Jesse Livermore / 1929 / Equity Short
When the crowd ran out of credit.
Jesse Livermore and the fragility beneath a speculative market.
Before the outcome was obvious.
The workbook frames Livermore’s 1929 short around speculation and excess credit. Its enduring appeal is the reversal of perspective: rising prices can look like confirmation while making the market more dependent on borrowed money. A short position benefits when prices fall, but the final profit conceals every difficult decision made on the way there. Treat this case as a study of market vulnerability, not a precise reconstruction of a trading ledger.
What could have gone wrong
A speculative market can keep rising. A short seller faces potentially unlimited losses and can be forced out before the break.
A diagnosis of excess still needs a plan for timing, position size and exit.
Put the thesis to the test.
Change the assumptions and watch the arithmetic update. These are simplified scenarios; they do not recreate the instrument’s pricing or the path of the trade.
How this model works
Profit ratio = profit ÷ stated position. Exposure ratio = stated position ÷ fund assets. Neither is a measure of maximum loss or a net investor return.
The workbook’s simple annualisation is profit ratio × 365 ÷ duration = 81.1%. It is linear, not compounded, and is not a repeatable annual return. Fees, financing, collateral, premium carry and changing exposures are not modelled.
What these figures mean.
Source: Legendary Trades Models, Master Comparison!A6:L6; Trade P&L Models, case 3. The following are original workbook inputs, preserved for transparency. They are estimates, not independently audited results.
- Workbook position
- $500m
- Workbook “gross profit”
- $100m
- Workbook duration
- 90 days
- Workbook fund assets
- $100m
- Workbook fund return
- 100%
- Workbook position ROI
- 20%
The fund-return field is a separate source claim, not a calculated result of this trade. Its reporting period and gross/net basis are not independently established here. Model ratios are recalculated from inputs rather than copied from rounded source ROI values.