In the stock market, how many times have we picked a well-reasoned stock in anticipation of a price rise which never came? How often have we patiently waited, become disgusted and eventually sold off just when the stock began its upward moves?
What about the times when we kept holding on to a falling stock only to sell at the bottom? Again there were times when we delayed our purchases in an advancing stock only to buy at or near the ultimate top? Why so precisely wrong?
Is knowledge, wisdom, experience or charting the solution to these errors?
Jesse Livermore popularly known as the greatest speculator and trader made 100 millions in the 1929 cash. He became the richest American. For more than 30 years he had been successful in trading in commodities and the stock market. Who would have thought that Jesse would one day end tragically?
Jesse made two fatal errors. According to his tape-reading, Union Pacific was under accumulation. After he had bought 5000 shares, a personal friend, Ed Hutton, a great financier and owner of a broker firm, told him that he had inside tips that Union Pacific would tank. Acting on this tip, he sold his 5000 shares at $162 per share and made a profit of $10,000. The next day the stock jumped 10 points which meant $50,000 additional profits if he didn’t sell. He vowed never to listen to tips again.
There was a time when he shorted cotton. He was doing well when Percy Thomas, the “Cotton King” came into his life. Percy was a great talker. Before long, Jesse was under his influence. He covered his shorts and began to go long when cotton price was declining. The price of cotton continued to decline. For some mysterious reasons, he started to average down and kept on averaging down against his own principles. Eventually he lost 90% of his capital before he finally came back to his senses and sold out his stake for $300,000.
He tried to make a come back in the stock market. But from then on, his decisions were never right. From brilliancy to stupidity, he lost all his money; he was in debt to the tune of $1 million.
Eventually, he became a bankrupt in 1934 and committed suicide in 1940. He left a suicide note to his wife admitting that he was a failure.
Why did Jesse, a master speculator and trader with ample experiences, go against his own principles? Did God send Percy to bring about his downfalls? Is he destined to end in tragedy?
God helps us in mysterious ways, but he also brings about our downfall in the same manner.
