REMINISCENCES OF A STOCK OPERATOR

by Edwin Lefèvre

I was utterly free from speculative prejudices. The bear side doesn't appeal to me any more than the bull side, or vice versa. My one steadfast prejudice is against being wrong.

I simply must. When I am long of stocks it is because my reading of conditions has made me bullish. But you find many people, reputed to be intelligent, who are bullish because they have stocks.

I do not allow my possessions or my prepossessions either to do any thinking for me. That is why I repeat that I never argue with the tape.

To be angry at the market because it unexpectedly or even illogically goes against you is like getting mad at your ...

Obviously the thing to do was to be bullish in a bull market and bearish in a bear market. Sounds silly, doesn't it? But I had to grasp that general principle firmly before I saw that to put it into practice really meant to anticipate probabilities. It took me a long time to learn to trade on those lines.

now with adequate resources, experience and confidence, I was in such a hurry to try the new key that I did not notice that there was another lock on the door a time lock! It was a perfectly natural oversight. I had to pay the usual tuition a good whack per each step forward.

I covered. It was just as well. If I hadn't I wouldn't have had enough left to buy a postal card. I lost most of my fur, but it was better to live to fight another day.

Cut loses quickly

I had observed certain facts but had not learned to co- ordinate them. My incomplete observation not only did not help but actually hindered.

I have always found it profitable to study my mistakes.

at all times the tape should be read to determine the propitiousness of the time for operating. If you begin right you will not see your profitable position seriously menaced; and then you will find no trouble in sitting tight.

I was too eager to prove to myself that I had seen real dollars and not a mirage. I saw, and knew that I saw. Thinking about the reward for my excellent sight kept me from considering the distance to the dollar-heap. I should have walked and not sprinted.

I didn't wait to determine whether or not the time was right for plunging on the bear side. On the one occasion when I should have invoked the aid of my tape-reading I didn't do it.

even when one is properly bearish at the very beginning of a bear market it is well not to begin selling in bulk until there is ...

If a man didn't make mistakes he'd own the world in a month. But if he didn't profit by his mistakes he wouldn't own a blessed thing.

this time I was cold-bloodedly right, not because of a hunch or from skilful reading of the tape, but as the result of my analysis of conditions affecting the stock market in general. I wasn't guessing. I was anticipating the inevitable. It did not call for any courage to sell stocks. I simply could not see anything but lower prices, and I had to act on it, didn't I? What else could I do?

It was very curious how, after suffering tremendous losses from a break of fifteen or twenty points, people who were still hanging on, welcomed a three-point rally and were certain the bottom had been reached and complete recovery begun.

The first ten thousand dollars I made in the bucket shops I lost because I traded in and out of season, every day, whether or not conditions were right. I wasn't making that mistake twice.

The rallies had broken me before. I wasn't going to let the next rally wipe me out. Instead of sitting tight I went to Florida. I love fishing and I needed a rest.

trading theory of mine that when a stock crosses 100 or 200 or 300 for the first time the price does not stop at the even figure but goes a good deal higher, so that if you buy it as soon as it crosses the line it is almost certain to show you a profit.

I was bearish, remember, but I was also a tape-reading trader. I knew Anaconda, if it went the way I figured, would move very quickly. Whatever moves fast always appeals to me.

I have learned patience and how to sit tight, but my personal preference is for fleet movements, and Anaconda certainly was no sluggard.

the only thing to do when a man is wrong is to be right by ceasing to be wrong.

When you want to get out, get out.

I was now playing safe because after being down a man enjoys being up, even if he doesn't quite make the top. The way to make money is to make it. The way to make big money is to be right at exactly the right time.

In this business a man has to think of both theory and practice. A speculator must not be merely a student, he must be both a student and a speculator.

the bull cliques were still fighting desperately against conditions against common sense and against common honesty, for they knew what was coming and were resorting to such schemes to put up the market in order to unload stocks before the storm struck them. It is possible they really did not believe the danger was as serious or as close at hand as I thought.

The big men of the Street are as prone to be wishful thinkers as the politicians or the plain suckers. I myself can't work that way. In a speculator such an attitude is fatal.

the real joy was in the consciousness that as a trader I was at last on the right track. I still had much to learn but I knew what to do.

Tape reading was an important part of the game; so was beginning at the right time; so was sticking to your position. But my greatest discovery was that a man must study general conditions, to size them so as to be able to anticipate probabilities.

In short, I had learned that I had to work for my money. I was no longer betting blindly or concerned with mastering the techniques of the game, but with earning m...

nobody was immune from the danger of making sucker plays. And for a sucker play a man gets sucker pay; for the paymaster is on the job and never lose...

the money market was megaphoning warnings to the entire world. But a belief in miracles kept people from selling what remained of their speculative holdings.

Between noon and about two o'clock there was ordinarily not much business done in money,

I knew that some day I would find out what was wrong and I would stop being wrong. I would then have not alone the will to be right but the knowledge to insure my being right. And that would mean power.

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. But there is a natural tendency in all men to avoid punishment.

When you associate certain mistakes with a licking, you do not hanker for a second dose, and, of course, all stock-market mistakes wound you in two ten...

A stock speculator sometimes makes mistakes and knows that he is making them. And after he makes them he will ask himself why he made them; and after thinking over it cold-bloodedly a long time after the pain of punishment is over he may learn how he came to make them, and when, and at what particular point of his ...

Of course, if a man is both wise and lucky, he will not make the same mistake twice. But he will make any one of the ten thousand brothers or cousins of the original. The Mistake family is so large that there is always one of them aro...

As far as my trading went, having a million merely meant more reserves. Money does not give a trader more comfort, because, rich or poor, he can make mistakes and it is never comfortable to be wrong.

when a millionaire is right his money is merely one of his several servants. Losing money is the least of my troubles. A loss never bothers me after I take it. I forget it Overnight. But being wrong not taking the loss that is what does the damage to the pocketbook and to the soul.

As a rule a man adapts himself to conditions so quickly that he loses the perspective. He does not feel the difference much that is, he does not vividly remember how it felt not to be a millionaire. He only remembers that there were things he could not do that he can do now.

It does not take a reasonably young and normal man very long to lose the habit of being poor. It requires a little longer to forget that he used to be rich.

after a man makes money in the stock market he very quickly loses the habit of not spending. But after he loses his money it takes him a l...

In the long run commodity prices are governed but by one law the economic law of demand and supply. The business of the trader in commodities is simply to get facts about the demand and the supply, present and prospective. He does not indulge in guesses about a dozen things as he does in stocks. It always appealed to me trading in commodities.

The message of the tape is the same. That will be perfectly plain to anyone who will take the trouble to think. He will find if he asks himself questions and considers conditions, that the answers will supply themselves directly. But people never take the trouble to ask questions, leave alone seeking answers.

you need experience. But it is even more important to keep certain fundamentals in mind. To read the tape is not to have your fortune told.

The object of reading the tape is to ascertain, first, how and, next, when to trade that is, whether it is wiser to buy than to sell.

The trend is evident to a man who has an open mind and reasonably clear sight, for it is never wise for a speculator to fit his facts to his theories. Such a man will, or ought to, know whether it is a bull or a bear market, and if he knows that he knows whether to buy or to sell.

As a rule, there is always a crowd of traders who are short at 120 because it looked so weak, or long at 130 because it looked so strong, and, when the market goes against them they are forced, after a while, either to change their minds and turn or to close out, In either event they help to define even more clearly the price line of least resistance. Thus the intelligent trader who has patiently waited to determine this line will enlist the aid of fundamental trade conditions and also of the force of the trading of that part of the community that happened to guess wrong and must now rectify mistakes. Such corrections tend to push prices along the line of least resistance.