The stock market has certainly produced its share of heroes and villains
over the years. And while villains have been many, the heroes have been
few.
One of the good guys (for me, at least) has always been
Jesse L. Livermore. He's considered by many of today's top Wall Street
traders to be the greatest trader who ever lived.
Leaving home at
age 14 with no more than five bucks in his pocket, Livermore went on to
earn millions on Wall Street back in the days when they still literally
read the tape.
Long or short, it didn't matter to Jesse.
Instead,
he was happy to take whatever the markets gave him because he knew what
every good trader knows: Markets never go straight up or straight down.
In
one of Livermore's more famous moves, he made a massive fortune betting
against the markets in 1929, earning $100 million in short-selling
profits during the crash. In today's dollars, that would be a cool $12.6
billion.
That's part of the reason why an earlier biography of
his life, entitled Reminiscences of a Stock Operator, has been a
must-read for experienced traders and beginners alike.
A gambler and speculator to the core, his insights into human nature and the markets have been widely quoted ever since.
Here are just a few of his market beating lessons:
On the school of hard knocks:
The
game taught me the game. And it didn't spare me rod while teaching. It
took me five years to learn to play the game intelligently enough to
make big money when I was right.
On losing trades:
Losing
money is the least of my troubles. A loss never troubles me after I
take it. I forget it overnight. But being wrong - not taking the loss -
that is what does the damage to the pocket book and to the soul.
On trading the trends:
Disregarding
the big swing and trying to jump in and out was fatal to me. Nobody can
catch all the fluctuations. In a bull market the game is to buy and
hold until you believe the bull market is near its end.
On sticking to his plan:
What
beat me was not having brains enough to stick to my own game - that is,
to play the market only when I was satisfied that precedents favoured
my play. There is the plain fool, who does the wrong thing at all times
everywhere, but there is also the Wall Street fool, who thinks he must
trade all the time. No man can have adequate reasons for buying or
selling stocks daily - or sufficient knowledge to make his play an
intelligent play.
On speculation:
If somebody had
told me my method would not work, I nevertheless would have tried it out
to make sure for myself, for when I am wrong only one thing convinces
me of it, and that is, to lose money. And I am only right when I make
money. That is speculating.
On respecting the tape:
A
speculator must concern himself with making money out of the market and
not with insisting that the tape must agree with him. Never argue with
it or ask for reasons or explanations.
On human nature and trading:
The
speculator's deadly enemies are: Ignorance, greed, fear and hope. All
the statute books in the world and all the rule books on all the
Exchanges of the earth cannot eliminate these from the human animal.
On riding the trend to the big money:
Men
who can both be right and sit tight are uncommon. I found it one of the
hardest things to learn. But it is only after a stock operator has
firmly grasped this that he can make big money. It is literally true
that millions come easier to a trader after he knows how to trade than
hundreds did in the days of his ignorance.
On the nature of Wall Street:
Wall
Street never changes, the pockets change, the suckers change, the
stocks change, but Wall Street never changes, because human nature never
changes.
So, what ever happened to Jesse L. Livermore?
He didn't die a poor man - not by any stretch of the imagination.
But he did take his own life, believing he was "a failure," which proves once again that money can't buy happiness.
http://moneymorning.com/2013/01/04/nine-lessons-from-the-greatest-trader-who-ever-lived/#
It's the fact and we can't decline that one should Beware of false knowledge; it is more dangerous than ignorance for Commodity Tips.
ReplyDeleteThese are one of the basic lessons that Epic Research teaches to its clients about trading.
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