Boy Plunger

Discussions about personal psychology for the individual trader.
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BARLI
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Boy Plunger

Post by BARLI » Sat Sep 24, 2005 11:17 pm

i was researching more on J.L. Livermore's life and got interesting facts:

Livermore, Plunger, Bankrupt Fourth Time; $2,259,212 Debts, $184,900 Assets Listed
NY Times wrote:Jesse L. Livermore, celebrated stock market plunger, is bankrupt for the fourth time in his spectacular career. He filed a petition in Federal court yesterday listing liabilities of $2,259,212.48 and assets of only $184,900, which includes the face value of insurance policies totaling $150,000.
source: http://pqasb.pqarchiver.com/nytimes/950 ... ets+Listed

Couldnt he just deposit for his retirement some of the millions he made after his spectacular operations in New York and Chicago markets?
To be wiped out 4 times thats extraordinary.

ClaudeTheWonderCat
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Jesse

Post by ClaudeTheWonderCat » Mon Sep 26, 2005 4:42 pm

Barli asked :
"Couldnt he just deposit for his retirement some of the millions he made after his spectacular operations in New York and Chicago markets?"

No Barli, he couldn't. :shock:
Of Course He Couldn't!

Do you think _anybody_ acts against their nature just because they are acting in the stock market? :o
Because they don't. Not now, not tomorrow,...

Best of luck, y'all. :)
... ClaudeTheWonderCat

efficiency
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Post by efficiency » Fri Jan 05, 2007 5:41 am

Folklore isn't just Paul Bunyon, Daniel Boone and Davey Crockett. There's a distinction between trading skill/money management versus 10% margin, no upticks, outside capital, acts of God, press releases, and insider information.

For clarification, here's a sketchy chronology:

By 1900, aged 23, he had amassed roughly $50,000, from the bucket shops.

Fall of 1905 Thomas Lawson of Boston provided ALL partnership capital for Livermore to raid Union Pacifc stock, actively traded by the Harriman. pool.
Losing his ass up until April 18, 1906 San Franciso earthquake. UNP stock took two days to respond lower. Lawson got the proceeds and Livermore pocketed a $300,000 fee. Took off for Saratoga.

On an unknown date soon after Livermore made the mistake of going short the SAME stock. Harriman pool this time was prepared. Livermore watched a quarter of a million vanish on upticks.

Slightly later, another 50/50 deal with Lawson to short Great Northern. Made a second killing. .

Jesse made his FIRST million in shorting Anaconda in the summer of 1907. Market panic as much as his skill. Banks called existing loans. October 24, 1907 J.P. Morgan forced his fellow capitalists to start supporting stocks. Livermore knew better than to buck the Morgan crowd. Bought his first yacht, the Anita Venetian.

Had an epiphany that commodities posed less "problems" because prices depended upon supply and demand (rather than synthetic measures). Long 120,000 bales of cotton. First used the power of the press release. in the New York Hearld "July Cotton Cornered by Jesse Livermore". Shorts covered, suckers (his term) rushed in, Livermore unloaded. New nickname, Cotton King.

Spring of 1908, Desperately trying to stem a dropping price by buying in both New Orleans and Liverpool, found himself long 500,000 bales. Simply put, the Anita Venetian went under the hammer.

For Livermore 1911-1913 appear to be lean years.

In 1914 he was living Bretton Hall Hotel at 86th & Broadway.

Filed bankruptcy in 1915 with $102,474 in professed liabilities.

The Bethlehem Steel trade in cited LeFevere's book was in here somewhere.

December 20, 1916, somehow became alerted to a telegram to Finlay Barrel & Co. in Palm Beach from a Washington reporter named W.W. Price leaking of Wilson warning the warring parties. Figuring there'd be a market collapse, Livermore approached Lawson again. With capital, shorted the "four horsemen" US Steel, American Can, Baldwin, and Anaconda. E.F Hutton made a flash wire to its offices hours before Wilson's note was publicized. Bids melted away. Livermore bought a half million annuity to throw off $30,000 per annum Also rushed out and bought a speed boat called the 'sub-catcher" and a $120,000 platinum and emerald ring.

Unloaded his first wife via Reno in October 1917 and the 40 year old, on December 2, 1918, married the 18 year old daughter of a wealthy Brooklyn merchant named Wendt. Rented a furnished townhouse at 8 West 76th Street. January 1920, bought a seat on the Curb (today the AMEX). 1919, first son.

1921 had a pool agreement with the Lewisohn Brothers to ramp Seneca Copper. After running from $12 to $25, the brothers canceled the (then legal) agreement.

Summer of 1922, Livermore was reported to have lost $8.5 million on the short side of Mexican Pete. June 1922, Clarence Saunders, owner of the Piggly Wiggly chain hired Livermore to "kill the bears". By November, Livermore had amassed 105,000 of 200,000 shares outstanding at an average of $35. March 1923, stock was over $70. Livermore had 198,872 of the float. March 19th, Saunders asked Livermore to spring the trap demanding delivery from short sellers. Livermore RENEGED. Saunder's somehow succeeded anyway. From an open of 75 ½ sky rocked to $124, and closed the day at $82. Same year, ran the Mammoth Oil pool involving Harry Sinclair.

In 1924, Arthur Cutten forced wheat to over $2 per bushel for the first time. Livermore was short and lost a considerable amount.

In 1927, Livermore ran a pool to ramp Freeport Texas stock from $19 to $74 ½. Also a dirrector of Minter & Assoc, selling $9 million worth of Florida lots and filing BK two years after inception. Robbed at gunpoint in his home in May 1927.

April 1929, sued for $1,450,000 over the 1926 Boca Raton RE crash.

July 1929 refused to make a court appearance in a $525,000 suit against Livermore by the Carbonite Corp for an alleged breach of agreement.

October 1929, details sketchy but even though Livermore "won" millions on the short side, he lost $6 million in his long positions in the crash.. Arthur Cutten purportedly lost $50 million.

August 16, 1932. Divorced his second wife. March 28, 1933, married his third wife at age 56. May 30, 1933. Security Legislation enacted. Pool operations outlawed.

March 4, 1934, Livermore filed BK again. . $2,259,212 liabilities/$184,000 assets. (FLAVOR OF THE THREAD)

Thanksgiving Eve 1935 his divorced second wife shot his first son. Non-fatal.

Summer 1937 chartered a yacht (Nina) rather than owning it outright.

Apparently from 1934 to 1940 he was an investment advisor/broker. Apparently to acquire capital for a comeback, decided to write a book (in two versions) The office that's frequently mentioned in awe appears to have been merely a facade to promote the book. The "legendary" market key, is patterned after Dow Theory confirmation, but using two companies in each of 5 leading industries. Hardly original, and basically the opposite of pairs trading.

November 28, 1940, shot himself in the head in the hat check room of the Sherry-Netherland hotel after writing an 8 page note to his wife with the recurrent theme "My life has been a failure"

Hmmm, seems to reflect some risk management and position size issues in addition to artificial "edges".
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BARLI
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Post by BARLI » Fri Jan 05, 2007 5:58 pm

efficiency, thanks for your thoughts. Did you read Richard Smiten's books on Livermore? I haven't. Concernign his suicide, I think that he felt "unworthy" of Nina's love(was she his 4-th wife?) it evident from his suicidal note:
My dear Nina: Can’t help it. Things have been bad with me. I am tired of fighting. Can’t carry on any longer. This is the only way out. I am unworthy of your love. I am a failure. I am truly sorry, but this is the only way out for me. Love Laurie
Richard Smitten said that untouchable trusts and cash assets at his death totalled over $5 million, but he had failed to regain his trading confidence by his death, so he didnt die poor.

efficiency
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Post by efficiency » Tue Jan 16, 2007 4:14 pm

I own one of Smitten's books. It's repetiitve fluff now in storage. Nice photos though.

I believe he was married thrice, the last being a Ziegfield girl several years his junior.

He may have not died broke, but he did die by his own hand, and the bulk of the last decade was absent former artificial edges. The sailent point though is apparently poor risk management and/or position size. This may be a reflection of manic depression. The untouchable trusts is a clearer reflection of his lack of discipline. Earlier he had set up annuties which he eventually liquidated (defeating the purpose of establishing).

He received the plunger moniker in the bucket shops for a reason.

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Post by edward kim » Tue Jan 16, 2007 7:21 pm

efficiency wrote:I own one of Smitten's books. It's repetiitve fluff now in storage. Nice photos though.

I believe he was married thrice, the last being a Ziegfield girl several years his junior.

He may have not died broke, but he did die by his own hand, and the bulk of the last decade was absent former artificial edges. The sailent point though is apparently poor risk management and/or position size. This may be a reflection of manic depression. The untouchable trusts is a clearer reflection of his lack of discipline. Earlier he had set up annuties which he eventually liquidated (defeating the purpose of establishing).

He received the plunger moniker in the bucket shops for a reason.
i read the original book, and i hear Smitten removed the last section on his trading log and pivot points. that is a very good read, in my opinion.

BARLI
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Post by BARLI » Wed Jan 17, 2007 9:43 am

efficiency wrote: He may have not died broke, but he did die by his own hand, and the bulk of the last decade was absent former artificial edges. The sailent point though is apparently poor risk management and/or position size.
You mean he lost his edge trading his last 10 years? Its hard to agree cos he had 40 years + of trading experience. I agree that his risk management was poor though.
Edward, are you taking about a book "Trade Like Jesse Livermore"?

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Post by edward kim » Sun Jan 21, 2007 1:48 pm

BARLI wrote:
efficiency wrote: Edward, are you taking about a book "Trade Like Jesse Livermore"?
no, i am talking about the original book "how to trade stocks" circa 1940.

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Post by efficiency » Mon Jan 22, 2007 8:07 am

BARLI wrote:
efficiency wrote: He may have not died broke, but he did die by his own hand, and the bulk of the last decade was absent former artificial edges. The sailent point though is apparently poor risk management and/or position size.

You mean he lost his edge trading his last 10 years? Its hard to agree cos he had 40 years + of trading experience. I agree that his risk management was poor though.
Edward, are you taking about a book "Trade Like Jesse Livermore"?

Yep, that's exactly what I meant.

There's good experience. There's bad experience. There's irrelevant experience. Replicating experience is a subset.

His last decade was relatively lean. Your own original post is about his FOURTH OFFICIAL BK. $184m may have been a princely sum in 1934, but was DWARFED by $2.2mm. Dying by one's own hand, whether from mental illness or a broken heart, has elements of both descretion and finality. Nobody I want to emulate. E.W. Harriman might be a better choice.

All indications are his 1940 book (published in two versions) was to raise funds for a comeback rather than the sharing of sage wisdom. It's debatable about his impressive office being a temporary facade for the press. It's not debatable that Securities Legislation, also in 1934, changed the complexion of the equity markets.

I'm not going to continue to debate this. Nothing to gain. Just interjecting my two cents about foklore with a chronology. Incidently, I reside precisely 3.5 miles from Buffett, so I have "experience" and consequent aversion to folklore and the walking on water, particularly when groupies may be referring to an all-you-can-eat restaurant in a northern suburb of Detroit.

Lastly.........I wish someone would stake me all the capital for a pool campaign, inflation-adjusted from 1906 dollars. I can piss it away as well as the next guy.

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Post by tony5147 » Tue Jan 23, 2007 4:14 am

Hi :

If Mr Jesse Livermore is alive today he would have been a
more "efficient" trader. Instead of relying on the tape machine
and chalk boys filling the quotes of the blackboard, he would
have live streaming stock data, online technical charts and
live news feed at his fingertips to aid his decision making.

But he does have to mend his poor money management trading
habits though :)

BARLI
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Post by BARLI » Tue Jan 23, 2007 10:46 am

efficiency, thanks for your thoughts, update us on some inside buyng of Mr. Buffet :wink:

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Post by efficiency » Fri Jan 26, 2007 3:35 pm

tony5147 wrote:Hi :

If Mr Jesse Livermore is alive today he would have been a
more "efficient" trader. Instead of relying on the tape machine
and chalk boys filling the quotes of the blackboard, he would
have live streaming stock data, online technical charts and
live news feed at his fingertips to aid his decision making.

But he does have to mend his poor money management trading
habits though :)
One for the road, or is it baker's dozen? I forget.

Ask any carpenter or mechanic about the right tool for the job.

Problem is, human nature (particularly greed, fear, and impressionability) hasn't changed. Manipulation still exists, just more covert.

Again, Livermore's success, irrespective of booms and busts, was PRIOR to 1934 (security legislation). One example was negating pools. Incidenlty, Joe Kennedy, who led the 1926 pool in Yellow Cab, became the first head of the SEC. Not long after rum running from Windsor to Detroit. Let the fox watch over the henhouse.

Streaming stock data? You mean, as Seykota puts it, feeding the slot machine?

News? Internal news is by design as to BOTH timing and content. May be valid, may be fluff. Hmmm, called "release". Already acted upon for the anticipated response. Like a playing a violin. Tweedle dee.

External news can't generally be predicted. May be applicible. More often than not, no bearing or or at best temporary impact.

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