Interview with Jessy Livermore
summary-story about a 14year old boy in a time near the great depression, he meets Jesse Livermore, the billionaire that is one (or the best) of the best stock market traders the world has even known.
It was late at night, I looked the clock besides my bed, 2AM, it said, and I stood up to get a glass of water. There in my kitchen was my dad, asleep in the table with a bunch of papers besides him. I slowly went to get the glass of water, when my dad woke up. Jamie, come, sit, I have to talk to you, he said, y looked him surprised, his face was uncharacteristically serious, and on my fifteen years of life I can only remember seeing him this serious since my grandmother got badly sick and died two years ago. So I knew this wasnt going to be good. I sat down and looked him.
Jaime, we have to move out of this house in 3 days, I lost the money to maintain it, I didnt expect that after Thursday this downward continued in the stock market. I had no words, move out of my house? Where were we moving to?My dad was a very successful trader; he had done more than a million dollars on the stock market, but almost always he played with all his money, and not only his money but also money he was led by his broker, so he played with more money than what he actually had. It often seemed risky to me, but since we didnt had any money problems, I didnt really pay attention to it. In these days people will come and take our things to a van, Im sorry, son, I should have played more safely.This was the third day, it was Sunday first of November of 1929, and in three days I had lost practically all my possessions, and so had the rest of my family, my dad was now looking for a job. We moved to a department in Manhattan, I was pretty shocked, from living in a big house, without no worries, with a lot of toys, money, clothes, I had gone to a small apartment with very few of my stuff, and to top it all, I had to change of school, and had no friends in my new school.
I started going to school the day after we moved, it was half the school year already, and I really couldnt make much friend, it was hard to adapt. Besides, I had to take a job at a restaurant, as a janitor, it was a fine restaurant, many rich and important people came there to eat and have meetings. One day I was walking through the restaurant cleaning the floor, when I found a dropped newspaper. It said in the front page MARKET CRASH, WORLD IN CRISIS! I really couldnt understand that, I knew what the stock market and Wall Street was, but my dad had never really taught me about it deeply enough to understand it. But I did understand all the downward of the stocks and it was pretty logic that it meant the world was losing money. I kept walking while I read the newspaper, then I crashed with somebody.
It was a man, he was dressed very elegant, and he appeared to be about 53 years old. Im sorry Sir, I got distracted reading the newspaper I said, he picked up the newspaper I dropped, and, as he started to read it, he asked, How old are you? Im 15, sir I answered. He stared to me in a weird way, like if I remembered him of something. Son, in what does your dad work? He is looking for job, he lost a lot of money with the market crash and he is having a hard time finding a job. Mmmm, do you know who I am? Sorry, no, I dont know Im Jesse Livermore, Im a stock trader, I started to learn and make money from the stock market at your age, when I was fifteen years old. Wow, u learned by yourself? yeah, I learned by myself, and, by the way, I have an offer to you, if you want I can become your mentor for a while, pass on to you all I know about trading, so, what do you think about it? wow, I didnt know what to say, a rich trader of nowhere asks me to be his pupil, what should I say? look, you dont have to answer right now, Ill be eating here tomorrow night, if youre interested I will take you with me and teach you all about trading, market and economy, if not, you will keep living your life as you had, think about it and ask your parents. He continued walking and went into the elevator.
I came home late at night, I had gone to take a walk and think about if I went with him or not. When I came into our department my parents were waiting in the door, where had you been? We had been worried sick about you! said my parents mom, dad, I need to talk to you I was very serious, and in seconds their expressions of anger turned into ones of surprise and concern, I told them what had happened, and that I wanted to go. No, you cant go away! said my mother, but my dad stopped her Jesse Livermore is of the bests traders in all the world, we cant take him this opportunity said my dad But, but she couldnt finish, I walked to my room to pack the few things I had and went to sleep, to go in the morning with Mr. Livermore to live ad his pupil for a while.
In the morning I met again with Mr. Livermore, the first thing he did was to take me to his desk and showed me a bunch of papers with graphics that I couldnt understand at first, he thought me the basics, formations, what volume is, and the common patterns. He had me studying this for about a week, until I had all this memorized, at the end he asked me what each meant and technically what stock would go up and which one would go down, I passed the first 3 graphs, but the fourth, although it was very similar to the other ones, Mr. Livermore didnt accept my answer. This stock is one year ago, look what it did after this and I saw what it had done, it had crashed and lost practically all its value, This is your next lesson, always check the fundamental side too, and the market state What is the fundamental side? The fundamental side is what the company that the stock represents is, in the mayority, good companies lead to good stocks, but we cant buy any stock without considering both technical, that the stock has good graphic, and fundamental, that the company has a good product. Ah, and stocks are moved by supply and demand, it depends of the confidence of the people, just as the economy.I spent the next 3 months practicing, like Mr. Livermore did when he was my age, writing down predictions on a paper and then checking them after they moved. But I was getting impatient, I was accurate on almost every stock, and I wanted to play with some money. Remember, Jaime, practicing shooting with targets isnt the same than being in a battlefield where if you miss you would die, but ok, Ill test you, Ill give you a thousand dollars to play with, if you lose them, you will return to your home and lose this opportunity I was scared, but I was inpatient and I thought I was more than ready, so I accepted Youre on your own now with this, just remember the rules, cut loses, make your wins bigger, and dont listen to others advice.
From that day Mr. Livermore would not talk to me anything about the stock market, maybe we would talk of other things or opinions, but he would not advice me of any sector or stock. It was now 1930, and the depression hadnt ended, then it came to my mind what Mr. Livermore had said to me before The stocks and the economy are moved by the confidence or fear of the people. Then I knew that it would be easier to gain more profit shorting, but what sector and stock? I remembered what my mentor had said In general, the stocks that represent companies that have good products, will rise in their time, and eventually the companies with bad products will fall with the smallest amount of fear.
Ok, what sector was the worst? People had fear; they didnt have money, and couldnt get jobs easily, what type of company depends on peoples trust, enough to make it break? Well, it came to my mind; its a recession, a big one, of what I had heard, what is the primary effect? Countries stop growing, people save, consume less, and then it came to my mind buildings, cars, houses, and what sectors depend on that? Mining and logging, because of that were the cars, buildings and houses made of, so I picked ____, a stock that represents a company that specializes itself in building houses.
I sold ____ short, and followed Mr. Livermores rules, sold and sold more in short as it kept going down, by the time I covered my position it was 1932, and I had about seven hundred thousand dollars, I had won more than a 500% profit. Mr. Livermore thought I was ready, he was fifty five years old, and he wanted to rest for a while, so he gave me the money I had won, and told me to return with my parents. I was very grateful with Mr. Livermore, and went home, with the best gift someone could ever give to me, financial education.
My parents were very happy to see me, and couldnt believe the money I had won, and what I had learned. I had dedicated since then to trading in the stock market.
Well, gentleman, this is all, this is how I became so good, I was tough by the best trader, Jesse Livermore, who before his death he left with me his teachings, and now at my 27 years I have absolutely no economic problems, I dedicate all this to my teacher, Mr. Jesse Livermore.