on October 2, 2002
Literary critics are often asked, "If you were stranded on a tropical island and you only had one book to read for the rest of your life which book would you choose?" Well, if you posed that same question to the world's professional traders the response "Reminiscences of a Stock Operator by Edwin LeFevre" would be the most frequent response, and by a large margin.
Despite being written in the early 1920's, Reminiscences of a Stock Operator continues to be the most useful and most-loved book ever written on the subject of trading and speculation. In this novel, LeFevre brilliantly describes the life and times of the book's protagonist, Larry Livingston, a pseudonym for Jesse Livermore, one of history's most famous traders.
Livingston never considered himself an investor; he was a speculator. He didn't mind being long or short, he just wanted to be correct. His approach was to figure out what the path of least resistance was and then go with the flow. He didn't believe in picking tops or bottoms; he waited for a trend to be confirmed and then jumped in, thus never fighting the tape. Livingston never traded out of boredom or solely for the sake of the excitement it brought to him. He knew that he could get rich by following a defined trend and thus calmly waited on the sidelines when the market was directionless. Had Livingston been alive today he would certainly be a momentum/price action based trader.
Although a sizeable portion of the book vividly describes the highs and lows of Livingston's exciting life, the meat of the book comes in the form of trading commandments that every successful trader can likely repeat even while asleep. These are the trading rules that have been passed down from mothers to daughters, fathers to sons, mentors to students, winners to losers. This is the book from which almost every subsequent general trading book is derived. If you have ever wondered where the trading rule "Never average down" came from, just turn to page 154. Where did the comparison between greed and fear first originate? You'll find it on page 130. Some other rules to live by that were introduced in LeFevre's book are:
-The trend is your friend.
-History repeats itself.
-No stock is too high to buy or too low to sell.
-Let your winners run and cut your losses quickly.
For beginners, this book will give you a strong and sturdy foundation on which you can build your successful trading career. It will fill your absorbent trading mind with vitally important trading principles in a clear and understandable manner. For experienced traders, reading this book again will galvanize your mind and refresh your spirit for trading. It brings clarity as to why we trade and how to best go about it. This is a must read for beginners and a must re-read for all others.
on June 26, 2001
There is a reason this book rates a mention on most lists of Wall Street Classics. Since it was published in 1923, generations of investors have found its trading advice rings true.
The fictionalized biography of Jesse Livermore, one of the greatest stock market speculators, it contains perceptive trading advice and insightful analyses of market price movements.
"I learned early that there is nothing new in Wall Street," states the book's protagonist, Larry Livingstone. "There can't be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again."
During the 1970's when this book was out of print, my friends and I would scrounge used bookshops in searching of copies of this gem. The reason: its pages contain precious pearls of wisdom with which experienced traders can identify, from which new traders can learn. Thankfully, this generation of traders will not have to go to the lengths mine did to access this wisdom.
"I did precisely the wrong thing," Livingstone notes. "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."
Livermore made and lost millions playing the stock and commodity markets. LeFevre, a journalist captures many of his timeless lessons in this book, which first appeared as a series in The Saturday Evening Post. There is, however, one Wall Street Pearl that did not make the book - "a speculator who dies rich, is a speculator who dies before his time." Livermore committed suicide in a bathroom of the Pierre Hotel and died a penniless man.
on November 27, 2001
I have a library of nearly 100 books about the markets. Reminiscences was the third book I ever read and it remains my "bible" more than a decade later. You might wonder how an 80-year old book about the stock market could still be relevant. Well, that is because financial markets are determined by human nature as much as anything else, and human nature acts today as it did a century ago. Greed, fear, herd thinking, impatience - those are the same influences that drive markets today and haunt traders and investors who are striving to make the right decisions. Many of the lessons that dictate my investment philosophy ("Cut your losses, let your winners run", "if you don't like the odds, don't bet") were taught to me by the protagonist, who is the fictional characterization of the legendary Jesse Livermore. That he tells his stories with such color and suspense makes the book completely entertaining beyond its invaluable trading lessons. BUY THIS BOOK FOR YOURSELF. BUY ANOTHER ONE FOR A FRIEND (I've given 4 copies). You'll not only improve your own investing results, but your gift will impress as well.
on December 6, 1999
How can I say this forcefully to impress upon you how great this book is?I don't write reviews. This is my first and only, so here goes.Every high school student in America should be made to read this book.My children will read this book and give me a report on it.Millions are lost in stock trading and stock guessing.This book tells you how make millions by following simple rules.I didn't want this book to end. When I reached the end I went right back to page one. I love this book. You will too.
on October 14, 2004
Jesse Livermore, the "writer" of this book (though he calls himself Lawrence Livingston and the book sports, as author, one Edwin Lefevre), here tells the story of his life in the markets (both stocks and commodities) from the time he was 14 years old until he became a successful "stock operator" in his late thirties or, perhaps, early forties. Along the way he offers us a view of how he progressed from mere tape reading and betting on price fluctuations on a very short term basis to genuine player, able to "run big lines" in the market, corner various stocks and other goods and successfully manipulate markets for himself and those who sought this of him, to sell positions that were too big to be absorbed without depressing prices to a level that made such sales untenable. The picture of the markets Livermore sketches here is fascinating as is the glimpse he gives us into how he became good at what he did.
He learned, he tells us, that mere tape reading alone, while a useful tool, was not sufficient to make real money in the markets. For that you had to be able to adequately gauge "general conditions" and correctly bet which way the economy and markets would be moving over a long period of time, i.e., to determine if conditions were bullish or bearish. Then, says Livermore, the key is to move into your positions but only incrementally, testing the waters as you go and never overcommitting. You have to be patient, he says, and only move when you are sure and, once in, if things are going your way, you have to hold your ground and not try to grab quick profits and trade in and out heavily. Value has no part in this since prices move with the enthusiasms or fears of the crowd. So a stock, he asserts, is never too high to buy or too low to sell . . . if the stock price is moving your way. But you have to be prepared to act, he adds, against your normal human inclinations, i.e., to take losses quickly when the market for your positions moves contrary to your expectations. It's better to take the loss and conserve capital, he says, than hang on in vain hope.
He played both the long and short sides of the market and was enamoured of the game itself. He tells us it wasn't the money that kept him in it, or at least not the money per se, but rather the sense of accomplishment he derived from being right. The money was the confirmation of that accomplishment. Still Livermore managed to go broke a couple of times in this book (and, as others have pointed out here, he finally died broke after cleaning up as a result of his being bearish in the year leading up to the 1929 crash).
While there are lots of intriguing anecdotes here, including the tale of his efforts to come back after a big-time blunder in cotton (which he ascribes to his being mesmerized by a charismatic cotton speculator who bedazzled him into ignoring his own best judgment), there is very little about the people he knew and shaped him, or who he influenced in his turn. We're told about this or that broker, this or that trader and assorted business tycoons. And he mentions his marriage and wife briefly and in passing. But his interests are clearly in the market and in his own thoughts while playing it. I understand from other sources that he was a very private man who did not connect well with other people and that he suffered from bouts of depression. This probably explains the almost total dearth of humanity in the book, except for his own experiences in the market. (It reads, in fact, like a series of "as told to" interviews, strung together for publication in book form.)
Perhaps Livermore's way is really how one gets good at something like stock speculation, to be a totally focused and blindered individual, completely devoted to honing an almost inhuman skill at outguessing the mass of other human beings through the markets. Still, the few personal anecdotes he offers do reverberate and illuminate.
It's intriguing to see how he had to dissemble in order to operate in the crooked "bucket shops" (where no stocks were ever really bought or sold as customers bet on the next price quotation), or when, coming back from Boston to New York, he stumbled into a small brokerage house and, looking younger than his years, he and a friend were taken for well-off college students instead of the market professionals that Livermore, at least, was fast becoming. In this case, Livermore (or Livingston) takes the poor shop owner (it may have been one of those bucket shops) for a ride until the man regretfully acknowledges they have nearly cleaned him out and asks them to give him a break and just move on. Another time, after the cotton fiasco, Livermore recalls how he was brought back to New York from Chicago (where he'd gone to rebuild his stake) by a big, respectable brokerage house who wrote him a check for $25,000 (real money in those days) and just told him to trade out of their house. Surprised at their largesse, he takes the opportunity they are offering to make a swifter comeback than would otherwise have been possible, but soon finds that they are crimping his trading. Because of his sense of obligation to them, he allows them to do it, forcing him into mistakes that lead to his incurring even greater debt than before. In the end he realizes that he has been brought in for "cover" since his reputation for "running a big line" and short selling provides them camouflage as they liquidate the assets of their major customer on the open market, thereby enabling them to avoid driving down the prices of the shares.
Livermore comes across as an honorable fellow who, even after declaring bankruptcy to 'free his mind' from creditors so he can trade successfully again, goes out of his way to pay back a million dollars in debt. Of course, the point of declaring bankruptcy is to wipe out those debts. But Livermore tells us that he paid everyone back anyway and that he only went the bankruptcy route to remove the sword of Damocles that seemed to be hanging over his head and hindering his market judgement.
In the end I wanted more from the book than it had to give. But as a window into the mind of an enigmatic and remarkably successful "stock market operator" of the early twentieth century, it was unbeatable. The man gives us his own learning experiences, his insights and his invaluable perspective. True, markets aren't quite like this anymore, driven as they are these days by program trading and international money flows. A line of sixty thousand shares is hardly enough to move most major stock prices on the big board these days, at least not for very long. But the fundamental principles of the markets are hardly likely to have changed. Livermore would certainly have had to play a different game today. But he'd have been at home.
on November 28, 1999
Like Muhammed Ali, this book is undisputedly the greatest. A true & timeless classic that will endure for as long as people speculate, "Reminiscences" is to trading what Sophia Loren was to curves or Raquel Welch was to breasts...and then some. It really does require genuine market experience and multiple re-readings to gain the full benefit of the invaluable insights from this incredible book. Livermore was almost certainly the greatest natural talent in the entire history of trading - if he played basketball, he would probably make Michael Jordan look like a clueless 5'6" sophomore klutz. But unlike sport, trading requires discipline as well as talent, and Livermore was chronically deficient in the former. That he blew out multi-million dollar fortunes (back in the days when a million dollars meant something) repeatedly, and then came back with a few thousand and managed to run it up to millions again within a couple of years, not just once but several times, just goes to show what a unique trader he truly was.
So is this book going to help your trading, or is it just a fascinating look at a trading legend? Well, lots of professional traders have cited this as the most influential book on trading they ever read (see the laudatory comments in "Market Wizards"), and I can only second that opinion. There is really great discussion of trading techniques, such as the usefullness of adding to a position as the market confirms your original idea, how to trade in big size, how to read the tape to determine the market's underlying strength or weakness, etc. There are also great psychological insights - it is obvious that Livermore was a very introspective and perceptive man, at least in respect to his ability to trade.
In some ways this is a melancholy book - one can only imagine how much wealth Livermore would have possessed if he had been able to exercise even an ounce of discipline. Any pro trader who reads this book will see the man for what he is - a one-off whose like we will not see for many a year. The man makes current gurus George Soros and Warren Buffett look like a bunch of clueless high school students.
"Prices are never too high to begin buying or too low to begin selling."
"Always sell what shows you a loss and keep what shows you a profit."
"There is nothing like losing all you have in the world for teaching you what not to do."
"Millions come easier to a trader after he learns how to trade, than hundreds did in his days of ignorance"
This book is full of such timeless wisdom. Feast on it, and die disgustingly rich.
on October 7, 1999
This is an absolute classic. I read this book as a rookie on Wall Street in 1987, only months before the crash. I just bought it again as a gift for a client's son graduating Wharton. The theme 75 years ago applies today and will apply in 75 years to come. From Boston to New York to Palm Beach and back, Jesse Livermore "swings a big line" (trades larger and larger blocks in the stock positions he takes) and along the way teaches us all about what is to trade, to lose, to win. Todays daytraders could learn much from this book as well as newly minted Ivy League MBA portfolio managers. It is a brilliant reflection on the true spirit, grit, culture and challenge of man versus market and the subsequent lessons learned of the ultimate enemy in trading: self. The rumour around this book for years has been that the fictionalized version of Jesse Livermore died penniless, having gone through multiple fortunes. However, I have heard from many old liners in those very same cities otherwise. Read the book.
on March 28, 2000
I'd have to say first that this book will not tell you how to trade technicals, nor how to read the financial pages.
That being said, I found this masterpiece a riveting story of a man who won and lost millions of dollars in a time when thousands would set you up for life... His technique for trading the tape and his rise as an investor is truely a traders dream come true. Starting at 15, trading through the drepression, and manipulating the markets of his time is a wonderful refresher to todays trading. If only I could have been alive in such a time in history... to be able to corner a market and sell another to unload your numerous possitions must have been unbelievable to witness, let alone accomplish.
If you like stories of success you'll love this book...
on March 15, 2004
What makes a classic a classic? It's that the truths taught so many years ago are still true today.
Jesse Livermore in this book written nearly a century ago (minus just a few years) teaches us truths of the market. And those truths hold today.
How much does news help your trades? How much do friends and tipsters help your trades? How much do YOU help others by telling them about your trades?
Jesse reveals why you should ignore the news (you'll always be the last to hear it, learn that), ignore friends and family (when it comes to stock tips), and stop giving advice too. All three are disasters for you and everybody else.
The market is there to tell its own story. You can study the tape (using Livermore's language) and with practice and some knack for the skill, you can learn to trade successfully. Livermore got rich by sticking to his plans and by making sure the market itself was the only thing he studied.
I don't think this book will teach you what to do as much as it trains you to STOP doing things that detract you and distract you from what the market is trying to tell you all the time. Listen to the market and you'll make some cash.
on April 25, 2006
Picture this; it's the early 1900's, the dawn of the Roaring 20's. Gatsby like characters abound and are romanticized in the Saturday Evening Post, Horatio Alger rags to riches stories are all the rave. Along comes Jesse Livermore, a ballsy, throw caution to the wind and risk it all by leveraging it up to the hilt and letting it ride type of guy. It's a time when the market is on fire and behaves something like the late 90's but the regulators are nowhere to be seen. Charles Ponzi takes Boston by storm with his promises of 50% in 45 days with his Ponzi Notes and creates an all out frenzy engulfing what seems like half of the City.
I read this book in 1990 when I first entered the securities business, and promptly bough 10 copies to give to friends. Over the years I have either given as a gift or recommended this book to everyone entering the business (Wall St. and the investing business in general).
In this edition the illustrations from the 1920's Post are worth every penny, however the market insight is invaluable. Just think about what you can learn from a guy that was day trading and scalping eights 70 years before it was in vogue!
I enjoyed the ride of the market throughout the 90's as a Wall Street broker and then moved on to real estate in 2001. I would recommend this book to anyone just starting out on Wall Street and for those that are Street veterans and have not read it yet, shame on you.
By Kevin Kingston, author of: A 20,000% Gain in Real Estate: A True Story About the Ups and Downs From Wall Street to Real Estate Leading to Phenomenal Returns