What kind of mistakes should we never make? Why did the king of speculation commit suicide? Today, let's take a look at how the king of speculation, Livermore, earned 100 million US dollars and reached the peak of his life, and how he fell from the peak of his life to the bottom and committed suicide. What inspirations can Livermore's son's suicide and his grandson's suicide bring to us?

Let’s first look at how he got the title of the King of Speculation. In May 1929, Britain elected a new left-leaning prime minister. Livermore verified through various data and channels that the new queen would most likely raise interest rates for the Bank of England after taking office. Moreover, Britain was the global financial hegemon at the time. If the Bank of England raised interest rates, it would be a huge negative for the global stock market.

Although the US stock market was still rising at that time, Livermore found through data analysis that the number of stocks with record high prices in June fell from 614 a year ago to 338. He also noticed that the US housing starts and car sales data were both declining, which indicated that the US economy was about to slow down. During this period, he continued to short US stocks on a small scale, but lost $6 million. Because the bull market was still going on at this time, it was just the tail end of the bull market.

In early September, the U.S. stock market was weak and increasingly unstable, so Livermore began to increase the scale of short selling. On September 5, he opened a short selling of $15 million. On the same day, the U.S. stock market plummeted, and he made a net profit of $1.8 million. On September 20, he shorted the U.S. stock market again and made a profit of $2.5 million on the same day. Since then, the U.S. stock market has continued to fall, but the trading volume has not increased. At that time, many investors still believed that the bull market in the U.S. stock market was still there, and this correction was just a halftime break and a normal correction. Most people were adding positions significantly, but Livermore insisted that the bear market had come and continued to short sell.

On October 3, the British Chancellor of the Exchequer suddenly warned that the U.S. stock market was very risky. The U.S. stock market plummeted. Livermore saw an opportunity and went all in. The next day, he mortgaged his house and yacht to get a loan of $10 million. Together with the original $20 million, the total principal was $30 million. According to the leverage rules at the time, he could add up to 25 times the leverage, and he went all in to short stocks worth $750 million. $750 million was equivalent to 5% of the total market value of U.S. stocks at the time. The total market value of U.S. stocks is now about $430 trillion. If the proportion of Livermore's short-selling funds at the time is converted to today, it is equivalent to him adding $15 trillion in assets to short U.S. stocks.

With so much money being sold, even if there is no bear market in the US stock market, one can be created.

Sure enough, on October 23, 1929, the U.S. stock market, which was shorted by Moore, began to fall in large volume. Livermore closed a quarter of his short orders and made a profit of $8 million. On October 24, the U.S. stock market continued to plummet, and he closed half of his short orders and made a profit of $14 million. Faced with the decline of the U.S. stock market, on October 25, then-U.S. President Hoover came out to appease the market, and the U.S. stock market temporarily stopped falling. He closed part of his short positions again and made a total profit of $27 million; on October 28, Black Monday, the Dow fell 14%, and he added $50 million in short positions; on October 29, Black Tuesday, the Dow fell again by 19%. At this point, he sold all his short orders.

This time, he made a total profit of $100 million. You have to know that at that time, the US fiscal revenue was only $4.2 billion. In other words, for example, Moore alone earned 2.38% of the US Treasury's revenue in less than half a year. This battle not only put him among the world's top rich people, but also made him the "King of Speculation".

Perhaps because of Livermore's short selling, after the 1930s, the United States strengthened its supervision of the stock market and revised the short selling rules. The new rules made Livermore no longer feel comfortable. In addition, he spent money lavishly, had many mansions in the United States and Europe, and had two 90-meter cruise ships. His relationship was full of infidelity and distortion. He went through three marriages, had more than 20 lovers at most, and had luxurious dances every night. All these eroded his self-discipline bit by bit. If a trader loses his self-discipline, it is equivalent to a soldier losing his hands and no longer having the ability to fight.

Like most people who are greedy for wealth, Livermore was also very fond of beautiful women after he became rich, and he had many mistresses. He was married three times, and his second wife shot and crippled his son. Especially in his later years, the troubles of marriage and family made him suffer from depression. This made him unable to focus on the market and his investments made mistakes frequently. At the age of 60, Livermore lost hundreds of millions of funds for the last time, and he had to declare bankruptcy again.

On November 28, 1940, a snowy day, the landlord came to collect the rent. Livermore drank the remaining half bottle of whiskey and walked out of the apartment to wander on the street. He looked at the homeless begging on the street and the fat diners in the luxury hotel, and sighed: This world is a casino where the strong prey on the weak.

Then, Livermore walked into a hotel bathroom, took out a pistol, and shot himself in the right ear. The suicide note he left behind read: My life is a failure.

Sadly, Livermore's son also committed suicide in 1975, and his grandson also died of suicide. Three generations of the Livermore family were trapped in a tragic vicious cycle.

After Livermore's death, someone counted his assets and found that they were worth about $5 million, a 95% decrease from his peak.

There are two fundamental reasons for his failure summarized by later generations. One is overconfidence, and the other is contrarian manipulation, that is, trying to change the trend of the entire market by relying on personal strength. There are similar people in our currency circle, such as Liang Xi. He made a lot of money in a short period of time by increasing leverage through an accidental opportunity to short Bitcoin. However, his subsequent operations were almost all shorting Bitcoin. Those who follow him on Twitter should have noticed that he has been calling for shorting Bitcoin since the end of last year, and has taken actual actions to short Bitcoin. The final result is that he owes a lot of debt to his fans, which has not been repaid yet.

On the contrary, Buffett and Munger are much smarter. They only look at Bitcoin bearishly but never short it.

Moreover, Buffett and Munger were very self-disciplined in their later years. They only drank Coke and rarely drank alcohol, and always kept a clear head. Finally, let me talk about what I learned from people like More. Investing is to make our families live a better life. If you find that your investment behavior seriously threatens the harmony of your family, then it only means that the investment is a failure and you need to resist it firmly.

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