly swirling it's
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crucial to develop a keen sense of judgment to have the courage to act upon it another lesson we can glean from
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livermore's life is the importance of discipline both in the markets and in our personal lives his story serves as a
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cautionary tale about the dangers of excess impulsivity and the toll that
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unchecked ambition can take on one's mental health yet despite his tragic end
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Jesse livermore's story is a testament to the resilient human Spirit and the endless potential of those who dare to
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dream big but if you think livermore's story is insane you won't want to miss out on our next video a gripping tale of
30:42
another Financial mastermine whose life was just as if not more surreal and
30:47
unpredictable
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