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Reminiscences of a Stock Operator by Edwin…
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Reminiscences of a Stock Operator (1923)

by Edwin Lefèvre

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Reminiscences of a Stock Operator is a rollercoaster ride on pre SEC stock markets. It’s the wild west of finance by someone who understood every nuance of it. The book was written in the first person by Edwin Lefevre, but he refers to the hero throughout as Larry Livingston, and it is widely recognized to be the autobiography of Jesse Livermore, to whom the book is dedicated. It was first published in 1923 and republished every decade since. Human failings never go out of style. Especially when they’re larger than life, and well-written.

It is a refreshing tour of the markets at the turn of the last century. There were only 275 stocks on the NYSE, so it was much easier to have a handle on the day to day movements. Most stocks never traded at all, making it even easier. All the stocks could be displayed on one big board. If the market traded a quarter of a million shares, it was a huge day. There was ticker tape for data, and boys would post the latest trades on giant boards at every brokerage. There was no SEC and no taxes on profits. There was very little real news, and therefore plenty of rumors and tips. News was routinely withheld until insiders finished trading. A move of ten points in a day was a big deal. Overnight borrowings by brokers were 100 to 150 percent per annum. It was different world.

Livingston was what we would call a day trader. As a teenager, he went to bucket shops and put down margin – a dollar a share on hundred dollar stocks - and waited there for a gain of a dollar before selling. The bucket shop never actually executed the trade. It took the money and when the contract closed, it either kept the cash or paid out winnings. If there were too many bets on a stock, the shop could influence the tape by actually buying or selling the underlying stock for its own account. The fix was in, and bucket shops appeared all over the country.

As a 14 year old, Livingston was the kid posting the numbers. It was the only paying job he ever had. He remembered all the numbers every day, he said, and could predict patterns, which was his system. But it only worked well at bucket shops, where he could get an instant fill at the desk, because the order was never actually sent to the exchange floor to be executed. When he tried it at a real New York brokerage, he lost.

Livingston’s life quest was to learn from his mistakes and find the undefeatable system. It wasn’t about the money, he said, but about the self-discipline – the game. “I am so accustomed to losing money that I never think first of that phase of my mistakes. It always the play itself: the reason why.” He looked at losses as tuition fees, he said.
Incredibly, he made millions and lost them again almost immediately. He was a multimillionaire in his early twenties, in 1907. But soon had to declare personal bankruptcy on over a million dollars. He owned three yachts but soon had to rent a room – in Chicago – where he tried to start over as an unknown.

He did not practice diversification. When the tape told him something, he was all in, fully margined. So when he hit, it was gigantic. When he missed, he got wiped out. When he could not see something going up, it must therefore go down, so he sold short, massively. Once, when someone cornered a commodity, he broke it by shorting a related commodity, causing the whole edifice to crumble and allowing him to get out, at his own price. He understood it all.

The ride is dizzying. The story is engrossing. The adventures are captivating. It moves effortlessly. There is a challenge of sorts, in deciphering the jargon of the era: “reaction” is a retracement or reversal, for example. A “break” is a sharp fall in price. You quickly figure it out. Overall, it is a total delight, an education, and a warning.

The writing is often terrific. Here’s a description of the manager of a New Haven bucket shop: “He’d say good morning as though he had discovered the morning’s goodness after ten years of searching for it with a microscope and was making you a present of the discovery, as well as the sky, the sun, and the firm’s bankroll.”

Of interest might be that nearly all the famous names in the book are unknown today. The traders, the brokerages, the CEOs and directors, and even their companies sound made up to a 2018 ear. Perhaps this should not be surprising, when you realize none of the original companies in the Dow Jones Industrials are still there. The huge successes, the huge corporations – pretty much all have faded away. Above it all sits the market, Livingston’s muse. His message was that while disciplined investors can pick stocks and win, no one can beat the market. His mission to perfect his game was therefore a failure. In real life, Livermore lost it all one last time, and shot himself, the decade after this book first came out.

David Wineberg ( )
  DavidWineberg | Nov 5, 2018 |
The jacket blurb on this book is: "One of the most highly regarded financial books ever written." Based on what, I'm not precisely sure. Certainly the anecdotes related in this book (which was originally published in the early 1920s) have little or no relevance to stock investing as it is carried on today, or indeed, even as it has been carried on since the creation of the Securities & Exchange Commission a decade after the book came out. While financial manipulation will always be with us, the bucket shops and market pools described in the book today are outright illegal. There would be no wisdom to be gained today; this is strictly a book for those yearning for a long-distant past, when individuals could go onto the Street and make (and lose, several) fortunes with nimble wits and a lot of gall. The book is dedicated to noted stock manipulator and great bear Jesse Livermore, and is generally regarded as a very thinly disguised biography of him. Certainly, a classic in financial biography, I would say. ( )
  EricCostello | Oct 15, 2018 |
History of Financial Advice Collection. 'Reminiscences of a Stock Operator' is the semi-fictionalized autobiography of the legendary Wall Street trader Jesse Livermore, ghost-written by the financial reporter Edwin Lefèvre. The protagonist, “Larry Livingston,” begins to speculate in bucket shops (gambling dens for betting on the stock market) and then graduates to regular brokerages, earning his reputation as the “Boy Plunger.” Livermore himself would make and lose several fortunes over the course of his career, eventually committing suicide in 1940 following a third bankruptcy. The book’s basic philosophy is that “the market never lies,” and Reminiscences presents itself as the classic instruction manual for the ordinary American on how to train the self to the discipline required for reading and decoding the endless stream of anonymous and abstract price fluctuations that make up “the market.”
  LibraryofMistakes | Feb 17, 2018 |
Nice book but not as helpful as I would have hoped for in the way of investment or trading help. ( )
  gdemange | Jun 4, 2016 |
This 1923 novel describes what it was like to play in the stock marked back in the 1920's. It brings and interesting perspective to today's financial markets. ( )
  M_Clark | Mar 13, 2016 |
Showing 1-5 of 8 (next | show all)
This book has been considered one of the investment classics. While written some seventy years ago, this collection of stories continue to speak to the contemporary reader. Hence, its reputation is deserved.
added by mikeg2 | editSeeking Alpha, Ray Merola (Feb 28, 2011)
 

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Lowenstein, RogerForewordsecondary authorsome editionsconfirmed
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Amazon.com Amazon.com Review (ISBN 0471770884, Paperback)

Stock investing is a relatively recent phenomenon and the inventory of true classics is somewhat slim. When asked, people in the know will always list books by Benjamin Graham, Burton G. Malkiel's A Random Walk Down Wall Street, and Common Stocks and Uncommon Profits and Other Writings by Philip A. Fisher. You'll know you're getting really good advice if they also mention Reminiscences of a Stock Operator by Edwin Lefèvre.

Reminiscences of a Stock Operator is the thinly disguised biography of Jesse Livermore, a remarkable character who first started speculating in New England bucket shops at the turn of the century. Livermore, who was banned from these shady operations because of his winning ways, soon moved to Wall Street where he made and lost his fortune several times over. What makes this book so valuable are the observations that Lefèvre records about investing, speculating, and the nature of the market itself. For example:

"It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine--that is, they made no real money out of it. Men who can both be right and sit tight are uncommon."

If you've ever spent weekends and nights puzzling over whether to buy, sell, or hold a position in whatever investment--be it stock, bonds, or pork bellies, you'll be glad that you read this book. Reminiscences of a Stock Operator is full of lessons that are as relevant today as they were in 1923 when the book was first published. Highly recommended. --Harry C. Edwards

(retrieved from Amazon Thu, 12 Mar 2015 18:10:13 -0400)

(see all 6 descriptions)

"Reminiscences of a Stock Operator, Annoted Edition brings the story of the great speculator Jesse Livermore to life like never before. One of the foremost investment classics of all time, the original edition of Reminiscences by Edwin Lefe vre has inspired countless investors and traders with its fictionalised account of Livermore's legendary trading experiences. Now, in this meticulously researched Annoted Edition, Jon Markman reveals the truth about Jesse Livermore and provides colorful, historically accurate commentary on the characters, places, and events that have made Reminiscences such an enjoyable and educational read for generations"--Cover.… (more)

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