By Cam R
Title: Reminiscences of a Stock Operator
Author: Edwin Lefèvre
Whether you're a novice or a veteran in the markets, one of the books you will notice that many will recommend as a must-read book is the classically titled 'Reminiscences of a Stock Operator'. Published way back in the 1920s, it is still held as the book of books on trading the markets. Supposedly the real life biography of the stock and commodities market wizard Jesse Livermore, it's probably the source of all the trading aphorisms such as 'trade with the trend', 'cut your losses', 'let your profits run' and many many more.
So is it worth your time to read through this book? Let's dig in below.
Packaging - 3/5 (Wiley Paperback edition)
A decent quality paperback, with relatively thick paper suitable for frequent flipping. The cover design is part of the Wiley Investment Classics range, with its red and muted gold template. Pleasant to the eyes so nothing to nitpick about. Plenty of empty margin around the main text of each page, so that's a definite plus in its point especially if you want to jot down ideas on any page.
Writing Style - 3/5
Slightly archaic in its writing, modern readers of English might find it slightly inaccessible at the beginning. But after one or two chapters, it should flow pretty naturally and this is when the straight-forward and lively writing shines through. It feels almost like you're an onlooker at the scene with Livermore as he walks you through his experiences and thoughts. An expected plus is his honesty, which I found a lot of wisdom in.
Here is his take on the process of learning:
"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!".
Trading Methods (Specifics) - 2/5
Not much in the specifics, for readers looking for a specific method or methodology for trading. For that, Livermore's other book How to Trade in Stocks (Review Here) is more suitable. This book is titled 'Reminiscences' after all, so Livermore's musings, thoughts and comments form the bulk of it. I do like the part where he delves into the art of tape reading.
His matter-of-fact stance on tape reading:
"This matter of tape reading is not as complicated as it appears. Of course you need experience. But it is even more important to keep several fundamentals in mind. To read the tape is not to have your fortune told. The tape does not tell you how much you will surely be worth next Thursday at 1:35pm. The object of reading the tape is to ascertain, first, how and, next, when to trade - that is, whether it is wiser to buy than to sell. It works exactly the same for stocks as for cotton or wheat or corn or oats.
You watch the market - that is, the course of prices as recorded by the tape - with one object: to determine the direction - that is, the price tendency. Prices, we know, will move either up or down according to the resistance they encounter. For purposes of easy explanation, we will say that prices, like anything else, move along the line of least resistance. They will do whatever comes easiest, therefore they will go up if there is least resistance to an advance than to a decline; and vice versa.
Nobody should be puzzled as to whether a market is a bull or bear market after it fairly starts. The trend is evident to a man who has an open mind and reasonably clear sight, for it is never wise for a speculator to fit his facts to his theories. Such a man will, or ought to, know whether it is a bull or a bear market, and if he knows that he knows whether to buy or sell. It is therefore the very inception of the movement that a man needs to know whether to buy or to sell."
He goes on to elaborate with examples on how exactly he reads the tape, in effect he basically gives away the essence of his trading system based on reading the tape. Fantastic stuff. Plus, if you substitute the word 'tape' with 'chart', whatever he says would still work more or less actually.
Trading Management (Soft Skills) - 3/5
Not much in the way of specifics here too, it's probably more useful to take away lessons from Livermore's experience when he executes his big plays. However, what I found excellent was the sprinkling of stories about the other big stock market operators during the time. The books details the fascinating plays of these big players with lots of wisdom there to be. I found the story about the shrewd Deacon S.V White and how he manage to test the stock market waters especially fun and enlightening.
Trading Psychology (Mindset) - 4/5
When you read between the lines, the whole book is steeped with it.
Some notable quotes:
- Another lesson I learned early is that there is nothing new in Wall Street. There can't be because speculation is as old as the hills. Whatever happens in the stock market to-day has happened before and will happen again..
- My plan of trading was sound enough and won oftener than it lost. If I had stuck to it I'd have been right perhaps as often as seven out of ten times. What beat me was not having brains enough to stick to my own game.
Longevity -5/5
When I first read this book without an atom of trading experience in me, it really didn't make any sense and I basically dismissed it. But with the benefit of experience and 20/20 hindsight, this has been one of the books that I have always gone back too, and probably read more times than I can remember. Some of its wisdom will jump at you when you least expect it. Definitely one for your shelf, library or kindle, this is a definite keeper.
Value - 5/5
Worth its weight in gold.
Things to Watch Out For -
Obviously, this is the biography of one man. Learn whatever you can but it's good to be aware also that there are many other ways and methods. The world is a big place.
Overall - 5/5
A most excellent book on trading the markets. For novices, do yourself an enormous favour and read it. Then get some trading experience under your belt and then re-read it. For veterans, I daresay reading it will put a smile on your face, it's like a visit with an old and wise friend.
Score Recap:
Packaging - 3/5
Writing Style - 3/5
Trading Methods (Specifics) - 2/5
Trading Management (Soft Skills) - 3/5
Trading Psychology (Mindset) - 4/5
Longevity -5/5
Value - 5/5
Overall - 5/5
Where to Buy:
If you found the above review helpful and want to buy the book, please do consider buying it from my Amazon affiliate link below. I genuinely appreciate it and any purchase really goes a long way in supporting this site. Thank you!
Related Books
Livermore has authored a book titled How to Trade in Stocks. It has great educational value for anyone looking to trade in stocks and is also a nice supplement after reading Reminiscences. I have a review up for that book, so check it out if you need more information. (Review Here)
For anyone interested in Jesse Livermore, check out Stock Market Technique Number One too (Review Here). The author Richard Wyckoff was friends with Jesse Livermore, and there are a few little-known quotes from Livermore that Wyckoff has shared, which are really delightful too.
Thank you very much for reading!
And do check back for new and updated book reviews, cheers! :)
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