No, the 1929 stock market crash did not happen because of Jesse Livermore, though he is often famously blamed for it.
Here is the breakdown of why people think that and what actually happened:
1. Why did people blame him
Jesse Livermore (known as the “Boy Plunger” or the “Great Bear of Wall Street”) was a famous speculator who shorted the market right before the crash.
- He made a fortune: While most people lost their life savings, Livermore reportedly made $100 million in a few days (equivalent to roughly $1.5 billion today).
- The Scapegoat: Because he profited so massively from the country’s misery, the public and newspapers looked for someone to blame. They accused him of driving the market down with his massive sell orders. He even received death threats and had to hire armed bodyguards.
2. The Reality: He didn’t cause it
Livermore was just one trader. He didn’t have enough capital to crash the entire US economy on his own. He simply anticipated that the market was overvalued and bet against it.
The crash was actually caused by deep economic issues, including:
- The Bubble: Stock prices had gone far higher than the companies were actually worth.
- Margin Buying: Millions of people were buying stocks with borrowed money (leverage). When prices dipped, they were forced to sell, creating a domino effect.
- Economic Slowdown: Production was declining, and banks were struggling before the crash even started.
Summary: Jesse Livermore did not break the market; he just saw the break coming before anyone else did and profited from it.