Duffy Pratt's Reviews > Reminiscences of a Stock Operator

Reminiscences of a Stock Operator by Edwin Lefèvre
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Mar 14, 11

bookshelves: trading, memoir
Read from March 04 to 13, 2011

This book is a marvel. It's well written. It clings very closely to the trade of a speculator, and barely touches on any personal life. For example, we only learn that the narrator has a wife when someone tries to use her to hook him into a stock manipulation. Everything focuses on the markets, and how the narrator interacts with the markets.

The technology, and the law, have changed enormously. But one of the central points of the book is that fear, greed, hope and ignorance will drive the markets for as long as humans make trading decisions. It's true that the advent of computerized trading robots may take those emotions out of some trading nowadays, and may lead to problems of their own. But those factors still weigh as heavily on the markets as they did at that time. And I don't think I've ever read a better explanation of how each of those things can impact trading decisions and price movements.

As with many memoirs, the beginning is the most electric, and has the most personal interest. Here, we start with his experience in totally unregulated "bucket shops," where the businesses operate on extremely high margin, and actively take positions against their customers to fleece them. People still accuse some online brokerage houses of working the same way. And the explanation of those mechanics showed me, for the first time, how it might still be possible (though much more sophisticated nowadays).

Even more extraordinary, given the feeling of authenticity throughout this book, is that it is a fictionalized account. Lefevre was a journalist. Apparently, he spent a few months with one of the leading speculators of the day. He talked with him, got to know him, and interviewed him extensively. The book is a distillation of that experience and those interviews. More than anything else, I think this book captures the mindset of a trader, and that is why it is still so admired. It's well worth reading for anyone interested in trading, or generally in Wall Street.
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Comments (showing 1-8 of 8) (8 new)

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message 1: by AC (new) - rated it 5 stars

AC There's no question, I think, that Lefevre was little more than a vehicle here for Jesse Livermore. Barton Biggs, in fact, confirmed this in one of his books. A real classic...


message 2: by Leo (new)

Leo Horovitz "[...] barely touches on any personal wife"? There might be a typo there... :)


Duffy Pratt Leo wrote: ""[...] barely touches on any personal wife"? There might be a typo there... :)"
Fixed, thanks.


Duffy Pratt AC wrote: "There's no question, I think, that Lefevre was little more than a vehicle here for Jesse Livermore. Barton Biggs, in fact, confirmed this in one of his books. A real classic..."

I've read this, but since I don't independently know anything about Livermore, it doesn't mean that much to me. Except, if I find other books that touch on him or his career, it would now especially raise my interest.

And yes, it is a real classic. I'd give it five stars, except I thought that the material faded a bit once he got into the details of stock manipulation. That may just be because I don't see how that sort of manipulation matters much to what I'm doing these days. But it also underscores that this sort of book is great for people who already have an interest in the field, but probably a snooze for the general reader.


message 5: by AC (new) - rated it 5 stars

AC Duffy wrote: "And yes, it is a real classic. I'd give it five stars, except I thought that the material faded a bit once he got into the details of stock manipulation. That may just be because I don't see how that sort of manipulation matters much to what I'm doing these days. But it also underscores that this sort of book is great for people who already have an interest in the field, but probably a snooze for the general reader

That last is true, of course, for any book in any topic..., no?

As to manipulation and stock pools..., it does not occur on the major exchanges, obviously..., but it is still widely practiced on exchanges like the TSXV -- which are of importance, because of the concentration there of commodity plays, and where retail investors are routinely fleeced by ringers and plants (masquerading as private individuals) placed there by the houses in Toronto. These are professional operations, and some of them are very, very good at it.

One hint -- as Justin Mamis and Livermore (as I recall?) both note -- these operations are commonly done on declines -- that is, *after* the stock has peaked..., as retail likes to buy into what they believe are bargains. The sellers, of course, are insiders and brokers.

caveat emptor... aka Human nature never changes...


Duffy Pratt AC wrote: "Duffy wrote: "And yes, it is a real classic. I'd give it five stars, except I thought that the material faded a bit once he got into the details of stock manipulation. That may just be because I do..."

Good points. Right now, I'm mostly focused on trading currencies. The Forex market has some problems, but it is probably the least prone to manipulation of the sort you talk about.

I don't doubt that the same sort of thing can go on with smaller exchanges, and with OTC equities. And yes, human nature doesn't change, especially when greed is the central issue.


message 7: by AC (new) - rated it 5 stars

AC Duffy wrote: "AC wrote: "Duffy wrote: "And yes, it is a real classic. I'd give it five stars, except I thought that the material faded a bit once he got into the details of stock manipulation. That may just be b..."

btw, the old saw that markets are driven by greed and fear is a direct steal from Thucydides, who thought that human events are driven by 'hope' (elpis) and 'fear' (phobos).


Duffy Pratt AC wrote: "Duffy wrote: "AC wrote: "Duffy wrote: "And yes, it is a real classic. I'd give it five stars, except I thought that the material faded a bit once he got into the details of stock manipulation. That..."

Maybe so, but on the scale of steals, it's pretty low. I think it's possible that more than one person independently arrived at this gem.


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