Lifmo: The Wall Street Speculation Legend and Self-Destruction from Five Dollars to One Hundred Million Dollars

When a 14-year-old boy left a Massachusetts farm with five dollars, no one could have predicted how he would rewrite the history of trading on Wall Street. The name LeFèvre carries a legendary contrast in the financial world — he could make $7.5 million in just three months from short selling, yet a single cotton trade mistake could wipe out all his glory. This is a story of genius, greed, luck, and self-destruction.

From the Fields to Wall Street: The Numerical Awakening of Young LeFèvre

Born in Massachusetts in 1877, LeFèvre learned to read and write by age three and started reading financial newspapers at five. A math prodigy, he excelled in school, but poverty forced him to drop out at 14. His father demanded he return to farm work, which enraged him. His mother, unable to bear seeing her son’s talents wasted, secretly scraped together five dollars (equivalent to about $180 today) to encourage him to escape his small town.

In spring 1891, LeFèvre boarded a wagon then transferred to a train, eventually arriving in Boston. Surprisingly, this rural boy’s first step into the big city showed no fear. Instead of going to relatives at the address his mother provided, he was drawn to the scrolling ticker tape outside Paine Webber’s building. With a somewhat mature appearance, he successfully applied to be a quote board clerk, beginning his financial career.

Discovering the Breath of Numbers: An Unintentional Technical Analysis Pioneer

Daily copying of stock quotes seemed dull, but LeFèvre’s mathematical intuition uncovered patterns amid the monotony. He noticed certain number combinations repeated, like fixed routines in card games; the Union Pacific Railroad’s stock often fluctuated similarly at 11:15 a.m. and 2:30 p.m., as if driven by unseen tides.

He started drawing price charts in a one-cent grid notebook, discovering that some stocks’ retracements always measured 3/8 of the previous move — startlingly similar to modern Fibonacci retracement levels. He secretly examined brokers’ notes, finding large buy orders often supported at specific prices. These discoveries laid the groundwork for later technical analysis theories.

At 16, LeFèvre invested five dollars into a betting house (where clients bet on stock movements, akin to modern CFDs). One trade earned him $3.12 profit. As his experience grew, he traded while working, eventually quitting at age 20 to become a full-time trader, earning $10,000 (roughly $300,000 today) in just a few years. His success drew suspicion from Boston’s betting houses — he won too often — and he was eventually blacklisted by all of Boston’s betting houses.

First Battle in New York: Failures and Marital Breakdown

In 1899, at 23, LeFèvre moved to Wall Street. There, he met Native American girl Nettie Jordan, and they married within weeks. But New York’s scene was far more complex than Boston’s. Relying on an automatic quote recorder, he traded based on data that lagged the market by 30-40 minutes. This fatal delay led to bankruptcy less than a year after marriage.

To recover, he asked his new wife to pawn her jewelry, but she refused. This failure and their conflicts eventually led to divorce after seven years — a double blow of financial and emotional ruin.

1906 Earthquake Short Sale: Wall Street’s First Legend

After years of steady accumulation, at 28, LeFèvre’s assets reached $100,000. Yet he doubted himself, feeling his trading was too conservative. To relax, he vacationed in Palm Beach. During this reflection, he spotted his next opportunity.

On April 18, 1906, the San Francisco earthquake struck with a 7.9 magnitude, igniting fires and nearly destroying the city. As the key railroad hub of Union Pacific faced huge losses, the market was bullish, expecting reconstruction to boost rail stocks. But LeFèvre’s analysis was the opposite.

Fundamentally, the earthquake caused a short-term drop in UP’s freight volume, and insurance companies would face massive payouts, likely selling stocks to cash out. His on-the-ground research confirmed UP’s financials would fall well below market expectations. Technically, although the stock rebounded briefly, declining volume indicated weak buying.

He patiently waited until the stock hit his “key point” (resistance level), then began shorting through multiple brokerages, using high leverage but strict position control. First, he shorted around $160, market sideways. When UP announced sharply reduced profits, the stock broke below $150 support, and he increased his short. As panic spread and the stock plunged below $100, LeFèvre closed his position near $90, netting over $250,000 — equivalent to $7.5 million today.

This strategy became his trading bible: wait for confirmed downtrends, understand market psychology (bad news after good news is bearish), and keep reserve funds for volatility.

The 1907 Trust Crisis: Making $100 Million in a Week

In 1907, LeFèvre discovered that New York trust companies heavily leveraged junk bonds, relying on short-term borrowing. Interbank rates soared from 6% to 100%, sparking a liquidity crisis. Disguised as a client, he secretly investigated and confirmed many trusts’ collateral was poor.

Prepared, he shorted key stocks like Union Pacific and U.S. Steel via multiple brokerages, and bought put options. On October 14, he publicly questioned the solvency of Nick Biddle’s trust, triggering a bank run. Three days later, the trust declared bankruptcy, spreading panic.

On October 22, leveraging T+0 clearing rules, LeFèvre concentrated his sell-offs before close, shorted overheated stocks, and used a “pyramid” position-adding method to trigger stop-loss orders, accelerating the crash. By October 24, panic peaked; NYSE’s chairman begged him to stop shorting. The Dow plunged 8% in a day, and Morgan’s group intervened to stabilize.

He exited before Morgan’s bailout, closing 70% of his shorts, and when the market stabilized by October 30, he liquidated all positions. Total profit: $3 million — about $100 million today. He later said, “The market needed a thorough cleansing.” This victory cemented his reputation as the “King of Wall Street Shorts.”

Cotton Trap: Genius’s Self-Punishment

As money flowed in, LeFèvre indulged. He bought a $200,000 yacht, a train carriage, and a mansion in the West Side. He joined luxury clubs, surrounded by mistresses.

But arrogance opened the door to deception. His friend Teddy Price, an authority in cotton, publicly bullish but secretly shorted with growers. Price exploited LeFèvre’s desire to “prove cross-market skill,” feeding him false “supply shortage” narratives.

Despite discovering the truth in his database, LeFèvre trusted Price and bought 3 million pounds of cotton futures, far beyond rational size. Ultimately, he lost $3 million, wiping out all 1907 short profits. This failure forced him to close other positions, leading to bankruptcy in 1915-1916.

He violated his own three iron rules: never trust advice, never average down, and never let fundamentals override price signals. Instead of being deceived, it was his own hubris — or a gambler’s all-in failure.

Rising from the Ruins: The Final Glory of WWI

After the 1915 cotton debacle, LeFèvre staged his most dramatic comeback. He filed for bankruptcy, settling with creditors for only $50,000. Using secret credit from former rival Daniel Williamson, he traded under Williamson’s firm — effectively under surveillance.

Limited to 1:5 leverage instead of his usual 1:20, with positions capped at 10% of total capital, these restrictions ironically helped him rebuild discipline.

World War I was raging in Europe. LeFèvre keenly sensed U.S. military orders would surge, but Bethlehem Steel’s stock hadn’t yet reacted. Using industrial intelligence leaks, he saw unpublicized financials and volume surges, classic accumulation signs.

In July 1915, he bought a tentative position with $50,000 (5% of capital). When prices broke $60 in August, he added more. By September, at $58, he refused to cut losses, believing the uptrend remained intact. By January, the stock soared to $700, yielding a 14-fold profit. He turned $50,000 into $3 million again.

Money, Women, and Inner Darkness

In the following decades, LeFèvre’s life intertwined wealth and women. In 1925, he made $10 million trading wheat and corn. During the 1929 crash, he shorted and made another $100 million (about $1.5 billion today). He built a formal trading business, earning $15 million and employing 60 staff.

But wealth became a curse. His divorce from Nettie was long, scandalous, and public. He then married Dorothy, a glamorous dancer from the Ziegfeld Follies, with whom he had two sons, but secretly maintained an affair with European opera singer Anita Venice, even naming a luxury yacht after her. Dorothy struggled with alcohol.

The New Yorker once commented: “LeFèvre was precise as a scalpel in markets, blind as a drunkard in love. He spent his life shorting the market but always longing to go long on love — both ended in ruin.”

In 1931, at second divorce, Dorothy received $10 million, and sold their $3.5 million mansion for $222,000. The mansion, with butlers, maids, chefs, and gardeners, was eventually demolished. Jewelry and wedding rings he gave her were sold cheaply — emotional humiliation that struck him deeply.

In 1932, at 55, he met 38-year-old divorced woman Harriet Metz Noble. Reporters thought she might misjudge his wealth, but he was already $2 million in debt. After his final bankruptcy in 1934, they moved out of their Manhattan apartment, living on jewelry sales.

Despair and Suicide: Darkness Within

In November 1940, Harriet shot herself in a hotel room with LeFèvre’s revolver, leaving a note about “unable to endure poverty and his drinking.” Her death left an indelible scar on him. He wrote in his diary: “I have killed everyone close to me.”

On November 28, 1941 — the day before Thanksgiving — in the cloakroom of the Shirley Holland Hotel in Manhattan, LeFèvre shot himself with a Colt .32 revolver. It was the same model he bought after his 1907 short sale victory, as if fate completed a full circle.

He left a final note on the hotel notepad:

My life is a failure.

I am tired of fighting, unable to endure more.

This is the only way out.

Only 15 people attended his funeral, including two creditors. His pockets held only $8.24 and an expired horse race betting slip. It wasn’t until 1999 that fans funded a memorial on his gravestone: “His life proved that even the sharpest trading blade ultimately turns inward.”

LeFèvre’s Legacy: The Trader’s Bible of the Loser

Though his life ended in tragedy, LeFèvre left behind trading theories that changed finance. Buffett, Soros, Peter Lynch, and others regard his writings as “holy scriptures.” His lessons include:

Core trading principles: Buy rising stocks, sell falling stocks. Trade only when there’s a clear trend. Big profits come from waiting, not frequent trading. If you can’t make money on the leaders, don’t expect to make money in the market. The market only has one side — the right side, not bullish or bearish, but correct.

Human nature warnings: Wall Street never changes. Pockets change, stocks change, but human nature remains. Investors must beware of many things, especially themselves. The market is never wrong; only humans err. Wall Street has no new tricks because human nature never changes. Speculation is the most fascinating game in the world, but fools shouldn’t play, lazy people shouldn’t play, and fragile minds shouldn’t play.

LeFèvre’s legendary life experienced four rises and falls, confirming an eternal truth: the greatest enemy in financial markets isn’t the market itself, but greed, fear, and self-deception within human nature. His methods transcend eras, but he couldn’t transcend himself. A genius skilled in numerical patterns ultimately declared bankruptcy in life’s greatest trade. This isn’t a story of success but of failure’s wisdom — a gift that remains the most precious for every investor.