Reminiscences of a Stock Operator: and The Investment Strategies of Jesse Livermore (Illustrated)

by Edwin Lefèvre

I came to New York at the age of 21, bringing with me all I had, twenty-five hundred dollars.

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.

The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money every day, as though they were working for regular wages.

Getting sore at the market doesn’t get you anywhere.

It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!

The market does not beat them. They beat themselves, because though they have brains they cannot sit tight.

being broke is a very efficient educational agency.

He was a very fine old man, clever as they make them, and brave.

The analysis of the week that had passed was less important to me than the forecast of the weeks that were to come.

I cruised off the coast of Florida. The fishing was good. I was out of stocks.

He was a man, J. P. Morgan was. They don’t come much bigger.

Well, I was worth over one million after the close of business that day. But my biggest winnings were not in dollars but in the intangibles: I had been right, I had looked ahead and followed a clear-cut plan. I had learned what a man must do in order to make big money; I was permanently out of the gambler class; I had at last learned to trade intelligently in a big way. It was a day of days for me.

The recognition of our own mistakes should not benefit us any more than the study of our successes.

In Wall Street, and, for that matter, everywhere else, any accident that makes big money for a man is regarded with suspicion. When the accident is unprofitable it is never considered an accident but the logical outcome of your hoggish-ness or of the swelled head.

I get my pleasure out of matching my brains against the brains of other traders men whom I have never seen and never talked to and never advised to buy or sell and never expect to meet or know.

A man must know himself thoroughly if he is going to make a good job out of trading in the speculative markets.

By letting a man have his say in full you are able to decide at once. It is a great time-saver. It averts debates and prolonged discussions that get nowhere.

The loss of the money didn’t bother me. Whenever I have lost money in the stock market, I have always considered that I have learned something; that if I have lost money I have gained experience, so that the money really went for a tuition fee.

There is no need to feel anger over being human.

But I object to losing money when I am right.

Tips! How people want tips! They crave not only to get them but to give them. There is greed involved, and vanity.

The training of a stock trader is like a medical education.

Observation, experience, memory and mathematics these are what the successful trader must depend on. He must not only observe accurately but remember at all times what he has observed. He cannot bet on the unreasonable or on the unexpected, however strong his personal convictions may be about man’s unreasonableness or however certain he may feel that the unexpected happens very frequently. He must bet always on probabilities that is, try to anticipate them. Years of practice at the game, of constant study, of always remembering, enable the trader to act on the instant when the unexpected happens as well as when the expected comes to pass.

Experience has taught me that the way a market behaves is an excellent guide for an operator to follow. It is like taking a patient’s temperature and pulse or noting the color of the eyeballs and the coating of the tongue.

“If I am walking along a railroad track and I see a train coming toward me at sixty miles an hour, do I keep on walking on the ties? Friend, I sidestep. And I do not even pat myself on the back for being so wise and prudent.”

With me, I cannot fear to be wrong because I never think I am wrong until I am proven wrong. In fact, I am uncomfortable unless I am capitalizing my experience.

But that, was something I had no business to think because my business is to trade that is, to stick to the facts before me and not to what I think other people ought to do.

He that sells what isn’t his’n Must buy it back or go to pris’n.

Vision without money means heartaches; with money, it means achievement; and that means power; and that means money; and that means achievement; and so on, over and over and over. Of

In the stock market, as in warfare, it is well to keep in mind the difference between strategy and tactics.

Let me begin at the beginning.

When the stock you are manipulating doesn’t act as it should, quit. Don’t argue with the tape. Do not seek to lure the profit back. Quit while the quitting is good and cheap.

Whereupon the average man — who never thinks of values but of prices, and is not governed in his actions by conditions but by fears — takes the easiest way, he stops thinking that there must be a limit to the advances.

Intimate friends were now asked to pay off loans, for all the world as though they had never played golf with the president.

They are still angry. I am not. Getting angry doesn’t get a man anywhere.

The speculator’s deadly enemies are: Ignorance, greed, fear and hope.

“No man can succeed in the market unless he acquires a fundamental knowledge of economics and thoroughly familiarizes himself with conditions of every sort — the financial position of a company, its past history, production, as well as the state of the industry in which it is engaged, and the general economic situation.

“Essentials to stock market success are knowledge and patience. So few people succeed in the market because they have no patience. They want to get rich quickly. They are not willing to buy when a thing goes down, and wait. They buy mostly when a thing is going up, and near the top.

“In the long run, patience counts more than any other element except knowledge.

He desires not only the advantage of plenty of sleep; he wishes to rise early, thoroughly refreshed for the day’s work. He puts in an hour or two before breakfast studying world conditions affecting the stock market, banking, foreign trade, money, crops, corporate reports and trade statistics. He chooses the early morning for studying these subjects for at that time his mind is thoroughly rested and cleared of the previous day’s impressions, like a photographic plate ready for the negative.

Anyone who has employed the early hours for such a purpose realizes what an immense advantage is gained in this practice. The house is quiet. Nothing disturbs the flow of thought during a sufficient period for subjects to be taken up, investigated and conclusions reached. No other part of the day affords such a splendid opportunity for the quiet absorption of such data.

Livermore has succeeded because he has made a deep study of the stock market and of himself. That is the way to make a success of anything.

The real news is not in the headlines. One must seek it elsewhere.

Your neighbor in the next chair always wants to tell you his hopes and fears: what he sees, hears, thinks or knows.

His telephoning is also done in a standing position.

That silence and seclusion are essential to the formation of sound, clear and independent judgment. As in any other line of work, one must concentrate. Thinking, planning, and execution of business in this field can best be accomplished away from your broker’s office.

He knows that very often insiders are the worst judges of their own stocks, because they know too much about their companies; they are too close to them to see the weak spots; they are often ignorant of technical considerations.

The market moves along the line of least resistance and when demand is greater than supply this line is upward.

It is almost an appalling fact that the practice of the public is to accept a profit of two or three points, but to stand for a loss ranging from ten to thirty points, and sometimes fifty or a hundred points. This means that the public reverses one of the first principles in successful stock trading which is: cut your losses and let your profits run.

He closes out when it does not act right, regardless of whether the trade is even, a little above or a little below where he entered it.