One of my favorite parts about the story of Jesse Livermore is the way he hustled in bucket shops in order to build the bankroll that he would eventually take to Wall Street. Then, after busting out on his first attempt on Wall Street, he went back to the bucket shops to rebuild his bankroll.
But what would he do if he was just getting his start today? There simply aren’t bucket shops anymore. His same approach would likely still work for him on Wall Street today, but how would he ever build enough capital to find out?
Based on the nature of Livermore’s hustle, I suspect that Amazon FBA selling might be a reasonable outlet for him to utilize. Many aspects of Amazon selling are actually quite similar to the bucket shops Livermore earned his capital from. Amazon selling would have allowed him to profit from moving prices in an environment filled with people who were not as ambitious or dedicated as him.
If Livermore were just getting started today and needed to amass capital as quickly as possible, I believe that Amazon FBA selling would be an excellent opportunity for him. Based on his trading, here are two principles that I believe he would use when sourcing products:
Pyramiding Into Positions
I’m not sure if he was the person who invented pyramiding, but Livermore references it a great deal in his books. He would likely take the same approach in his product sourcing. That means he would try many products taking a small commitment in each one, and then increase his exposure in certain areas as they showed profits.
This principle has worked very well for me in my Amazon selling. Through trying literally hundreds of different products, I have now identified quite a few products that I can regularly acquire and then quickly resell for a decent profit.
Plunge Into Big Winners
If he wasn’t able to acquire the nickname, “Boy Plunger” in bucket shops today, perhaps Livermore would have done the same thing in his Amazon product sourcing. Following with his trading methodologies, when he identified products that were big cash cows, he would plunge everything he had into them with almost reckless abandon.
I have behaved in similar fashion lately, as I have been buying as much Disney Frozen merchandise as I can get my hands on. I have also followed up my success selling Kitchen Aid utensils and Pyrex pans by making much large commitments towards more products in those categories.
So many people like to talk about how Livermore would approach today’s markets. While I believe he would trade them very much the same way he did in his time, he would have had to take a very different route to get there. Amazon FBA selling would have been a very interesting option for his skill set.