I will be posting a new book
review each week to Slope of Hope. One
of the primary questions I receive as a trader is, “what should I read to learn
more about trading?” My goal is to
introduce many of the books I have found helpful and provide a brief summary of
the tome. Not all books about the
markets are relevant to everyone so hopefully this weekly posting will help you
decide if the selected books are for you.
Let me begin with, what I believe
is, one of the most timeless books ever written about trading: Reminiscences of a Stock Operator. Yes, it is cliché to start with
Reminiscences. However, considering
oneself a professional trader and not reading this book is akin to going to
church and stating that one has never opened the Bible. Skim the pages of Market Wizards and behold
the sheer volume of great traders and hedge funders who specifically point to it.
Originally published in 1923,
Reminiscences of a Stock Operator is the fictional account of Jesse Livermore;
arguably one of the greatest traders to ever operate on Wall Street. The lessons and scenarios presented
throughout the book are timeless as the problems Mr. Livermore faces and the
strategies he employs are virtually unchanged in current times.
Why You Should Read Reminiscences
The sheer knowledge and anecdotal
advice sprinkled through the book is spectacular. Let me present in bullet form quotes from the
book:
- “I didn’t ask the tape why (it moves) when I was
fourteen, and I don’t ask it today when I am forty…What the dickens does
that matter.” - “The desire for constant action irrespective of
underlying conditions is responsible for many losses on Wall Street.” - “It never was my thinking that made the big money for
me. It was always my sitting. Got that? My sitting tight!” - “Your best and only friend is a prevailing trend.”
- “Always sell what shows you a loss and keep what
shows you a profit.” - “I’ve got friends, of course, but my business has
always been the same; a one man affair.
That is why I have always played a lone hand.” - “Remember that stocks are never too high for you to
begin buying or too low to begin selling.”
I could continue for hours
regurgitating the priceless pieces of advice throughout the book but that would
defeat the point.
If the prior quotes weren’t
enough to show the advice in Reminiscence is timeless, let me present to
everyone a situation Mr. Livermore faced in respect to a large coffee trade he
put on in 1917 (change the date to 2008/2009 and does the following sound
eerily familiar?):
“Coming sure and fast, that
profit of millions! But it never reached
me. No: it wasn’t side-tracked by a
sudden change in conditions….What happened?….It was simply that the fellows
who had sold me the coffee knew what was in store for them, and in their
efforts to squirm out of the positions, devised a new way of welshing. They
rushed to
for help, and got it (emphasis added).”
Sound familiar? Not much has changed in Wall Street. Read Reminiscences and much of the shenanigans
in the current market will no longer shock you.
Trade the tape you have and listen to the sage advice of the original
Wizard of Wall Street.
Trading Verdict: BUY
Applicable to: EVERYONE
