Book: 20250726 to 20250924, "Reminiscences of a Stock Operator" by Edwin Lefevre
20250726 - Chapter I - 3
This half fictional story is about Jesse Lauriston Livermore，1877 - 1940.The price changes have pattern, but occasionally break the pattern, and the abnormality may last for quite long time. That make the stock traders go broke.
20250726 - Chapter II – 14
......but the fact remains that in A.R. Fullerton's office the tape always talked ancient history to me. p14It was full of cheating and violence back to early 20th century. Latency(information gap) caused by technology disadvantage is also a big obstacle for normal people.
That information gap is much narrower now, which means modern society is more fair and more friendly to normal people. Unfortunately modern society also has more traps than before, such as all types of screen.
20250726 - Chapter III – 27
20250726 - Chapter IV – 35
When you know what not to do in order not to lose money, you begin to learn what to do in order to win. p44I doubt it. In different situation, same strategy may stop working.
20250727 - Chapter V – 49
It never was my thinking that made the big money for me. It was always my sitting. p51That is about all I have learned - to study general conditions, to take a position andstick to it.
It is the big swing that makes the big money for you. p53
"Trading" is zero-sum game. Share price goes up with economy condition.
Economy condition(in USA, it's represented by SP500 index) = the average consumption per person * population + exporting - importing
How about unemployment rate, inflation and government deficit? How about UBI(UHI) and wealth gap? How about the economy of oversea countries? How about the P/B ratio of a stock/SP500?
In a world with oversupply of goods and services, these don't matter.
20250809 - Chapter VI – 60
I was much less concerned with the mystery of the hunch than with the fact that I got a quarter of a million out of it. p60The money is actually not important. That mystery of the hunch worth more investigation and considering.
It meant that I could now swing a much bigger line than ever, if or when the time came for it. p60
So the potential loss is much larger now.
20250809 - Chapter VII – 71
"Buy high, sell low".Mr Livermore really don't care much about "trending".
First principles was already populate concept in 1940s!
20250810 - Chapter VIII – 69
I worked back from the quotation to first principles; from price fluctuations to basic conditions. p71First principles was already populate concept in 1940s!
20250810 - Chapter IX – 89
20250812 - Chapter X – 94
But people never take the trouble to ask questions, leave alone seeking answers. p96Curiosity, ambition, sensitivity and execution are the keys to success.
Think hard, think ahead!
It is simple arithmetic to prove that it is a wise thing to have the big bet down only when you win, and when you lose to lose only a small exploratory bet, as it were. p102
This rule is similar to the rule of all risky actions.
No one can beat computer if this rule works. So it must stop working now.
He must fear that his loss may develop into a much bigger loss, and hope that his profit may become a big profit. p104
Just the opposite of the famous quote: "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful." In a 2008 interview with the New York Times, Warren Buffett.
What does this mean? Speculation is dead end.
However, they are both against our instinct!
A man may beat a stock or a group at a certain time, but no man living can beat the stock market! p104
Trend is the most important factor. Fluctuation kills profit.
20250825 - Chapter XI – 105
The professional concerns himself with doing the right thing rather than with making money. p107Any rule is better than no rule. But that doesn't guarantee success.
20250825 - Chapter XII – 115
"You certainly do not work merely to add a few more dollars to your bank account and you are not in Wall Street because you like easy money. You get your fun some other way." p119No matter the pay, all work is both boring and painful. Unless you can find joy in it.
20250828 - Chapter XIII – 141
This one is more likely just personal imaginazion.When good things happened, Mr Livermore believe it's caused by his talent/instinct; when bad things happened, he believe it's caused by other people.
That's nonsense.
20250828 - Chapter XIV – 139
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. p149Unexpected good news push up the price temporially, and the price will fall back later on, unless that good news changed the foundation of the company. It makes perfect sense.
20250829 - Chapter XV – 152
The reason for exaggerating the maginitude and the effect of my operations, I suppose, was the need to satisfy the public's insatiable demand for reasons for each and every price movement. p158Will the "coffee episode" happen again? Surely yes. There are still Donald Trump and Joe Biden.
How can I mitigate this type of threat?
20250830 - Chapter XVI – 159
It is not so much greed made blind by eagerness as it is hope bandaged by the unwillingness to do any thinking. p165
The problem is not caused by greed, but by laziness.
How can I get the habit of thinking? Good habit of living in the moment.
The investors(the Pennsylvania Dutchman, p170) focus on profit only. Surely the only correct approach to make money in stock market.
20250919 - Chapter XVII – 172
The cotton transactions were more or less based on facts.Well done.
20250920 - Chapter XVIII – 203
The TT stock transactions were more about luck.20250920 - Chapter XIX – 210
Market manipulation is real, mostly through rumors. Transaction itself is clean.SEC just announced that public companies might release financial report every 6 months instead of every quarter, that leave more space to rumors.
However, it also reduced the burden of short term profit pursuit.
It's good to try something new. If that doesn't work, SEC can always change it back.
However, it's terriable news to financial auditing companies.
20250921 - Chapter XX – 197
More people made good money by long, not by short.Instead of misguiding information, Mr Lefevre used buying and selling to manipulate the market for specific stock. That's legal and dangerous. Interesting.
20250922 - Chapter XXI – 206
The best of all tipsters, the most persuasive of all salesmen, is then tape. p210Because the tape has skin in the game. But that doesn't guarantee it is real, and that's why the traders can use it to manipulate the market.
Today, the market is 100 times larger than 100 years ago. There are computer controlled trading, Quantitative Trading and huge amount of oversea investors. Tape is more reliable than before.
However, computer responde much faster than human, so normal don't stands a chance in market manipulation game.
20250922 - Chapter XXII – 219
Good to know how specific stock is manipulated.We should not trust market sentiment.
20250924 - Chapter XXIII – 235
Get the slips of the financial news-agencies any day and it will surprise you to see how many statements of an implied semi-official nature they print. p237Same as nowadays. Does this mean we should ignore all these news? Yes.
The public ought to grasp firmly this one point: That the real reason for a protracted decline is never bear raiding. p241
It's caused by profit declining.
20250924 - Chapter XXIV – 244
Ignore rumors(tips)!
For most of people, they need to focus on "profit".
However, it's always too late to buy after the earning report. So, the only choice is index fund ETF.
For most of people, they need to focus on "profit".
However, it's always too late to buy after the earning report. So, the only choice is index fund ETF.
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