REMINISCENCES OF A STOCK OPERATOR

by Edwin Lefèvre

I noticed that in advances as well as declines, stock prices were apt to show certain habits, so to speak. There was no end of parallel cases and these made precedents to guide me.

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. I've never forgotten that.

I'd go during my lunch hour and buy or sell it never made any difference to me. I was playing a system and not a favorite stock or backing opinions.

You know, I don't do things blindly. I don't like to. I never did. Even as a kid I had to know why I should do certain things.

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.

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, 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.

My losses have taught me that I must not begin to advance until I am sure I shall not have to retreat. But if I cannot advance I do not move at all. I do not mean by this that a man should not limit his losses when he is wrong. He should. But that should not breed indecision.

in losing money I have gained experience and accumulated a lot of valuable don'ts. 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.

A man must believe in himself and his judgment if he expects to make ...

I know from experience that nobody can give me a tip or a series of tips that will make more money for me than my own judgment.

It took me five years to learn to play the game intelligently enough to make big money when I was right.

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.

The game taught me the game. And it didn't spare the rod while teaching.

I had had time to think calmly of some of my foolish plays; and then, one can see the whole better when one sees it from a little distance.

made my first ten thousand, and I lost that. But I knew how and why because I traded out of season all the time; because when I couldn't play according to my system, which was based on study and experience, I went in and gambled.

There is nothing like losing all you have in the world for teaching you what not to do. And when you know what not to do in order not to lose money, you begin to learn what to do in order to win. Did you get that? You begin to learn.

If a stock doesn't act right don't touch it; because, being unable to tell precisely what is wrong, you cannot tell which way it is going. No diagnosis, no prognosis. No prognosis, no profit.

not even a world war can keep the stock market from being a bull market when conditions are bullish, or a bear market when conditions are bearish. And all a man needs to know to make money is to appraise conditions.

The game of beating the market exclusively interested me from ten to three every day, and after three, the game of living my life. Don't misunderstand me. I never allowed pleasure to interfere with business. When I lost it was because I was wrong and not because I was suffering from dissipation or excesses. There never were any shattered nerves or rumshaken limbs to spoil my game. I couldn't afford anything that kept me from feeling physically and mentally fit. Even now I am usually in bed by ten. As a young man I never kept late hours, because I could not do business properly on insufficient sleep.

I was doing better than breaking even and that is why I didn't think there was any need to deprive myself of the good things of life. The market was always there to supply them. I was acquiring the confidence that comes to a man from a professionally dispassionate attitude toward his own method of providing bread and butter for himself.

It was the change in my own attitude toward the game that was of supreme importance to me.

I never thought that anything was irksome if it helped me to trade more intelligently. Before I can solve a problem I must state it to myself. When I think I have found the solution I must prove I am right. I know of only one way to prove it; and that is, with my own money.

I am not sure of the exact value of losing, for if I had lost more I would have lacked the money to test out the improvements in my methods of trading.

There was as much to learn from partial victory as from defeat.

I made up my mind to be wise and play carefully, conservatively.

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.

He had evidently suffered from the same defect in his young days and knew his own human weaknesses. He would not lay himself open to a temptation that experience had taught him was hard to resist and had always proved expensive to him, as it was to me.

the big money was not in the individual fluctuations but in the main movements that is, not in reading the tape but in sizing up the entire market and its trend.

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

Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money.

It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance.

The reason is that a man may see straight and clearly and yet become impatient or doubtful when the market takes its time ab...

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

In a bull market your game is to buy and hold until you believe that the bull market is near its end. To do this you must study general conditions and not tips or special factors affecting individual stocks.

Wait until you see or if you prefer, until you think you see the turn of the market; the beginning of a reversal of general conditions. You have to use your brains and your vision to do this;

One of the most helpful things that anybody can learn is to give up trying to catch the last eighth or the first. These two are the...

Without faith in his own judgment no man can go very far in this game.

I can wait without a twinge of impatience. I can see a setback without being shaken, knowing that it is only temporary.

It wasn't anything to be proud of, when you think that I had been broke three times in less than two years. And as I told you, being broke is a very efficient educational agency.

When I have argued myself into disregarding my impulse and have stood pat I have always had cause to regret it.

the moment I heard the news of the declaration of that unprecedented 10 per cent dividend, that I got what I deserved for disregarding the voice of experience and listening to the voice of a tipster. My own convictions I had set aside for the suspicions of a friend, simply because he was disinterested and as a rule knew what he was doing.

It was not that all I needed to learn was not to lake tips but follow my own inclination. It was that I gained confidence in myself and I was able finally to shake off the old method of trading.

From then on I began to think of basic conditions instead of individual stocks. I promoted myself to a higher grade in the hard school of speculation. It was a long and difficult step to take.

Now, the point is not so much to buy as cheap as possible or go short at top prices, but to buy or sell at the right time. When I am bearish and I sell a stock, each sale must be at a lower level than the previous sale. When I am buying, the reverse is true. I must buy on a rising scale. I don't buy long stock on a scale down, I buy on a scale up.

bullish. I never want to buy stocks too cheap or too easily.

If you operate on a large scale you will have to bear that in mind all the time. A man studies conditions, plans his operations carefully and proceeds to act. He swings a pretty fair line and he accumulates a big profit on paper. Well, that man can't sell at will. You can't expect the market to absorb fifty thousand shares of one stock as easily as it does one hundred. He will have to wait until he has a market there to take it. There comes the time when he thinks the requisite buying power is there. When that opportunity comes he must seize it. As a rule he will have been waiting for it. He has to sell when he can, not when he wants to. To learn the time, he has to watch and test. It is no trick to tell when the market can take what you give it. But in starting a movement it is unwise to take on your full line unless you are convinced that conditions are exactly right.

Remember that stocks are never too high for you to begin buying or too low to begin selling. But after the initial transaction, don't make a second unless the first shows you a profit. Wait and watch. That is where your tape reading conies in to enable you to decide as to the proper time for beginning. Much depends upon beginning at exactly the right time.

Suppose a man's line is five hundred shares of stock. I say that he ought not to buy it all at once ; not if he is speculating.