The Only Man Who Got Rich When the 1929 Bubble Burst

On October 29, 1929, the stock market fell almost twelve percent in a day, and the crowd was being sold out of its shares. One man, the legend says, went home that night with the biggest win of his life: Jesse Livermore, the speculator TIME magazine called a “famed bear.” But by 1934 he was bankrupt. And by 1940 he was dead. This episode of The Money Tales sets the legend against the record, and follows the money of everyone else: the margin buyers, the workers, the depositors and the homeowners who paid for the crash. A farmer's son from Massachusetts, Livermore left school in his early teens, chalked share prices on a Boston broker's blackboard, and made three dollars and twelve cents on his first trade. He beat the bucket shops until they refused his business, then made his name in New York betting on falling prices: about a quarter of a million dollars when the San Francisco earthquake struck in 1906, a fortune and the nickname “Boy Plunger” in the panic of 1907. Then cotton wiped him out. By his own count he had been “broke” seven times. His pattern repeated. A small stake. A wait for a big move. Borrowed money on top. A fortune. Then a wipe-out, and the whole thing again. Borrowed money multiplies a win. It multiplies a loss just as hard. The 1920s boom ran on the same fuel. On the eve of the crash, the loans brokers had made to buyers stood above six and a half billion dollars, and that year about six hundred thousand customers were buying on margin: ten dollars down on a hundred-dollar share. When the share fell by a tenth, the buyer's money was gone, the margin call came by wire, and if the buyer could not pay, the broker sold. Forced sales pushed prices down, lower prices triggered more calls, and within weeks those loans had shrunk by almost half. Livermore's family remembered Black Tuesday as his best day ever, and the story told ever since puts his winnings at a hundred million dollars. The record is less kind. When he died, TIME wrote: “When the Coolidge market broke, there were angry stories that Trader Livermore had smashed it. It had, in fact, smashed him. He was short 20,000, long 80,000 shares.” By the summer of 1932 the Dow had lost almost nine tenths of its value. In March 1934 Livermore filed for bankruptcy owing more than two million dollars, more than fifty million in today's money, against assets that were mostly life insurance. TIME's verdict: “At 56, he was back where he started at 16.” Two accounts of the same crash. Keep both in mind, and follow the money. So who did hold the cash? Albert Wiggin, head of Chase National Bank, whose private companies sold his own bank's shares short around the crash and made about four million dollars. And Joseph Kennedy, who cashed out before the crash, profited from falling prices in the Depression, then moved his money into films, liquor imports and real estate. What You'll Learn: • How buying on margin turned a small price fall into a forced sale, and why that arithmetic still sits under any loan against shares today • Why the most famous winner of 1929 may never have won at all • Who actually kept money from the crash, and what they did differently • What the rules of 1934 changed, and what they did not: American bank deposits are insured up to $250,000; shares are not Livermore wrote the lesson himself in the last year of his life: “I know but one sure tip from a broker. It is your margin call. When it reaches you, close your account.” On putting half of every profit aside, he added: “I only regret that I have not observed it throughout my career.” You can win when everyone else loses. But it's never safe and never certain. For every winner you hear about, thousands made the same bet and vanished without a story. Case Notes (PDF) with sources, charts and glossary: https://drive.google.com/file/d/1ATNg... Chapters: 0:00 The Man Said to Have Won in 1929 1:04 A Farmer's Son in the Bucket Shops 2:30 The Boy Plunger and Borrowed Money 4:41 A Boom Built on Borrowed Money 7:05 The Margin Call Machine 9:02 The Legend Against the Record 11:56 Who Really Held the Cash 13:17 The New Rules 15:02 Can Anyone Win When Everyone Else Loses? 16:23 What Still Applies Today 🔔 Subscribe for more deep dives into financial history and the figures who shaped our world #EconomicHistory #FinancialHistory #StockMarketCrash1929 #JesseLivermore #GreatDepression #Bubble #ShortSelling #BucketShop Nothing in this video is financial advice. It tells what happened; it does not tell you what to buy, sell or short.