New book on Jesse Livermore -- reviewed by NYT.
September 9, 2001
OFF THE SHELF
A Speculator's Life Is Still Elusive
By DIANA B. HENRIQUES
There may be no more enigmatic figure in Wall
Street history than Jesse Lauriston Livermore,
an elegant but austere New Englander who
became one of the nation's earliest celebrity investors.
Well, "investor" is a stretch. Speculation was Mr.
Livermore's game from his first teenage gamble in the
dubious bucket shops of Boston in the early 1890's.
His precocious success there caused traders to label
him the "Boy Plunger," a nickname that stuck long
after his sleek blond hair was frosted with gray.
Mr. Livermore played big and lived large, making his
fortune and losing it many times over while cultivating
a fearsome reputation as a lone wolf among the bulls
and bears. After a decade of struggling to play by the
new Roosevelt stock-trading rules, he left the speculative game as memorably as he had joined it. Just after 5:30
p.m. on Nov. 28, 1940, the impeccably dressed Mr. Livermore finished his second cocktail at his usual spot in the
Sherry Netherland Hotel bar in Manhattan, walked across the lobby to a deserted cloakroom, put a Colt automatic
pistol to his head and pulled the trigger. In an eight-page suicide note to his third pampered wife, he declared himself
a failure and said he had simply grown tired of struggling, yet again, to dig himself out of debt.
Even before that film-noir exit, the mystery with which Mr. Livermore
ostentatiously cloaked himself was like catnip to the financial journalists and Wall
Street gossips of his era. They loved trading stories about his impregnable
penthouse office, the daring burglary at his lavish Long Island estate, his
insatiable appetite for beautiful young women and his uncanny instincts —
especially, that inexplicable hunch that allowed him to profit from the San
Francisco earthquake of 1906. Was it really true, they all wondered, that the
plutocratic J. P. Morgan himself begged Mr. Livermore to stop selling into the
panic of 1907?
Unfortunately, the same obscurantism that made Mr. Livermore's legend in life
has made the dead Mr. Livermore the biographical equivalent of the Bermuda
Triangle — fatally attractive, possibly bogus and ultimately unknowable. Few
biographers have even tried to capture this elusive speculator. Indeed, the entire
Livermore bibliography would fit in a briefcase, with room left over for the grains
of salt that each of the books requires.
Among financial history mavens, the most famous of those books is certainly
"Reminiscences of a Stock Operator," first published in 1923. Ostensibly written
by Edwin Lefèvre about a speculator named Larry Livingston, "Reminiscences"
was dedicated to Mr. Livermore and burnished his thinly veiled image to a
remarkably durable gleam. How much of it was true? Was any of it true? Did Mr.
Lefèvre even write it? No matter — it remains a Wall Street favorite; indeed, John
Wiley & Sons brought out a $100 leather-bound reprint for the book's 75th
anniversary.
In 1940, the faltering Mr. Livermore brought out his own book, "How to Trade in
Stocks." Its cumbersome subtitle was "The Livermore Formula for Combining
Time Element and Price." That "formula" was no longer working very well for
the author, unfortunately, and Mr. Livermore clearly hoped that the book would
attract new acolytes. (Eventually, it did. It is still a favorite among self-taught
investors — but its success came far too late to rescue its despairing author.)
The first conventional biography, "Jesse Livermore: Speculator- King," came out
in 1967. Its author, Paul Sarnoff, had interviewed a dozen or so Wall Street
professionals who had actually known Mr. Livermore, including the then-famous
Gerald Loeb of E. F. Hutton. Still, the volume ran to only 136 well-padded pages
without footnotes, of course, and with a skimpy bibliography that includes
clippings from Police Gazette.
Thus the reader does not know who told Mr. Sarnoff that Mr. Livermore, just
before his death, had claimed authorship of "Reminiscences of a Stock Operator,"
saying that Mr. Lefèvre served only as "editor and coach." The fact that Mr.
Sarnoff got the book's title slightly wrong — attributing the reminiscences to a
"Stock Market Operator" — is the sort of thing one encounters cover to cover in
the Livermore library.
Then, in 1999, Richard Smitten produced a 288-page volume called "The
Amazing Life of Jesse Livermore," published by Traders Press in Greenville, S.C.
It is apparently the basis for Mr. Smitten's new book, "Jesse Livermore: World's
Greatest Stock Trader," being published this month by Wiley, which has reissued
an impressive line of genuine financial classics.
Sad to say, this new expedition into the misty land of Livermore is an enormous
disappointment. Its author, whose earlier books include several financial crime
thrillers and "Kathy: A Case of Nymphomania," has done nothing to dispel the
contradictions and confusion that surround the colorful speculator's career. Rather, he has muddied the waters
further.
Although Mr. Smitten acknowledges the help of surviving members of the Livermore family, their contributions
appear to have been limited to recounting dinner-table tales and settling old scores. There is little evidence that Mr.
Smitten tried to verify what he was told, even when such evidence would clearly have been available from
Congressional testimony or other archives or a basic Wall Street history. For example, he hilariously credits Joseph
P. Kennedy with writing the 1934 legislation that created the Securities and Exchange Commission, whose rules Mr.
Livermore would find so troublesome. "President Roosevelt had asked Kennedy to write the legislation, which
would go on to withstand the test of time," he adds helpfully. (That hum you hear is Felix Frankfurter, the Harvard
law professor and later Supreme Court justice who largely shaped F.D.R.'s securities legislation, spinning in his
grave.)
Mr. Smitten recounts, straight out of the Lefèvre book, Mr. Livermore's version of his inexplicable impulse in 1906
to bet against Union Pacific (news/quote) railroad's stock several days before news of the San Francisco earthquake
sent the stock plummeting. But he ignores the assertion by Mr. Sarnoff that Mr. Livermore actually made those
famous trades at the direction of Thomas W. Lawson, an irrepressible market scalawag in Boston. And he ignores
Mr. Sarnoff's claim that Mr. Livermore, not Mr. Lefèvre, actually wrote "Reminiscences of a Stock Operator." In
fact, Mr. Smitten doesn't even mention that book after the acknowledgments, although it presumably would have
loomed large in Mr. Livermore's life back in 1923.
Without footnotes and with the skimpiest of endnotes, and with dreadful imagined dialogue that makes one long for
Kathy the Nymphomaniac, this new "Jesse Livermore" is useless to anyone genuinely interested in the rich history
of Wall Street.
But that, clearly, is not its intended audience. Instead, it seems to be aimed at the next crop of self-styled
Livermores — obsessive chart-reading traders who are still convinced that the "world's greatest stock trader" had
cracked the secret code of the market and found a way to anticipate price movements before they occurred. Now,
really, the man went bankrupt more times than Warren Buffett goes fishing! Mr. Livermore himself credited his
great 1906 coup to extrasensory perception, and most of his big money was made in an unruly manipulated
marketplace that counted him as one of its most artful dodgers. When required to abide by the new S.E.C. rules, he
floundered, faltered and finally gave up.
Heaven knows, Jesse Livermore has lost none of his fascination in the 60 years since he declared himself a failure
and pulled the trigger. But why does this biographer insist on calling him a success? Why does he listen so raptly to
every throwaway comment Mr. Livermore ever uttered about the market and ignore what Mr. Livermore said so
emphatically, in that dim hotel cloakroom, about himself?
Copyright 2001 The New York Times Company |
