Reminiscences of a Stock Operator

By Edwin Lefevre

Reminiscences of a Stock Operator is a novel by American author Edwin Lefèvre which is the thinly disguised biography of Jesse Livermore. The Wall Street Journal described the book as a "classic", it was ranked #15 on 'Fortune's 75 The Smartest Books We Know', and Alan Greenspan said it is "a font of investing wisdom." Reminiscences is a fictionalized account of the life of the securities trader Jesse Livermore. Despite the book's age, it continues to offer insights into the art of trading and speculation. In Jack Schwagers Market Wizards, Reminiscences was quoted as a major source of stock trading learning material for experienced and new traders by many of the traders who Schwager interviewed. The book tells the story of Livermore's progression from day trading in the then so-called "New England bucket shops," to market speculator, market maker, and market manipulator, and finally to Wall Street. Along the way, Livermore learns many lessons, which he happily shares with the reader.

• Language: English
• Publisher: Lulu.com
• Release date: Jan 12, 2013
• ISBN: 9781300105824

Reviews for Reminiscences of a Stock Operator

[davidwineberg · Rating: 5 out of 5 stars]

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

[gdemange_2 · Rating: 4 out of 5 stars]

Nice book but not as helpful as I would have hoped for in the way of investment or trading help.