Jesse Livermore: How to Trade in Stocksby Scott Laming
The Snowball: Warren Buffett and the Business of Life
Warren Buffett is an array of paradoxes. He set out to prove that nice guys can finish first. Over the years he treated his investors as partners, acted as their steward, and championed honesty as an investor, CEO, board member, essayist, and speaker. At the same time he became the world's richest man, all from the modest Omaha headquarters of his company Berkshire Hathaway.
When Alice Schroeder met Buffett she was an insurance industry analyst and a gifted writer known for her keen perception and business acumen. Her writings on finance impressed him, and as she came to know him she realized that while much had been written on the subject of his investing style, no one had moved beyond that to explore his larger philosophy, which is bound up in a complex personality and the details of his life. Out of this came his decision to cooperate with her on the book about himself that he would never write.
Jesse Livermore made his name, and over $100 million dollars, by the end of 1929 during the worst economic climate ever recorded by short selling stocks in bear markets; which means selling a stock you do not own to someone, then buying it after the stock price has fallen so you can produce it to the original buyer keeping the difference as profit. Livermore was one of the most flamboyant personalities on Wall St. and now a signed copy of his first and only book How to Trade in Stocks commands a price of $15,000.
Born in 1877 Livermore began working with stocks at the age of 15 when he ran away from his parent’s farm and took a job posting stock quotes at a Boston brokerage firm. While he was working he would jot down predictions so he could follow up on them thus testing his theories. After doing this for some time he was convinced to try his systems with real money. However since he was still young he started placing bets with local bookies on the movements of particular stocks, he proved so good at this he was eventually banned from a number of local gambling houses for winning too much and he started trading on the real exchanges.
By 1907 he had been playing the market for the better part of 15 years and he quickly saw that the market was crashing; and he proceeded to short sell the market all the way to the bottom. During the panic of 1907 the stock market fell 50% and Livermore made a profit of $3 million.
During the flat markets from 1908 to 1912, Jesse Livermore managed to lose 90% of the money he had earned in the 1907 Panic and was forced to declare bankruptcy. Not to be one to roll over and give up he kept at trading and began making money again in the bull markets of the 1920s. In 1929 he noticed similar conditions that he had seen in 1907 and once again short sold his way through the great crash and ended up worth over $100 million dollars as America headed into the Great Depression.
Livermore married twice, first to a Ziegfeld Follies showgirl who he divorced in 1932. And the following year he married Harriet Metz Noble, a four- time widow who’s past husbands had all committed suicide. By 1934 Livermore was again bankrupt, and Livermore’s son suggested that Jesse write a book about his experiences in the stock market, possibly to cheer him up. The book was titled How to Trade in Stocks and was published in 1940 by Duell, Sloan and Pearce. It was initially panned by stock gurus at the time since Livermore’s practices were still considered new and controversial, also World War II was underway and peoples interests were obviously not focused on the Stock Market. Later that year Livermore joined the ranks of his wives other four husbands and also committed suicide.
Because of its initial cold reception early printings of the book are scarce and expensive. However the fact that the content remains so relevant today contributes to the Livermore’s book still being very much in print. Early copies of this work have become highly collectable reaching asking prices of four figures, rarer still is a signed copy of the book as Livermore had only a few months between the books publication and his suicide.
How to Trade in Stocks by Jesse Livermore
Published by McGraw-Hill (2006)
Prices from: $11.56
1940 Limited Edition Signed by Livermore
Book Price: $15,000
First Edition-Duell, Sloan & Pearce
Book Price: $7,000
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