Jesse Livermore: The Boy Plunger

In March 1934, Jesse Livermore’s lawyers filed papers listing his liabilities at $2,259,212.48. His assets were $184,900, mostly life insurance. He owed more than $560,000 in unpaid state and federal income taxes. His estate at Great Neck, Long Island, had already been sold at auction for $168,000.⁴⁰

Time magazine headlined its report “Fourth Down.” By its count, this was the fourth time Livermore had failed.⁴¹

For a generation of traders, Livermore was a legend. He had started at sixteen, in 1893, as a board boy at Paine, Webber & Co. in Boston, chalking prices on the quotation board. He was told to stop speculating in bucket shops, cheap betting parlors where customers wagered on stock price movements without owning shares, and he left the job.⁴² He moved to New York and became one of the most famous speculators in the country. His nickname was the Boy Plunger.

His reputation rested on a few spectacular bets. A short position in Union Pacific before the 1906 San Francisco earthquake reportedly earned him about $250,000. During the Panic of 1907 he reportedly made about $3 million.⁴³ (A short position is a bet that a price will fall: the trader borrows shares, sells them, and hopes to buy them back later at a lower price.) He is also widely reported to have made a very large fortune by betting against the market before the 1929 crash, though the commonly cited figure of $100 million rests on secondary sources and should be treated as unverified.⁴⁴