From $5 to billions and then ending with a gunshot—how did Leverage's Wall Street legend come to a close?

A person can make 100 million USD in the market but go bankrupt in life down to only $8.24.

On November 28, 1941, the night before Thanksgiving, gunshots rang out in the cloakroom of the Shirley Holland Hotel in Manhattan, New York. 63-year-old Jesse Lauriston Livermore ended his life with a Colt .32 revolver. He was once the most legendary trader on Wall Street and considered a “Bible-level” figure in Buffett’s eyes. But this genius, who once had a net worth over a hundred million dollars, left only three last words: “My life is a failure. I am tired of fighting and can’t endure it anymore. This is the only way out.”

His story is not simply a “zero to millionaire” tale but a more complex test of human nature—how one can lose oneself between money and desire, how to hover between genius and self-destruction.

A reluctant farm boy, starting a financial legend with $5

Born in 1877 into a farming family in Massachusetts, Livermore learned to read and write at three and a half, and by five, he was reading financial newspapers. His mathematical talent far exceeded his peers—yet such a prodigy was ordered by his father to stay on the farm.

At 14, a fierce argument with his father changed his life trajectory. His mother secretly raised $5 (equivalent to about $180 today). In spring 1891, the rural boy boarded a train to Boston. Instead of going to a relative his mother had designated, he stopped in front of Paine Webber stock brokerage. The flashing numbers on the quote board captivated him completely. He successfully applied to be a quote recorder with a slightly mature appearance.

Like many geniuses, Livermore discovered hidden patterns in seemingly ordinary work. Using a 1-cent grid notebook, he drew stock charts and found that the Union Pacific Railroad’s stock price fluctuated similarly at specific times (11:15 am and 2:30 pm), as if “driven by an invisible tide.” He noticed patterns behind large buy orders in broker notes, realizing these numbers were not random but traceable.

While recording cotton futures prices, he suddenly realized: “These numbers breathe—rising like climbing stairs, falling like collapsing snow piles.” This insight laid the foundation for later technical analysis theories.

Full-time trader at 16, the “troublemaker” repeatedly banned

Livermore found a betting house, invested $5, and earned $3.12 profit. Working while trading, he decided to quit at 16 to become a full-time gambler.

He was like a martial arts master stepping into the arena for the first time, quickly gaining fame within a few years. But because he kept winning money, he was banned one betting house after another in Boston. This young man in his early twenties managed to close the doors of casinos to him—he earned $10,000 (about $30,000 today).

First failure in New York: the first lesson for a genius

In 1899, he moved to New York. At 23, Livermore met Native American girl Nattie Jordan, and they married after a few weeks. The young trader, new to the big stage, was unaccustomed to the larger arena. He traded based on automatic stock quote data but lost because these data lagged the real-time market by 30 to 40 minutes. Less than a year after marriage, he went bankrupt due to trading failures.

To raise funds, Livermore asked his wife to pawn her jewelry, but she refused. Seven years later, they divorced.

This failure planted a seed: Livermore began to doubt himself, becoming moody, and this mental state would develop into depression over the years.

The epic battle of short-selling: three months earning $7.5 million

From 1899 to 1906, Livermore rebuilt himself over seven years. By age 28, he had accumulated $100,000 in capital. But he started criticizing himself—despite making money, he was still unhappy, and his trading was too conservative. During a vacation in Palm Beach, he engaged in deep self-reflection.

The opportunity arrived on April 18, 1906. The San Francisco earthquake, magnitude 7.9, destroyed the city. The market was generally bullish on Union Pacific Railroad (UP), expecting reconstruction to boost transportation demand. But Livermore held a contrary view.

His logic was clear:

• Fundamentals: The earthquake caused a sharp decline in freight volume in San Francisco; insurance companies needed to sell blue-chip stocks to cash out; UP’s financial reports would be far below expectations.
• Technical: The stock rebounded but with shrinking volume, indicating weak buying interest; he waited for the price to hit a key support level before starting to position.

Livermore executed this plan in three phases. In April-May, he shorted at $160; after the grim financial report in June, he increased his position; by July, when the stock plunged below $100, he closed near $90, earning over $250,000 (about $7.5 million today).

From this trade, others summarized Livermore’s core strategy: wait for trend confirmation before going all in, deeply understand that “good news is often bad news,” and always keep reserve funds for volatility. These trading principles remain effective even 120 years later.

The 1907 panic: Livermore’s one-week profit of about $100 million

In 1907, Livermore discovered that New York Trust was heavily leveraged in junk bonds, with interbank lending rates soaring from 6% to 100%—a sign of liquidity crisis. He personally went undercover to investigate and confirmed that many trust companies held poor-quality assets.

He shorted key stocks like Union Pacific and U.S. Steel through multiple brokerages. On October 14, he publicly questioned Nickebork Trust’s ability to meet obligations, triggering a bank run and bankruptcy.

On October 22, he used T+0 clearing rules to concentrate selling, triggering programmed stop-loss orders and accelerating the crash. On October 24, NYSE’s chairman personally begged him to stop shorting, or the market would collapse entirely. Livermore exited precisely one hour before Morgan announced the bailout, closing 70% of his short positions.

Total profit: $3 million, equivalent to about $100 million today.

This battle cemented Livermore’s reputation as the “King of Wall Street shorts” and allowed him to experience the power of information advantage and market psychology.

The genius’s self-punishment: $3 million loss in cotton futures

But human nature always wins at some point.

Livermore’s friend Teddy Plaisance was an authority in the cotton industry, with firsthand information on the spot market. Plaisance publicly bullish on cotton, and Livermore, wanting to “prove his cross-market ability,” was exploited psychologically. Even when data contradicted Plaisance’s view, he stubbornly believed his friend and ultimately held a long position of 300 million pounds of cotton futures—an excessively large bet.

The result was a complete loss: losing $3 million, wiping out all his 1907 short-term gains. This failure caused Livermore to violate his three iron rules: never trust others’ advice, never average down on losing positions, and never let narratives override price signals.

More precisely, it wasn’t betrayal by a friend but a self-punishment of a genius—a gambler’s all-in failure.

The comeback: turning $50,000 into $3 million

After a disastrous cotton trade in 1915, Livermore staged one of Wall Street’s most legendary comebacks.

He voluntarily filed for bankruptcy protection, reaching an agreement with creditors to keep only $50,000 for basic living expenses. Using secret credit lines obtained from former rivals, he agreed that all trades would be executed by the other party—an indirect form of oversight, but also a forced risk control at 1:5 leverage (previously he used 1:20).

These restrictions ironically helped him rebuild trading discipline.

At this time, World War I broke out, and U.S. military orders surged. Livermore noticed Bethlehem Steel’s stock price had not yet reflected this trend. Volume increased but price remained sideways—classic accumulation signal.

Starting in July 1915, he tentatively bought 5% of his capital at $50. In August, when it broke $60, he added more. In September, when it retraced to $58, he refused to cut losses, convinced the uptrend was intact. By January next year, the stock soared to $700, and he took profits at 14 times his initial capital—turning $50,000 into $3 million again.

The curse of money: three marriages and four bankruptcies

In the following decades, Livermore’s story continued around money and women.

He established a formal trading business, earning $15 million and employing 60 staff. In 1925, he made $10 million trading wheat and corn. During the 1929 Wall Street crash, he profited $100 million (about $1.5 billion today) through shorting.

But in the next ten years, all that money was spent on divorce, taxes, extravagance, and more.

After a long divorce from his first wife Nattie, he married dancer Dorothy and had two sons. But he also had an ambiguous relationship with European opera singer Anita, even naming a luxury yacht after her. Dorothy gradually became addicted to alcohol.

In 1931, Livermore divorced again, and Dorothy received a $10 million settlement. His estate, once bought for $3.5 million, was eventually sold for only $222,000. The mansion that held over a decade of happiness was demolished, and Livermore’s depression deepened. The jewelry and wedding rings he gave Dorothy, engraved with words, were sold cheaply—this was a fatal blow to his psyche.

This detail reveals two things: geniuses cannot endure emotional humiliation, and women who divorce are truly terrifying.

In 1932, at age 55, Livermore met 38-year-old Harriet Mets Noble, a “social widow” who was divorced. She might have misjudged Livermore’s wealth—he was actually $2 million in debt. After his last bankruptcy in 1934, they were forced to leave their Manhattan apartment and survive by selling jewelry.

The final darkness: heading toward the irreversible

In November 1940, Harriet committed suicide in a hotel room with Livermore’s revolver. The note mentioned “unable to endure poverty and his alcoholism.” Livermore wrote in his diary: “I have killed everyone close to me.”

A year later, on November 28, 1941, in the same hotel’s cloakroom, a deeply depressed Livermore pulled the trigger to his temple. It was the same weapon he carried for years and the same model he bought after his 1907 short-selling success—seemingly a closed loop of fate.

His pockets contained only $8.24 in cash and an expired horse racing betting ticket. Only 15 people attended his funeral, including two creditors.

It wasn’t until 1999 that fans raised funds to inscribe an epitaph on his tombstone: “His life proved that even the sharpest trading blade ultimately cuts himself.”

The legend’s legacy: core rules of the trading Bible

Livermore experienced four rises and falls but left behind a trading philosophy revered by Buffett, Soros, Peter Lynch:

• Buy rising stocks, sell falling stocks
• Trade only when the market shows a clear trend
• Wall Street never changes because human nature never changes
• Investors must beware of many things, especially themselves
• The market is never wrong; only human nature makes mistakes
• Making big money relies on patience, not frequent trading
• The market only has one side, not bull or bear, but the correct side

Livermore’s life is a footnote to these rules—he mastered the market but lost to himself; he could beat Wall Street but not human nature.

The New Yorker once commented: “Livermore was precise with a scalpel in the market but blind as a drunkard in love. He spent his life shorting the market but always longing for love—and both led to his bankruptcy.”

From $5 to billions, then from billions back down to $8.24, Livermore’s life exemplifies the paradox of money and desire—when a person masters the rules of the market but cannot conquer their own inner demons, all wealth ultimately vanishes into nothingness.