The name Livermore is treated with god like reverence by traders of all generations. The classic early 20th century trading classic Reminiscences of a Stock Operator by Lefevre (speculated to have been edited by Lefevre and actually written by Livermore himself) is on the top 5 list of every Wall Street legend.
Many people ask why Livermore is regarded in such high esteem within the trading community when he in fact lost virtually his entire $100 million fortune which had been accumulated during the 1929 market crash. Livermore reached the top of the Wall Street mountain at a time when almost everyone else fell to the bottom; this in itself enshrined him as a legend of the markets forever. Moreover, Reminiscences of a Stock Operator was the first of its kind and allowed readers insights into the ‘speculating game’, from the backstreet boiler rooms all the way to the top Wall Street operators of the roaring ’20s.
I have selected my favorite quotes from Livermore’s 1940 masterpiece How to Trade in Stocks. Read each one, think about each one, then realize how timeless his market wisdom was:
“…the fruits of your success will be in direct ratio to the honesty and sincerity of your own effort in keeping your own records, doing your own thinking, and reaching your own conclusions.”
“There are times when one should speculate, and just as surely there are times when one should not speculate. There is a very true adage: “You can beat a horse race, but you can’t beat the races.” So it is with market operations. There are times when money can be made investing and speculating in stocks, but money cannot consistently be made trading every day or every week during the year.”
“All through time, people have basically acted and reacted the same way in the market as a result of: greed, fear, ignorance, and hope. That is why the numerical formations and patterns recur on a constant basis.”
“…after forming a definite opinion with respect to a certain stock or stocks – do not be too anxious to get into it. Wait and watch the action of that stock or stocks marketwise.”
“Experience has proved to me that the real money made in speculating has been in commitments in a stock or commodity showing a profit right from the start.”
“One of the primary rules is that one should never permit speculative ventures to run into investments.”
“The speculator who insists on trying to profit from daily minor movements will never be in a position to take advantage of the next important change marketwise when it occurs.”
“In the course of time new leaders will come to the front; some of the old leaders will be dropped. It will always be that way as long as there is a stock market.”
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
Robert Sinn is a professional trader and market analyst who focuses on multiple asset classes including equities, futures, options and currencies. He integrates fundamental and technical analysis. More »
This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice.This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities.
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