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Reminiscences of a Stock Operator

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Reminiscences of a Stock Operator

Wiley,

15 min read
10 take-aways
Text available

What's inside?

Think things are new on Wall Street? Think again: fear and greed ruled 100 years ago, and they are still alive and well.

Editorial Rating

9

Qualities

  • Innovative
  • Applicable

Recommendation

Edwin Lefèvre published this classic in 1923. His subject is Jesse Livermore, an infamous speculator and the world’s first documented successful day trader. Lefèvre thinly disguises Livermore, assigning him the fictional name Larry Livingston. First published as a series of Saturday Evening Post articles, this book explores greed, fear, envy and the relentless pursuit of fame and fortune, all as relevant today as in 1923 – one reason that this remains required reading for investors. The writing style is quaintly dated and Runyon-esque. Lefèvre’s use of old market jargon ("plungers," "bucket shops," "bear raids" and stock "operators" instead of brokers) reminds readers that this is a journalistic, a novelistic and a fiscal period piece. The illustrations by M.L. Blumenthal evoke its original publication date. Interestingly, market bubbles, whether in high-tech, railroads or real estate, remain basically as emotional and nonrational as they were in the early 1920s, so the lessons here remain meaningful. Speaking from that more innocent time, Lefèvre provides lasting market insights, including Livermore’s investing secrets. He distills the eternal truth that markets only go up or down, and that investors run on fear and greed. getAbstract.com strongly suggests this classic to serious investors and financial reporters. As you read it, you will hear the voice of its time and its lessons for today.

Summary

Great Operators: The Voice of 1922

Any stock market decline takes down many types of customers and turns their paper profits into real losses. Broad market declines usually start with the most popular stocks, and then move on to less known names. When strong stocks falter, weak stocks can suffer rapid freefall – leaving many small customers dazed and hoping fruitlessly that their stocks will recover.

When investors ask stock operators (brokers) why such breaks occur, they may have no answer at all – or they might just blame a "bear raid." That is, the problem could reside with investors who sell stocks short hoping to make money buying them back at cheaper prices. For that to happen, short sellers hope their stocks’ prices will fall. This can drive out other speculators, especially those who bought stock on margin and only make money when prices rise. Commissioned brokers make money either way, so they are not obligated to the investing public.

Even worse, when brokers advise their customers that a bull market is over, customers usually don’t listen anyway. That only adds to the odds against stock speculators. The customers of 1923 may look a little different...

About the Author

Mining engineer Edwin Lefèvre became a journalist at age 19. During his 53-year-long career, he wrote eight books, including The Making of a Stockbroker. He became a celebrated financial author with his serialized publication of the fictionalized story of Jesse Livermore.

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    R. A. 6 years ago
    Wow
    Simply a great book on a great tradee.
    I have learned many tips abou J Livermore.
    I like his intrepid style on Markets