![]()
![]()
CONTENTS
Foreword
Preface
Chapter I
Chapter II
Chapter III
Chapter IV
Chapter V
Chapter VI
Chapter VII
Chapter VIII
Chapter IX
Chapter X
Chapter XI
Chapter XII
Chapter XIII
Chapter XIV
Chapter XV
Chapter XVI
Chapter XVII
Chapter XVIII
Chapter XIX
Chapter XX
Chapter XXI
Chapter XXII
Chapter XXIII
Chapter XXIV
Appendix: Dow Jones Industrial Average (1895–1929)
Paul Tudor Jones on Reminiscences
Selected Quotes
Credits
About the Author
![]()
![]()
Copyright © 2010 by John Wiley & Sons, Inc. All rights reserved.
Annotations: Copyright © by Jon D. Markman.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions.
Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.
For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002.
Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. For more information about Wiley products, visit our web site at www.wiley.com
Library of Congress Cataloging-in-Publication Data:
Lefèvre, Edwin, 1871–1943.
Reminiscences of a stock operator : with new commentary and insights on the life and times of Jesse Livermore / Edwin Lefèvre. — Annotated ed. / by Jon D. Markman.
p. cm.
Includes bibliographical references.
ISBN 978-0-470-48159-2 (cloth)
1. New York Stock Exchange. 2. Speculation. 3. Livermore, Jesse L. (Jesse Lauriston), 1877–1940. 4. Stockbrokers — United States. I. Markman, Jon D., 1958- II. Title.
HG4572.L4 2010
332.6’2 — dc22
[B]
2009042600
![]()
FOREWORD
I first read Reminiscences in 1976. It was given to me by my first boss as the most important book I could read. It resonated with me on a variety of levels. First, Livermore started with but a few coins in his pocket, and as a relatively penniless 21-year-old when I first read it, it was both reassuring and hopeful. His stories of making millions, hobnobbing with other great financiers and stock market operators, trading from a yacht, and deftly maneuvering through the great commodity and stock corners of the day was the financial equivalent of “sex, drugs and rock ‘n roll” to a young man at the advent of his financial career. Secondly, his facility with numbers was very similar to mine. It was as if he spoke straight to my soul in this regard. Finally, probably the greatest message I took away from my first read had to do with understanding price action. There are times when every market has a story to tell. And you have to train yourself to be both a great observer and listener, or you will be too late to enjoy the full story that will be told.
I have read the book countless times in my career, and I cannot remember a single time when I haven’t discovered something new. As I was reading it again for umpteenth time, I noticed on page three it reads that Livingston used to journal both “the determination of (probable price) movements” as well as “assorted record of my hits and misses.” I have been doing this semi-religiously for most of the past three decades, and I always thought it was my own invention. Over the years, I guess I deluded myself into taking credit for a brilliant practice integral to my success by conveniently forgetting the inventor. And this points to why this book is so important to me and why anyone looking to take up trading as a profession should read and study it. It is a textbook for speculation. Indeed, I hand a copy to every new trader we have, regardless of his or her considerable experience. I am always looking for the next Jesse Livermore.
—Paul Tudor Jones
Chairman and Chief Executive
Tudor Investment Corporation
For more Paul Tudor Jones’ thoughts on the book, please see page 399.
![]()
PREFACE
Imagine it is 1923. The horrors of World War I, in which 37 million men and women were killed or wounded, are still fresh in your mind. So are the horrors of the great flu pandemic of 1918–1919, which killed more than 50 million people worldwide. So are the great economic and psychological setbacks of two terrible postwar recessions in 1919 and 1921.
The cumulative gloom produced by the ravages of man and nature is hard to shake. Business in most industries is perking up a bit finally, but the stock market is reflecting a sour mood. Despite some dramatic ups and downs, prices are still pretty much where they were eight years ago.
Yet in this fallow ground of despair and fear, seeds of hope are being planted—and the dreams of ambitious, hardworking Americans are beginning to stir.
Families are starting to pour into cities from the countryside in the largest urban migration that the country has ever witnessed, and they all need new homes, water systems, transportation, offices, factories, and entertainment. Banks are beginning to feel more confident, and are doling out loans to industrialists with good ideas for cars, railroads, consumer goods, and resorts. Mass-market advertising is emerging for the first time to hawk goods over the radio, which has just begun to broadcast jazz music and baseball games after low-cost vacuum tubes have made home receivers affordable. The first talking motion pictures are emerging, a dazzling innovation that has begun to transmit American values worldwide for the first time.
Amid this growing sense of comfort and confidence, the stock market has finally begun to arch higher, and popular weekly publications are soon filled with stories of average people leveraging their wages to make a killing in stocks. Newspapers are covering Wall Street with élan, offering detailed reports on commodities and equities and the people and forces behind their mysterious movements.
Little did anyone know at the time, though in hindsight hints were abundant, that the market was about to surge 400 percent in the greatest single six-year span in its history. And so the time was ripe for the emergence of heroes to enthrall investors’ imaginations and spark latent animal spirits.
Witnessing this swelling sentiment for speculation was a veteran magazine writer and novelist named Edwin Lefevre. Born in Panama to American parents, and already well traveled in Asia and South America by his twenties, Lefevre was attracted to the New York financial markets as an observer, and after finding regular work as a journalist he parlayed his keen analytical skills and buoyant personality to become one of the era’s savviest chroniclers—writing and editing dozens of articles on Wall Street personalities and strategies. He stood apart from the boosterism of colleagues by primarily focusing on the gray underside of the change in stock prices, preferring to uncover tales of scammers, swindlers, and tricksters who preyed on the public’s gullibility to fatten their own ledgers. He was no moralizing prude, however, and counted giants of speculation like James Keene among his friends.
By the early 1920s, at about 50 years old, Lefevre recognized that even the smartest journalism failed to get at the very essence of the truths he had uncovered about Wall Street, so he decided to shift gears and try his hand at transcending the bounds of quotes and facts by writing a new type of fiction. Casting about for a central character on which to hang his story, he had a great number of candidates to choose from, as he was well regarded by many of the era’s top players. Most were relentless self-promoters well known to the public, so it was a little odd that he ultimately chose the notoriously reticent Jesse Lauriston Livermore as his foil. Perhaps it was the challenge.
Livermore had been raised on a rocky farm in Massachusetts and had risen through hard work, ambition, necessity, persistence, guts, and a sharp mind for numbers to become one of the greatest traders of stocks and commodities of the first two decades of the twentieth century. He had made and lost more fortunes by the age of 25 than most people will see in a lifetime, and though he rarely spoke to the press about his exploits and eschewed the companionship of partners—preferring to play what he c...
