“Dead Money No More! Jesse Livermore’s Final Insight on Capturing Big Gains

The financial world is full of inspiring stories from investing pioneers. One such character whose story stands out and is extremely relevant in these current times is Jesse Lauriston Livermore. Jesse Livermore is often remembered as the world’s greatest stock trader, who started out trading on the floor of the New York Stock Exchange at the tender age of 14 with just a few thousand dollars. Over the course of his lifetime he made millions of dollars trading the stock market through analysis and insight. His trading principles have helped guide the decisions of countless investors and have been discussed and dissected for decades. The final chapter of Livermore’s journey came in 1940, when he held a large position in a stock and his trading accounts were completely frozen. He believed that the stock was still undervalued and it would eventually go higher. Despite the fact that he has held the same stock for over a year, the stock was still trading below his purchase price. This posed a major problem – he couldn’t sell the stock, and he could not access the funds. This came to be known as ‘holding dead money positions’. Eventually, Livermore was able to make this dilemma work in his favour. He used the proceeds from the stock to purchase a larger position elsewhere and took advantage of the appreciation in the stock. In doing so, he managed to move his funds from a lower performing position to one that was offering better returns. This move by Livermore serves as an important lesson in investing and trading, especially for those caught in a dead money position. Instead of feeling trapped, savvy investors can use this opportunity to deploy their funds in investments with better returns. By using this approach, we can strive to make the most of our positions, as Livermore did. This is an example of the deep insight and decades of experience that Livermore had in the stock markets and why he is regarded as one of the most influential traders of all time. It is important to take the time to reflect on the lessons we can learn from his life and to focus on making smart decisions and pursuing the right strategies when it comes to our investing.