Jesse Livermore & Copper, one of the most successful stock traders of all time, was a strong believer in the relationship between copper and the economy. He believed that copper was a leading indicator of economic activity, and that it could be used to predict future trends in the stock market. Which way copper breaks will give us a clue on the economy.
In his book, Reminiscences of a Stock Operator, Livermore wrote:
"Copper is the most sensitive barometer of the business cycle. It always leads the way in a bull market, and it always leads the way in a bear market."
Livermore's belief in the relationship between copper and the economy was based on the fact that copper is a widely used commodity. It is used in a variety of industries, including construction, manufacturing, and electrical engineering. As a result, the demand for copper is closely tied to the overall health of the economy.
When the economy is growing, demand for copper increases. This is because businesses need more copper to build new factories and equipment. As a result, the price of copper tends to rise. Conversely, when the economy is slowing down, demand for copper decreases. This is because businesses are less likely to invest in new projects, and they may even be forced to lay off workers. As a result, the price of copper tends to fall.
Livermore used his belief in the relationship between copper and the economy to make profitable trades in the stock market. He would buy stocks when the price of copper was rising, and he would sell stocks when the price of copper was falling. This strategy helped him to make a fortune, and it is still used by some investors today.
