Extracts from 'Reminiscences of a Stock Operator'
by Edwin Lefevre
(said to be the biography of Jesse Livermore)
There are two basic laws that will never be repealed.(1) The law of supply and demand and
(2) The law of human nature
In Foreword by Benton W. Davis
There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. No man can always have adequate reasons for buying or selling stocks daily - or sufficient knowledge to make his play an intelligent play.....
The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money every day, as though they were working for regular wages.
They say there are two sides to everything. But there is only one side to the stock market; and it is not the bull side or the bear side, but the right side.
No, sir, nobody can make big money on what someone else tells him to do. I know from experience that nobody can give me a tip or a series of tips that will make more money for me than my own judgement.
Ignorance at twenty-two isn't a structural defect.
The average chart reader, however, is apt to become obsessed with the notion that the dips and peaks and primary and secondary movements are all there is to stock speculation. If he pushes his confidence to its logical limit he is bound to go broke.
You never grow poor taking profits. But neither do you grow rich by taking a four-point profit in a bull market.
The suckers differ amongst themselves according to their degree of experience.
Don't be a sucker! The semisucker is the type who thinks he has cut his wisdom teeth because he loves to buy in declines.
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.
It never was my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight!
Disregarding the big swing and trying to jump in and out was fatal to me.
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.
The next day we got the news of the San Francisco earthquake. It was an awful disaster but the market opened down only a couple of points. The bull forces were at work, and the public is never independently responsive to the news. You see it all the time. If there is a solid bull foundation, for instance, whether or not what the papers call bull manipulation is going on the same time, certain news items fail to have the effect they would have if the street was bearish.
People don't seem to grasp easily the fundamentals of stock trading. I have often said that to buy on a rising market is the most comfortable way of buying stocks. Now, the point is not so much to buy as cheap as possible or go short at top prices, but to buy or sell at the right time.
When I am bearish and I sell a stock, each sale must be made at a lower level than the previous sale. When I am buying, the reverse is true. I must buy on a rising scale. I don't buy long stock on a scale down. I buy on a scale up.
Remember that stocks are never too high for you to begin buying or too low to begin selling. But after the initial transaction, don't make a second one until the first shows you a profit.
A customer who makes money is an asset to any broker's office.
I have always found it profitable to study my mistakes.
I should have walked and not sprinted.
When one is properly bearish in the beginning of a bear market it is well not to begin selling in bulk until there is no danger of the engine back-firing.
If a man didn't make mistakes he would own the world in a month. But if he didn't profit by his mistakes he wouldn't own a blessed thing.
The longer the delay in starting, the sharper the break will be when it does start.
They exchanged market views and the friend said, "Mr. Travers, how can you be bearish with the market so stiff?" and Travers retorted, "Yes, the s-s-stiffness of d-death!"
It was Travers who went to the office of a company and asked to be allowed to see the books. The clerk asked him, "Have you an interest in the company?" and Travers answered, "I sh-should s-say I have! I'm sh-short t-t-twenty thousand sh-shares of the stock!"
The only thing that a man can do when a man is wrong is to be right by ceasing to be wrong.
As a matter of fact, millions upon millions of dollars have been lost by men who bought stocks because they looked cheap or sold them because they looked dear.
The trend has been established before the news is published, and in bull markets bear items are ignored and bull news exaggerated, and vice versa.
But in actual practice, a man has to guard against many things, and most of all against himself.
The speculator's chief enemies are always boring from within. It is inseparable from human nature to hope and to fear. In speculation when the market goes against you you hope that every day will be the last day - and you lose more than you should had you not listened to hope - to the same ally that is so potent a success-bringer to empire builders and pioneers, big and little. And when the market goes your way you become fearful that the next day will take away your profit, and you get out - too soon. Fear keeps you from making as much money as you ought to. The successful trader has to fight these two deep-seated instincts. He has to reverse what you might call his natural impulses. Instead of hoping he must fear; instead of fearing he must hope. He must fear that his loss may develop into a much bigger loss, and hope that his profit may become a big profit. It is absolutely wrong to gamble in stocks the way the average man does.
A man cannot spend years at one thing and not acquire a habitual attitude towards it quite unlike that of the average beginner. The difference distinguishes the professional from the amateur.
To learn that a man can make foolish plays for no reason whatever was a valuable lesson.
There are times when a man could no more help making money that he could help getting wet if he went out in a rainstorm without an umbrella.
H. H. Rogers
When something happens on which you did not count when you made your plans it behooves you to utilise the opportunity that a kindly fate offers you.
Never try to sell at a top. It isn't wise. Sell after a reaction if there is no rally.
A man can know what to do and still lose money if he doesn't do it quickly enough.
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.
Of all 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.
There are chances that the most prudent man is justified in taking - chances that he must take if he wishes to be more that an mercantile mollusk.
Experience has taught me to beware of buying a stock that does not follow the group-leader.
Stocks are manipulated to the highest point possible and then sold to the public on the way down.
When there is activity there is a synchronous demand for explanations.
The speculator's deadly enemies are: Ignorance, greed, fear and hope.
All the statute books in the world and all the rules of all the Exchanges on earth cannot eliminate these from the human animal.