The following are quotes from Reminiscences of a Stock Operator by Edwin Lefevre .

Its a is the thinly disguised biography of Jesse Livermore, one of the greatest speculators of all time; and one of the books you must read if you are a serious trader. It is on the top or close to the top of every hedge fund managers reco mmended book lists. The following are quotes, in order, from the book. The quo tes come directly from a series of essays called The Wisdom of Jesse Livermore (CT RL+F Wisdom of Jesse and youll find them) that was sent to me by a friend. This li st is not complete but should still prove helpful for anyone looking for some in vesting/trading/speculating wisdom. Ive added explanations where the quotes arent obvious. (Thanks to Andre for sending the essays over.) Sorry for them crunching together, apparently there are too many and WordPress j ust doesnt know what to do. Another lesson I learned early is that there is nothing new in Wall Street. There cant be because speculation is as old as the hills. Whatever happens in the stoc k market to-day has happened before and will happen again. Ive never forgotten th at. Thats all the fun there is being right by using your head. If I was right when I t ested my convictions with ten shares I would be ten times more right if I traded in a hundred shares. That is all that having more margin meant to me I was righ t more emphatically. More courage? No! No difference! If all I have is ten dolla rs and I risk it, I am much braver than when I risk a million, if I have another million salted away. I knew something was wrong somewhere, but I couldnt spot it exactly. But if someth ing was coming and I didnt know where from, I couldnt be on my guard against it. T hat being the case Id better be out of the market. My plan of trading was sound enough and won oftener than it lost. If I had stuck to it Id have been right perhaps as often as seven out of ten times. In fact, I a lways made money when I was sure I was right before I began. What beat me was no t having brains enough to stick to my own game that is, to play the market only when I was satisfied that precedents favored my play. There is a time for all th ings, but I didnt know it. There is the plain fool, who does the wrong thing at all times everywhere, but th ere is the Wall Street fool, who thinks he must trade all the time. No man can a lways have adequate reasons for buying or selling stocks daily or sufficient kno wledge to make his play an intelligent play. I proved it. The desire for constant action irrespective of underlying conditions is responsib le for many losses in Wall Street even among the professionals, who feel that th ey must take home some money every day, as though they were working for regular wages. A stock operator has to fight a lot of expensive enemies within himself. - It is of the utmost importance that traders be completely unemotional when trading. In the long run, and usually much sooner, emotions lead to the destruction of yo ur portfolio. I dont know whether I make myself plain, but I never lose my temper over the stock market. I never argue with the tape. Getting sore at the market doesnt get you a nywhere. - When you get mad (emotional) about market action, you are rendered useless in effective decision making. You will be blind to new opportunities. We ran into a crazy bull market when stocks didnt react enough to wipe out even th e one-point margins, and, of course, all the customers were bulls and winning an d pyramiding. Its easy to win in a bull market, everyone does. Traders should not care about the direction of the move, just of the opportunity. It takes a man a long time to learn all the lessons of all his mistakes. They say there are two sides to everything. But there is only one side to the stock mark et; and it is not the bull side or the bear side, but the right side. It took me longer to get that general principle fixed firmly in my mind than it did most o f the more technical phases of the game of stock speculation. With me I must back my opinions with my money. My losses have taught me that I mu st not begin to advance until I am sure I shall not have to retreat. But if I ca nnot advance I do not move at all. I do not mean by this that a man should not l

imit his losses when he is wrong. He should. But that should not breed indecisio n. All my life I have made mistakes, but in losing money I have gained experienc e and accumulated a lot of valuable donts. I have been flat broke several times, but my loss has never been a total loss. Otherwise, I wouldnt be here now. I alwa ys knew I would have another chance and that I would not make the same mistake a second time. I believed in myself. A man must believe in himself and his judgme nt if he expects to make a living at this game. It took me five years to learn to play the game intelligently enough to make big money when I was right. - Dont be discouraged by early losses. Speculation is a hard and trying business, and a speculator must be on the job al l the time or hell soon have no job to be on. The game taught me the game. And it didnt spare the rod while teaching. **If somebody had told me my method would not work I nevertheless would have trie d it out to make sure for myself, for when I am wrong only one thing convinces m e of it, and that is, to lose money. And I am only right when I make money. That is speculating. Everything happened as I had foreseen. I was dead right and I lost every cent I h ad! I was wiped out by something that was unusual. If the unusual never happened there would be no difference in people and then there wouldnt be any fun in life . The game would become merely a matter of addition and subtraction. It would ma ke of us a race of bookkeepers with plodding minds. Its the guessing that develop s a mans brain power. Just consider what you have to do to guess right. - He sai d this right after losing his entire $50k ($1 Million now) in two trades at the age of 22. He would never have bounced back were it not for the resilient attit ude shown in the above quote. If I hadnt made money some of the time I might have acquired market wisdom quicker . - Lessons are learned quicker when they cause pain and discomfort. I was twenty when I made my first ten thousand, and I lost that. But I knew how a nd why because I traded out of season all the time; because when I couldnt play a ccording to my system, which was based on study and experience, I went in and ga mbled. I hoped to win, instead of knowing that I ought to win on form. - If your e not getting setups for your method, WAIT. If you wait and nothing comes up, d evelop another method but never gamble. There is nothing like losing all you have in the world for teaching you what not to do. And when you know what not to do in order not to lose money, you begin to learn what to do in order to win. Did you get that? You begin to learn! After all, the game of speculation isnt all mathematics or set rules, however rigi d the main laws may be. - The main laws being things like buy fear and sell gre ed. (He was referring to price action alone.) If a stock doesnt act right dont touch it; because, being unable to tell precisely what is wrong, you cannot tell which way it is going. No diagnosis, no prognosis . No prognosis, no profit. I should say that a chart helps those who can read it or rather who can assimilat e what they read. The average chart reader, however, is apt to become obsessed w ith the notion that the dips and peaks and primary and secondary movements are a ll there is to stock speculation. If he pushes his confidence to its logical lim it he is bound to go broke. Methods should be varied. But not even a world war can keep the stock market from being a bull market when conditions are bullish, or a bear market when conditions are bearish. And all a man needs to know to make money is to appraise conditions. The more I made the more I spent. This is the usual experience with most men. No, not necessarily with easy-money pickers, but with every human being who is not a slave of the hoarding instinct. Some men, like old Russell Sage, have the mone y-making and money-hoarding instinct equally well developed, and of course they die disgustingly rich. But not even a world war can keep the stock market from being a bull market when conditions are bullish, or a bear market when conditions are bearish. And all a man needs to know to make money is to appraise conditions. - Look at the curren t primary trend. I couldnt afford anything that kept me from feeling physically and mentally fit. E

ven now I am usually in bed by ten. As a young man I never kept late hours, beca use I could not do business properly on insufficient sleep. It taught me, little by little, the essential difference between betting on fluct uations and anticipating inevitable advances and declines, between gambling and speculating. - Wait until the odds are stacked WAY in your favor and you are al most certain you are correct, then bet big. When I think I have found the solution I must prove I am right. I know of only on e way to prove it; and that is, with my own money. But I am not sure of the exact value of losing, for if I had lost more I would ha ve lacked the money to test out the improvements in my methods of trading. - Wh ile losses are important to learn from they have to be contained; otherwise youll have no money to invest. They say you never grow poor taking profits. No, you dont. But neither do you grow rich taking a four-point profit in a bull market. - If you want to win big, ho ld out for big wins. This semisucker is the type that thinks he has cut his wisdom teeth because he lo ves to buy on declines. He waits for them. He measures his bargains by the numbe r of points it has sold off from the top. - A previously $100 stock can still b e a terrible buy at $20 if the fundamentals arent there. Another lesson I learned early is that there is nothing new in Wall Street. There cant be because speculation is as old as the hills. Whatever happens in the stoc k market to-day has happened before and will happen again. Ive never forgotten th at. Thats all the fun there is being right by using your head. If I was right when I t ested my convictions with ten shares I would be ten times more right if I traded in a hundred shares. That is all that having more margin meant to me I was righ t more emphatically. More courage? No! No difference! If all I have is ten dolla rs and I risk it, I am much braver than when I risk a million, if I have another million salted away. I knew something was wrong somewhere, but I couldnt spot it exactly. But if someth ing was coming and I didnt know where from, I couldnt be on my guard against it. T hat being the case Id better be out of the market. My plan of trading was sound enough and won oftener than it lost. If I had stuck to it Id have been right perhaps as often as seven out of ten times. In fact, I a lways made money when I was sure I was right before I began. What beat me was no t having brains enough to stick to my own game that is, to play the market only when I was satisfied that precedents favored my play. There is a time for all th ings, but I didnt know it. There is the plain fool, who does the wrong thing at all times everywhere, but th ere is the Wall Street fool, who thinks he must trade all the time. No man can a lways have adequate reasons for buying or selling stocks daily or sufficient kno wledge to make his play an intelligent play. I proved it. The desire for constant action irrespective of underlying conditions is responsib le for many losses in Wall Street even among the professionals, who feel that th ey must take home some money every day, as though they were working for regular wages. A stock operator has to fight a lot of expensive enemies within himself. - It is of the utmost importance that traders be completely unemotional when trading. In the long run, and usually much sooner, emotions lead to the destruction of yo ur portfolio. I dont know whether I make myself plain, but I never lose my temper over the stock market. I never argue with the tape. Getting sore at the market doesnt get you a nywhere. - When you get mad (emotional) about market action, you are rendered

useless in effective decision making. You will be blind to new opportunities. We ran into a crazy bull market when stocks didnt react enough to wipe out even th e one-point margins, and, of course, all the customers were bulls and winning an d pyramiding. Its easy to win in a bull market, everyone does. Traders should not care about the direction of the move, just of the opportunity. It takes a man a long time to learn all the lessons of all his mistakes. They say there are two sides to everything. But there is only one side to the stock mark et; and it is not the bull side or the bear side, but the right side. It took me longer to get that general principle fixed firmly in my mind than it did most o f the more technical phases of the game of stock speculation. With me I must back my opinions with my money. My losses have taught me that I mu st not begin to advance until I am sure I shall not have to retreat. But if I ca nnot advance I do not move at all. I do not mean by this that a man should not l imit his losses when he is wrong. He should. But that should not breed indecisio n. All my life I have made mistakes, but in losing money I have gained experienc e and accumulated a lot of valuable donts. I have been flat broke several times, but my loss has never been a total loss. Otherwise, I wouldnt be here now. I alwa ys knew I would have another chance and that I would not make the same mistake a second time. I believed in myself. A man must believe in himself and his judgme nt if he expects to make a living at this game. It took me five years to learn to play the game intelligently enough to make big money when I was right. - Dont be discouraged by early losses. Speculation is a hard and trying business, and a speculator must be on the job al l the time or hell soon have no job to be on. The game taught me the game. And it didnt spare the rod while teaching. **If somebody had told me my method would not work I nevertheless would have trie d it out to make sure for myself, for when I am wrong only one thing convinces m e of it, and that is, to lose money. And I am only right when I make money. That is speculating. Everything happened as I had foreseen. I was dead right and I lost every cent I h ad! I was wiped out by something that was unusual. If the unusual never happened there would be no difference in people and then there wouldnt be any fun in life . The game would become merely a matter of addition and subtraction. It would ma ke of us a race of bookkeepers with plodding minds. Its the guessing that develop s a mans brain power. Just consider what you have to do to guess right. - He sai d this right after losing his entire $50k ($1 Million now) in two trades at the age of 22. He would never have bounced back were it not for the resilient attit ude shown in the above quote. If I hadnt made money some of the time I might have acquired market wisdom quicker . - Lessons are learned quicker when they cause pain and discomfort. I was twenty when I made my first ten thousand, and I lost that. But I knew how a nd why because I traded out of season all the time; because when I couldnt play a ccording to my system, which was based on study and experience, I went in and ga mbled. I hoped to win, instead of knowing that I ought to win on form. - If your e not getting setups for your method, WAIT. If you wait and nothing comes up, d evelop another method but never gamble. There is nothing like losing all you have in the world for teaching you what not to do. And when you know what not to do in order not to lose money, you begin to learn what to do in order to win. Did you get that? You begin to learn!

After all, the game of speculation isnt all mathematics or set rules, however rigi d the main laws may be. - The main laws being things like buy fear and sell gre ed. (He was referring to price action alone.) If a stock doesnt act right dont touch it; because, being unable to tell precisely what is wrong, you cannot tell which way it is going. No diagnosis, no prognosis . No prognosis, no profit. I should say that a chart helps those who can read it or rather who can assimilat e what they read. The average chart reader, however, is apt to become obsessed w ith the notion that the dips and peaks and primary and secondary movements are a ll there is to stock speculation. If he pushes his confidence to its logical lim it he is bound to go broke. Methods should be varied. But not even a world war can keep the stock market from being a bull market when conditions are bullish, or a bear market when conditions are bearish. And all a man needs to know to make money is to appraise conditions. The more I made the more I spent. This is the usual experience with most men. No, not necessarily with easy-money pickers, but with every human being who is not a slave of the hoarding instinct. Some men, like old Russell Sage, have the mone y-making and money-hoarding instinct equally well developed, and of course they die disgustingly rich. But not even a world war can keep the stock market from being a bull market when conditions are bullish, or a bear market when conditions are bearish. And all a man needs to know to make money is to appraise conditions. - Look at the curren t primary trend. I couldnt afford anything that kept me from feeling physically and mentally fit. E ven now I am usually in bed by ten. As a young man I never kept late hours, beca use I could not do business properly on insufficient sleep. It taught me, little by little, the essential difference between betting on fluct uations and anticipating inevitable advances and declines, between gambling and speculating. - Wait until the odds are stacked WAY in your favor and you are al most certain you are correct, then bet big. When I think I have found the solution I must prove I am right. I know of only on e way to prove it; and that is, with my own money. But I am not sure of the exact value of losing, for if I had lost more I would ha ve lacked the money to test out the improvements in my methods of trading. - Wh ile losses are important to learn from they have to be contained; otherwise youll have no money to invest. They say you never grow poor taking profits. No, you dont. But neither do you grow rich taking a four-point profit in a bull market. - If you want to win big, ho ld out for big wins. This semisucker is the ves to buy on declines. r of points it has sold e a terrible buy at $20 type that thinks he has cut his wisdom teeth because he lo He waits for them. He measures his bargains by the numbe off from the top. - A previously $100 stock can still b if the fundamentals arent there.