The trader who made $100mn from the 1929 crash — only to lose it all

**Robert Armstrong** (0:00)
He would walk into stockbroker's offices, and they'd think he was a naïve kid, when in fact he was an absolute shark and would clean the place out.

**Robin Wigglesworth** (0:09)
I mean, I found this great quote that apparently he gave to his kids. The only way to get a real education in life is to examine each and every one of your mistakes.

**Robert Armstrong** (0:18)
Yeah, and isn't that the truth on Wall Street in life? It's the very same thing.

**Robin Wigglesworth** (0:23)
I think what's so compelling about Jesse Livermore is that he does learn from his mistakes, most of the time at least.

**Robert Armstrong** (0:30)
Bad investors, what they do, and what I've done when I've made mistakes, is you think you lost because it was a coincidence. Livermore never does that. The only thing that is winning is making money, and if you lose and lose money, it's because you were wrong, not because you were unlucky.

**Robin Wigglesworth** (0:57)
Today, on The Story of Money, how do you make 100 million bucks when marks are crashing and everyone else is losing their shirt and then somehow blow it all? Well, today we're going to be talking about one of history's most legendary traders, Jesse Livermore. He made a cool 100 million dollars in the Great Crash of 1929
That's actually one and a half billion dollars in today's money. Or if you want to scale it relative to the size of the US economy back then and now, around 30 billion dollars. One of the biggest trading halls in history. He was a larger than life character who went from Massachusetts farm boy to champagne soaked parties in New York.
He even helped inspire F. Scott Fitzgerald's Jay Gatsby. He's basically the patron saint of day traders everywhere. But tragically, just like Jay Gatsby, Livermore's rise was matched by a catastrophic fall. Now Gillian is away today sadly, so it's just me this week. I'm Robin Wigglesworth and this is the story of money from the Financial Times.
To get into the story of Jesse Livermore, I am joined by a very special guest, Robert Armstrong, who like Livermore is a bit of a Renaissance man. You may know as the FT's US Financial Commentator, or as the host of the Unhedge Podcast, or as the writer of the Unhedge Newsletter. For me, he'll always be the FT's best style columnist, and he also was a hedge fund analyst back in the day as well. So Rob, thanks so much for being here today.

**Robert Armstrong** (2:49)
It's a great pleasure to join the show.

**Robin Wigglesworth** (2:51)
So Rob, when did you first hear of Jesse Livermore?

**Robert Armstrong** (2:54)
When I first started working on Wall Street, there was a small handful of books that was pressed upon me, as kind of the founding literature of the profession, that every young man on the road to making money in speculation should read.
And one of them was a book called Reminiscences of a Stock Operator, which was written by a journalist called Edwin Lefèvre. And it's a roman à clef about Livermore's life, told in Livermore's voice. Really it's a sort of as told to autobiography, but he never mentions his own name. It's almost in the style of a novel, but it's this incredible, vivid, autobiographical testament to not only the ups and downs of Livermore's, the early and middle part of his life, but also his approach to trading stocks. As a result of this book, the way Livermore thought and talked is kind of burned into the minds of a lot of people on Wall Street.

**Robin Wigglesworth** (4:01)
Yeah, so he was this incredible trader, but this made him a legend, this book. And it still is read on Wall Street today, right?

**Robert Armstrong** (4:08)
Oh, absolutely. I mean, it's a wonderful book on the literary merits in a certain way. It makes Livermore into a kind of Wall Street Tom Sawyer, as it were, always getting up to high jinx, always getting knocked over and picking himself up again. And of course, one of the main lessons about being an investor is learning from your mistakes. And this is Livermore's constant theme in this book. So there's a way it's a book about flexibility, which is one of the great lessons that every investor has to learn.

**Robin Wigglesworth** (4:45)
I've never worked on a Wall Street trading desk myself, but I also have had that book recommended to me. I have it here in my shelf. I brought it to the forefront just for today.
I've seen people recommend, like Alan Greenspan has recommended it. This seems to be one of those kind of Wall Street classics or financial classics, even a century after it came out, which is pretty remarkable, really.