Reminiscences of a Stock Operator: With New Commentary and Insights on the Life and Times of Jesse Livermore by Edwin Lefèvre (Investing Book Review)

"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 was always my sitting. Got that? My sitting tight!"

Reminiscences of a Stock Operator by Edwin Lefèvre is the fictionalized story of one of the greatest speculators of all time, Jesse Livermore, who won and lost tens of millions of dollars (an astronomical sum at the time) in the stock and commodities markets during the early 1900s.

Get the Annotated Edition by Jon. D Markman to understand the historical context of the companies, personalities and news events. With pictures and charts from that period, it brings the story to life in an immersive way. The foreword and Q&A with the legendary Paul Tudor Jones is also valuable.

Key Takeaways

1. The speculator’s chief enemy is himself – his greed and fear, lack of confidence, indecision, and inability to sit tight.
2. Do not argue or get angry with the stock market. The speculator’s job is to observe prices and conditions and to get on the right side of the market.
3. Prices follow the “line of least resistance”. It is pointless to try and figure out a reason for a rise or fall.
4. A speculator should average up and not average down.
5. The key success factors to become a successful trader are a keen sense of observation, ability to learn from mistakes, and a solid grasp of mathematics (especially probability).

Book Highlights

"There is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again."

"The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals."

"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 was always my sitting. Got that? My sitting tight!"

"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."

"Remember that stocks are never too high for you to begin buying or too low to begin selling."

"The only thing to do when a man is wrong is to be right by ceasing to be wrong."

"Prices, like everything else, move along the line of least resistance. They will do whatever comes easiest."

"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."

"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."

"It is enough for the experienced trader to perceive that something is wrong. He must not expect the tape to become a lecturer. His job is to listen for it to say “Get out!” and not wait for it to submit a legal brief for approval."

"Never try to sell at the top…Sell after a reaction if there is no rally."

"A man may know what to do and lose money – if he doesn’t do it quickly enough."

"Observation, experience, memory and mathematics–these are what the successful trader must depend on…He must bet always on probabilities–that is, try to anticipate them."