Jesse Livermore the pioneer of short selling the markets

Jesse Livermore can be classified as one of the pioneers when it comes to short selling.

His first attempt at short market positions is when he sells Union Pacific just before the 1906 earthquake in San Francisco. The profit is 250,000 pounds, but that's just the beginning.

In 1907, the investor was a stock market seller, and as the market crashes, Livermore profits $ 1 million for his efforts. Always looking for the next goal, he concentrated on wheat production in 1925, with another successful short winning of $ 3 million.

After these successful deals Jesse Livermore gains a significant reputation, but his next short will make the previous ones pretty pale.

In the early autumn of 1929, Dow Jones grew fivefold in the last 5 years, but the euphoria on the floor of the stock market is not shared by Livermore. Incoming cash flows reach its $ 8.5 billion peak, while unpaid credits exceed the amount of money in circulation. Then Jesse Livermore sees the opportunity to short the whole market and he does it. The US financial sector is collapsing and Livermore has won $ 100 million, which is now estimated at $ 1.4 billion.

In 1934 Livermore was declared bankrupt and banned by the Chicago Board of Trade, only five years after its greatest success as an investor. No one knows exactly why and how he lost all his money, but his reputation as one of the best "short seller" still stands today.

Read more:

• PAUL TUDOR JONES: The next recession will be ‘frightening’
• Jim Rogers about the bubbles, emerging markets, Asia and something else
• Linda Raschke on Twitter: “So nice when someone sums up timeless guidelines with such a well organized layout”
• Ray Dalio: “The World Has Gone Mad and the System Is Broken.”
• Bill Gross: Cheap is not always cheerful in value investing