Reminiscences of a Stock Operator is one of those great all time classic books that everyone should read at some point in their life. This is true not just of people who want to invest, but pretty much anyone. The book is an all time classic and can be bought on Amazon as a paperback book or downloaded for free as a PDF via the web.
Written by Edwin Lefèvre, and meant as a biography of Jesse Livermore, Reminiscences of a Stock Operator tells a story of rising and falling in the stock trading world. Any investor knows that markets rise and fall. Sometimes you win some and sometimes you lose some. Livermore, who was a real person, but whom the book treats as fictional, was famed for his dramatic rises and falls on Wall Street.
Written in 1923 as Livermore was still very much in the midst of his investing career, Reminiscences of a Stock Operator, chronicles the rise of this famed investor. First, he starts as a day trader, then a stock speculator, to a market maker, and finally a market manipulator.
Depending on the edition, the book is about 288 pages long. As such, it’s not precisely a short read. Still, Fortune Magazine, which is well regarded in the investing world, listed it as their “15th Smartest Book”. As such, it’s a pretty big hit and is still worth your time to read.
As much a tale of life as investing, the book can impart many important lessons for those willing to listen. Livermore was as much a gambler as he was an investor. Sometimes, it can feel like there is a very thin line between “investing” and gambling. For Livermore, this is especially true. He made and lost many fortunes.
A Look At The Actual Text Of Reminiscences of a Stock Operator
Let’s look at the first paragraph so you can get a feel for the writing style:
“I went to work when I was just out of grammar school. I got a job as quotation-board boy in a stock-brokerage office. I was quick at figures. At school I did three years of arithmetic in one. I was particularly good at mental arithmetic. As quotation-board boy I posted the numbers on the big board in the customers’ room. One of the customers usually sat by the ticker and called out the prices. They couldn’t come too fast for me. I have always remembered figures. No trouble at all.“
And how about a favorite quote:
“There is a time for all things, but I didn’t know it. And that is precisely what beats so many men on Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. No man can always have adequate reasons for buying and selling stocks daily – or sufficient knowledge to make his play an intelligent play.”
A Look At the Lessons Learned In Reminiscences of a Stock Operator
Did you like the writing? Even if not, if you’re interested in investing, you should pick up a copy of this book. It holds many valuable insights, and also lessons learned for newbie investors. It’s a great learning experience, and you can learn from both Livermore’s failures and successes.
Livermore is a real life story of a man who flew to close to the sun. His risky trading strategies brought a lot of success. Yet as with gambling, if you keep plugging away with such risky strategies, you’re bound to get burned at some point. This is precisely what happened, and Livermore would eventually lose much of his fortune.
Ultimately, Livermore’s failures outweighed his successes. Worth an estimated $100 million dollars in 1929, before the Great Depression set in, Livermore would lose most of his fortune as the economy tanked. In 1940, struggling to deal with depression and the weight of his failures, he shot himself in the head.
He left a tragic death note to his wife, chronicling his failures. Check out this excerpt:
“My dear Nina: Can’t help it. Things have been bad with me. I am tired of fighting. Can’t carry on any longer. This is the only way out. I am unworthy of your love. I am a failure. I am truly sorry, but this is the only way out for me. Love Laurie”
Tragic, right? Remember, investing is no game and if you play with fire, you’ll get burned. Livermore could have been more cautious, and could have taken steps to protect himself. If he had, he would have never suffered such losses, and probably would have never been driven to suicide.
Ironically, even before he committed suicide, he was still quite wealthy, worth an estimated $5 million dollars.