Reminiscences of a Stock Operator

With New Commentary and Insights on the Life and Times of Jesse Livermore

Edwin Lefèvre, Jon D. Markman

• Publisher: Wiley
• Year: 2010
• ISBN:
  9780470593226
• Edition: 1
• Topic: Business
• Subtopic: Investments & Securities
• Index: Business

With new commentary and Insights on the life and times of Jesse Livermore

Reminiscences of a Stock Operator is the fictionalized biography of perhaps the most famous financial speculator of all time-Jesse Livermore. This annotated edition bridges the gap between Edwin Lefevre's fictionalized account of Livermore's life and the actual, historical events, places, and people that populate the book. It also describes the variety of trading approaches Livermore used throughout his life and analyzes his psychological development as a trader and the lessons gained through hard experiences.

• Analyzes legendary trader Jesse Livermore's strategies and explains how they can be used in today's markets
• Provides factual details regarding the actual companies Livermore traded in and the people who helped/hindered him along the way
• Explains the structure and mechanics of the Livermore-era markets, including the bucket shops and the commodity exchanges
• Includes more than 100 pages of new material

Reminiscences of a Stock Operator has endured over 70 years because traders and investors continue to find lessons from Livermore's experiences that they can apply to their own trading. This annotated edition will continue the trend.

SELECTED QUOTES

Reminiscences of a Stock Operator has endured as a classic as much because of the richness of its narrative as for the truth of its insights. But if you just want to get a quick read on its big ideas without the framework of the storytelling, here are most of the key passages.

There is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market to-day has happened before and will happen again.

The tape does not concern itself with the why and wherefore. It doesn’t go into explanations. I didn’t ask the tape why when I was fourteen, and I don’t ask it to-day, at forty. The reason for what a certain stock does today may not be known for two or three days, or weeks, or months. But what the dickens does that matter? Your business with the tape is now—not to-morrow. The reason can wait.

I always made money when I was sure I was right before I began. What beat me was not having brains enough to stick to my own game—that is, to play the market only when I was satisfied that precedents favored my play. There is a time for all things, but I didn’t know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. No man can always have adequate reasons for buying or selling stocks daily—or sufficient knowledge to make his play an intelligent play.

The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals.

A stock operator has to fight a lot of expensive enemies within himself.

I don’t know whether I make myself plain, but I never lose my temper over the stock market. I never argue with the tape. Getting sore at the market doesn’t get you anywhere.

It takes a man a long time to learn all the lessons of all his mistakes. They say there are two sides to everything. But there is only one side to the stock market; and it is not the bull side or the bear side, but the right side.

I have been flat broke several times, but my loss has never been a total loss. Otherwise, I wouldn’t be here now. I always knew I would have another chance and that I would not make the same mistake a second time. I believed in myself.

Speculation is a hard and trying business, and a speculator must be on the job all the time or he’ll soon have no job to be on.

I owe my early success as a trader … not to brains or knowledge, because my mind was untrained and my ignorance was colossal. The game taught me the game. And it didn’t spare the rod while teaching.

If somebody had told me my method would not work I nevertheless would have tried it out to make sure for myself, for when I am wrong only one thing convinces me of it, and that is, to lose money. And I am only right when I make money. That is speculating.

Ignorance at twenty-two isn’t a structural defect.

If the unusual never happened there would be no difference in people and then there wouldn’t be any fun in life. The game would become merely a matter of addition and subtraction. It would make of us a race of bookkeepers with plodding minds. It’s the guessing that develops a man’s brain power.

When a man is right he wants to get all that is coming to him for being right.

[Brokers] always had the hope of getting away from me what I had taken from them. They regarded my winnings as temporary loans.

The first change I made in my play was in the matter of time. I couldn’t wait for the sure thing to come along and then take a point or two out of it. … I had to start much earlier.…In other words, I had to study what was going to happen; to anticipate stock movements…the essential difference between betting on fluctuation and anticipating inevitable advances and declines, between gambling and speculating.

I discovered that although I often was 100 percent right on the market—that is, in my diagnosis of conditions and general trend—I was not making as much money as my market “rightness” entitled me to.

They say you never grow poor taking profits. No, you don’t. But neither do you grow rich taking a four-point profit in a bull market. Where I should have made twenty thousand dollars I made two thousand. That was what my conservatism did for me.

Suckers differ among themselves according to the degree of experience. The tyro knows nothing, and everybody, including himself, knows it. … The second-grade sucker knows how to keep from losing his money in some of the ways that get the raw beginner. It is this semisucker rather than the 100 per cent article who is the real all-the-year-round support of the commission houses. He lasts about three and a half years on an average, as compared with a single season of from three to thirty weeks, which is the usual Wall Street life of a first offender. It is naturally the semisucker who is always quoting the famous trading aphorisms and the various rules of the game. He knows all the don’ts that ever fell from the oracular lips of the old stagers—excepting the principal one, which is: Don’t be a sucke...