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wwatts1734 's review for:
Reminiscences of a Stock Operator
by Edwin Lefèvre
This book is one of the premier works about the trading of stocks and commodities. Written by Edwin Lefevre, a business writer of the 1900-1920 era, it is actually the story of Jesse Livermore, one of the greatest stock traders of all time. Livermore started trading at the age of 15 and became known as the "Boy Plunger" because he was famous for taking huge short positions in the market, hoping to profit from price declines. Livermore was an active trader on the NY Stock Exchange for 40 years, and during that time he made and lost 4 different multi-million dollar fortunes. During the great crash of October 1907, Livermore made his first million dollars in the market, taking a short position that was so large that JP Morgan himself asked Livermore to stop shorting stocks for the sake of the market. In 1919, Livermore's attempt to corner the post WWI cotton market caused President Wilson to invite him to the White House to try to persuade him to remove his corner for the sake of the struggling post-war economy. Of course, in the great crash of 1929, Livermore took another short position that made him over $100 million during the crash, a sum that equates to more than $1 billion dollars in today's money. By 1934, Livermore had lost the whole sum. In 1940, he walked into a NY hotel, sat in the coat room and killed himself. Such was the life of the trading genius.
In this 1923 book, Livermore gives us his trading tips and experiences. Written in 1920s street slang, without much of a structure, the book is still relevant today. This is not because Livermore teaches the reader how to use options to hedge a position, nor is it a how-to manual on how to corner a commodities market. Rather, it is a very abstract book of advice on how to be a disciplined trader. Livermore tells the reader that quick profits in the market are a fairy tale. Nobody can time the market well enough to maximize profits, and there are some markets that are so bad that the good trader is best advised to just get out and enjoy a vacation. Livermore's advice about how to make market profits is not to get in the market at the right place or to get out at the right time, but to be able to sit on a position long enough to earn profits. He says that there were many times that he sold right at the peak of a market, but it did him no good because he didn't stay short long enough to profit from the fall. This book is more about the discipline of trading than about any particular trading method. That's what makes the book enduringly relevant.
One of the interesting things about this book is the obvious gambler's mentality that he uses to trade. Livermore began trading in "bucket shops", which are essentially gambling parlors where people can bet on stock and commodity prices. Livermore made so much money in the bucket shops by his 20th birthday that he was banned from bucket shops in Boston and Missouri. So he moved to New York and began trading actual stocks and commmodities. Livermore's approach to trading is almost purely technical. He tracks stock movements and does not concern himself all that much with actual market fundamentals. Although toward the end of the book he does explain that tracking market fundamentals did help him later in his career. Another intersting aspect of the book is how many ways Livermore describes to manipulate the market through buying pools, insider trading, stock swapping and other activities that are completely illegal in today's market, but were perfectly fine and even expected in the market that Livermore lived in.
If you do not have a good understanding of stock and commodity trading then you will probably not understand this book, since the author uses trading terminology all the time without defining his terms. But if you are a trader, this is probably the best book that you can read on the subject.
In this 1923 book, Livermore gives us his trading tips and experiences. Written in 1920s street slang, without much of a structure, the book is still relevant today. This is not because Livermore teaches the reader how to use options to hedge a position, nor is it a how-to manual on how to corner a commodities market. Rather, it is a very abstract book of advice on how to be a disciplined trader. Livermore tells the reader that quick profits in the market are a fairy tale. Nobody can time the market well enough to maximize profits, and there are some markets that are so bad that the good trader is best advised to just get out and enjoy a vacation. Livermore's advice about how to make market profits is not to get in the market at the right place or to get out at the right time, but to be able to sit on a position long enough to earn profits. He says that there were many times that he sold right at the peak of a market, but it did him no good because he didn't stay short long enough to profit from the fall. This book is more about the discipline of trading than about any particular trading method. That's what makes the book enduringly relevant.
One of the interesting things about this book is the obvious gambler's mentality that he uses to trade. Livermore began trading in "bucket shops", which are essentially gambling parlors where people can bet on stock and commodity prices. Livermore made so much money in the bucket shops by his 20th birthday that he was banned from bucket shops in Boston and Missouri. So he moved to New York and began trading actual stocks and commmodities. Livermore's approach to trading is almost purely technical. He tracks stock movements and does not concern himself all that much with actual market fundamentals. Although toward the end of the book he does explain that tracking market fundamentals did help him later in his career. Another intersting aspect of the book is how many ways Livermore describes to manipulate the market through buying pools, insider trading, stock swapping and other activities that are completely illegal in today's market, but were perfectly fine and even expected in the market that Livermore lived in.
If you do not have a good understanding of stock and commodity trading then you will probably not understand this book, since the author uses trading terminology all the time without defining his terms. But if you are a trader, this is probably the best book that you can read on the subject.