Famous for having beaten the bucket shops at their own game in the early part of the 20th century, Jesse Livermore  later became a role model for generations of traders. These pages and blog are but a small tribute to the man and speculator.  By far,  the best way to pick his brain is to focus on the quasi-fictional character of “Reminiscences of a Stock Operator”, in particular, chapter #5. Below are some excerpts.

“Of course I loved to trade heavily and they called me the Boy Plunger; but I also liked to study the moves. 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.”

“After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!.”

“The reason is that a man may see straight and clearly and yet become impatient or doubtful when the market takes its time about doing as he figured it must do. That is why so many men in Wall Street, who are not at all in the sucker class, not even in the third grade, nevertheless lose money. The market does not beat them. They beat themselves, because though they have brains they cannot sit tight.”

“Disregarding the big swing and trying to jump in and out was fatal to me. Nobody can catch all the fluctuations. 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.”

“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 most expensive eighths in the world. They have cost stock traders, in the aggregate, enough millions of dollars to build a concrete highway across the continent.”

“I think it was a long step forward in my trading education when I realized at last that when old Mr. Partridge kept on telling the other customers, “Well, you know this is a bull market!” he really meant to tell them that 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.”

“I believe there are no good stocks or bad stocks; there are only money making stocks. So there is no good direction to trade, short or long; there is only the money-making way to trade.”

Jesse Lauriston Livermore

Source: Reminiscences of a Stock Operator

Some interesting links

Business: Boy Plunger
Monday, Dec. 09, 1940
Original TIME magazine article about Jesse Livermore.

Caring nothing about stocks themselves, only about quotations, Jesse Livermore had a theory: he would be right 60% of the time, wrong 40%, pyramid a fortune out of the 20% differential.

By 1934 he was in bankruptcy again —his fourth, for $2,259,000. At 56, he was back where he started at 16. Jesse Livermore undoubtedly would have come back a fourth time and paid his debts if SEC hadn’t changed the rules. By 1937 the market became too strictly regulated for operators of his type. Through all his market days he had never been a real market insider. He never learned that sometimes it was better to take stock than cash, better to get stock control of a business to tide a man over his old age. He was a trader, a gambler—one of the sharpest.

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