Reminiscences of a Stock Operator

From the Publisher

Years later, many trading and investing books repeat the very same rules first enunciated by Livermore in Reminiscences, such as: go with the trend; no stock is too high to buy or too low to sell; let your winners run and cut your losses short; make your own decisions; and market history repeats itself. Interestingly, Livermore frequently violated his own rules and usually lost money as a result. The enduring appeal to the book rests in Livermore's view that the market is made up of people and the excesses of the market reflect mass psychology and the mistakes of individuals are frequently the result of the inability to control fear and greed. Thus, the views and lessons of Livermore continue to be relevant to every new generation of investors and traders.

From the Investment Office

A timless classic. with some of the most memorable quotes on markets and investors:

On Trends

"the big money was not in the individual fluctuations but in the main movements - that is, not in reading the tape but in sizing up the entire markets and its trend."

"It never was my thinking that made the big money for me. It always was my sitting.(...) Men who can be both right and sit tight are uncommon. I found it one of the hardest things to learn."

"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 your game is to buy and hold until you believe that the bull market is near its end."

"When a stock is going up no elaborate explanation is needed as to why it is going up."

Average Investors and Behavioral Finance

"He wants to get something for nothing. He does not wish to work. He doesn't even wish to have to think."

"You find many people, reputed to be intelligent, who are bullish because they have stocks. I do not allow my possessions- or my preposessions either- to do any thinking for me."

"There is profit in studying the human factors-the ease with which human beings believe what it pleases them to believe; and how they allow themselves-indeed, urge themselves- to be influenced by their cupidity or by the dollar-cost of the average man's carelessness. Fear and hope remain the same."

"The principles of successful stock speculation are based on the supposition that people will continue in the future to make the mistakes that they have made in the past."

"Investments were not wanted. The demand was for easy money; for the sure gambling profit."

On Trading Rules

"I never buy cheap stocks."

A man "has to sell when he can, not when he wants to. To learn the time, he has to watch and test."

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

"I never argue with the tape."

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

"Never try to sell at the top. It isn't wise. Sell after a reaction if there is no rally."

"I never buy at the bottom and I always sell too soon."

"I never buy a stock even in a bull market, if it doesn't act as it ought to act in that kind of market."

"Beware of buying a stock that refuses to follow the group-leader."

"I don't look out for the breaks; I look out for the warnings."

On Speculation

"I was no longer betting blindly or concerned with mastering the technic of the game, but with earning my successes by hard study and clear thinking."

"A man must give his entire mind to his business-if he wishes to succeed in stock speculation."

"I try to stick to facts and facts only, and govern my actions accordingly. Sometimes I do not see the facts-all the facts-clearly enough or early enough; or else I do  not reason logically. Whenever any of these things happen I lose. I am wrong. And it awlays cost me money to be wrong. (...) But I object to losing money when I am right."

"Investors are a different breed of cats. Most of them go in strong for inventories and statistics of earnigs and all sort of mathematical data, as though that meant facts and certainties. The human factor is minimised as a rule."

"The wisest investor I ever knew (...) He was a great investigator (...) He believed in asking his own questions and in doing his seeing with his own eyes. He had no use for another man's spectacles."

"Observation, experience, memory and mathematics-these are what the successful trader must depend on."

"The speculaor's deadly enemies are: Ignorance, greed, fear and hope."

On Markets

"Nowhere does history indulge in repetions so often or so uniformly as in Wall Street.

"A man does not swear eternal allegiance to either the bull or the bear side. His concern lies with being right."

"A market does no culminate in one grand blaze of glory. Neither does it end with a sudden reversal of form. A market can and does often cease to be a bull market long before prices generally begin to break."

"No man can consistently and continuously beat the stock market though he may make money in individual stocks on certain occasions."

On Corporate Insiders

"The people who know what a stock is worth will always buy it when it is selling at bargain prices."

"It instantly struck me that if the insiders in that stock, who never felt a moral obligation to keep the price up, were now buying the stock in the face of a declining general market there must be a reason. They were not ignorant asses nor philantropists nor yet bankers concerned with keeping the price up to sell more securities over the counter."

"When the men who ought to want a stock don't want it, why should I want it?"