Sunday, June 05, 2005

Reminiscences of a Stock Operator (Edwin Lefevre) 0 comments

This classic, written in 1923, is regarded as one of the best financial books ever written, and it is not difficult to see why after just reading the first few pages. Highly entertaining, filled with knowledge on how to play the stock market in a logical way, coupled with an infectious excitement through its pacy narration, it is one of the few books that I have read and re-read for inspiration.

The book chronicles the experiences and thoughts of Larry Livingstone, which was actually a pseudonym for Jesse Livermore, widely regarded as the greatest trader who ever lived, gainer and loser of several multi-million fortunes in his lifetime. The persona (Larry Livingston) describes how he honed his trading skills in the "bucket shops" (a type of stockbroker now made illegal) and solidified his reputation as the "Boy Plunger" in the big markets in New York; and his market experiences which shaped his trading philosophies. His startling insights are what keep many traders turning back to it again and again. A sample of the flavour of this book:

"I did precisely the wrong thing. The cotton showed me a loss and I kept it. The wheat showed me a profit and I sold it out. Of all the speculative blunders there are few greater than trying to average a losing game. Always sell what shows you a loss and keep what shows you a profit."

"After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It was never my thinking that made the big money for me. It was always my sitting..... Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn."

"I had made a mistake. But where? I was bearish in a bear market. That was wise. I had sold stocks short. That was proper. I had sold them too soon. That was costly. My position was right but my play was wrong."

I hope this has whetted your appetite. It has surely whetted mine and I'm going off to read it for a third time.

By the way, if you're getting it, make sure you get the Wiley Classic paperback edition, NOT the illustrated large hardcover which I recently saw at Borders. The content is different; the original is the former.




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