Reminiscences of a Stock Operator
Written by: Edwin Lefevre
Foreword by: Tim Price
This was an all around phenomenal book to read. Recently I have been focusing on reading non-fiction and that can get so, so boring. I actually started listening to Hamilton on tape for my drive to and from work and, though very interesting, very boring. Between the hum-drum ebb and flow of my 9-5, this was a welcomed change.
Reminiscences of a Stock Operator is a fictional representation of the life of Jesse Lauriston Livermore, a stock trader in the early 1900's. Using the pseudonym Jesse Livingston, author Lefevre dives into the experiences had by Livermore himself. It begins in a bucket shop in New England and ends up on Wall Street. What really pulls readers in (me) are the gains and losses. Growing the few dollars he started with into over $10 thousand, losing it all. Making a few million, then soon finding himself in massive debt. Figuring out what he'd done wrong and making that million back - and more.
That part is true.
Some parts in between, the day in the life, that may be dramatized and fictionalized, the but the underlying theme of the book is true. This was originally published in 1923 so some of the lingo is old school, but many of the lessons and words of wisdom are still widely accepted and used to this day.
I was able to fly through this one. It wasn't dry at all and legitimately provided a source of amusement for me like a typical fictional book does. The kicker? I was still able to take some things away to [hopefully] help out my investing.
Lately I have been focusing on the very short term. It has been working, but looking back, had I held on to some investments for even a month longer I would be sitting pretty. My trading has been solely in the options markets, had I read this book I may have done better.
My two biggest take aways are as follows:
1. Have conviction and confidence in your trades and hold on to them as they rise. As long as your view and analysis has not changed, withstand the ups and the downs for the long term.
1a. Conviction is important, but it's important to know when you're wrong; never add to a losing position. If you're wrong, own it and work from it. Don't let emotions or fantasy distract from the market.
The market giveth. The market taketh away.
2. Stick to your rules and don't listen to the hype. One of my rules, which I wrote about in a previous post, is to analyze the chart at a 20% gain and sell every time at 25% (I amended it a bit). I got caught up in the market hype and my own delusions of hitting it big time. My holding of FB was up 28% and I held. And that was a week ago. The stock is down 12% since then and I am sad and so upset at myself. It's happened before, I'm sure it'll happen again. There are more examples of that in the book that have much larger implications than my $500 dollar swing does.
Where I am in my life and in my investing, those two things jumped out at me and stuck with me. They are a little contradictory, but like I said, that's where I am.
Listen, I loved this book. I have been trying to get my friend to read it so we can talk about how good it is. After doing a quick wikipedia run through, it appears lots and lots of people love this book. In a direct quote from the wikipedia page for Reminiscence of a Stock Operator...
In Jack Schwager's Market Wizards, Reminiscences was quoted as a major source of stock trading learning material for experienced and new traders by many of the traders who Schwager interviewed.Even Alan Greenspan called it a, "font of investing wisdom."
Overall, I really enjoyed reading this book and would recommend it to any and all investors. Whether you're just starting or deep in the game. Even if you find nothing from it useful - which you won't - then at least you got to read a fun book!
*If you do feel like adding a book to your library and you decided on this one, using the link at the top of bottom of the page would really help me out and I would greatly appreciate it.
"Reminiscences of a Stock Operator"
Authored by: Edwin Lefevre
Foreword by: Tim Price