Thanks for the link. So, he has a strong short bias. Which works great during the crash of 1929.
HOWEVER, he didn't covered all of his position. He was up $100M (or $1.4B in today's dollar) and 4-5 years latter he was broke? WTF?!
I know it's easy with hindsight. With shorts, I'm a lot quicker to cover than with longs since there's a long bias in the market. This is the new me speaking. Years ago I countertrend and held on for catastrophic losses(well not catastrophic but relative to my small account level).
Then he went long at the top of bear market rally just when others were getting out and reshorting. Basically he went long at resistance in a bear market. I thought he studied TA.
However, wouldn't cutting losses have allowed him to keep most of his gains? So let's say he has a super wide stops. at 10%. So on a $100M he will lose $10M. He would still be $90M richer. The fact that he lost everything means he has really poor risk management despite being a "good" trader that caught huge moves.
Hmm.. interesting.
Regardless, he was a baller! I would be scared to swing such a large amount in order to make $100M.
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"But Livermore was soon up and investing again, making and losing fortunes. The peak of his career came during the crash of 1929, while he was heavily shorted. When the worst of the crash was over, he was worth $100 million, about $1.4 billion in today’s dollars, and one of the richest people in the world.
Over 42 days in 1932, the market snapped back, regaining 93% of its value. Livermore was badly hurt because of his short holdings and, to add insult to injury, went long just as the bounce ended. By the middle of 1933, all his gains from 1929 had evaporated. He was not only broke by 1934, but also owed $5 million to creditors."
