The Dog ate my Supper – I’ll Blame the Mouse
Shorting has made it back into the headlines because a number of directors and financial commentators are seeking to blame it for the fall of civilization, or at the very least the fact that bank shares have taken a beating.
Best Stock Tips
Jesse Livermore learned about the best stock tips the hard way.
Having learned his lesson, he enjoyed discussing how their willingness to take stock tips had hit other traders in their pockets.
Find the Strangest Thing and then explore it
John Wheeler is a theoretical physicist with a talent for memorable communication. In the nineteen-sixties he came up with the term “black hole” to describe the phenomenon we now know as…….. a black hole.
Stock Trading by Gut Feel – Only for Pigs
I’m writing about gut feel for the last time today – about how our gut feel for numbers – probability/chance in particular – is inaccurate. This is important because trading is a game of chance. We should trade when we have the highest expectation of success.
Rock Bottom
Seventy-three years ago, on March 19 1934, Time Magazine reported Jesse Livermore’s final bankruptcy.
From the 1929 pinnacle of his career, when he shorted the market for a profit of $100 million, less than five years had passed.
Gut Feel, Conditioned Minds and Trading II – Jim Leitner
Jim Leitner runs Falcon Management in New Jersey. He has taken $2 billion profit out of the market in his career. Jim gave an interview to Steven Drobny for his book The House of Money. Jim’s mind has been conditioned by a huge amount of experience in trading, as follows:
Gut Feel, Conditioned Minds and Trading
I’ve heard experienced traders talk about trading on “gut feel”. Inexperienced traders need to be cautious about this sort of trading – if they don’t want to see their trading accounts clobbered.
The Semi-Sucker and the Casino
I recall a discussion I had around 5 years ago with a semi-sucker. This particular semi-sucker had misunderstood a trading book. He believed it should be possible using money management techniques to beat the casino at roulette.
The Stock Market Sucker Test – 5 Questions
Market commentators say money’s going to be made by anyone who goes long volatility. You decide it’s time to:
Spot the Sucker – It Might Be You
In his 1987 letter to shareholders, the masterfully quotable Warren Buffett said, “If you’ve been in the [poker] game 30 minutes and you don’t know who the patsy is, you’re the patsy.”
The equally masterful quote-smith, Jesse Livermore, categorized four grades of sucker:
Relax after an Exciting Week
After an exciting week on the markets, one I’m sure Jesse Livermore at the peak of his powers would have relished, here are a few jokes – probably as old as Jesse – to ease us into the weekend:
Margaret Thatcher, Ben Bernanke and the Greenspan Put
On March 10 1988, an opposition MP goaded British Prime Minister Margaret Thatcher at “Question Time” about the way her Treasury (run by Nigel Lawson) was using interest rate policy and intervention in the foreign exchange markets to keep sterling trading in a tight band with the deutschemark.
CEO says Fantasic Job – Stock Falls over Thirty Percent
Today, here’s another fine example – from Germany – of a company and analysts telling investors that everything was fine when its chart told an entirely different story.
The Foolish Four and Trading Patterns
I am not going to talk about using sunspots as trading signals.
(Although, now that I think about it, sunspot activity does influence climate and climate does influence the economy and the economy does influence the stock market – hey maybe I should be using sunspot activity!)
Proof at last – Stockbrokers are not Snakes
Here are some nice numbers:
1. A Python can survive quite happily on 1 good victim per year. (Finally proving there’s a difference between snakes and stockbrokers.)
Stock Trading – Wait for the Reason and Miss the Opportunity
In How to Trade in Stocks, Jesse Livermore discussed “the folly of trying to find out a good reason why you should buy or sell a given stock.”
The Worst Trade of 2007 – Morgan Stanley correct but lose $9 Billion
Morgan Stanley’s fourth quarter results are the most remarkable I’ve ever seen.
The Best Trade of 2007 – John Paulson Overtakes Oprah Winfrey
Further to my thoughts on Jesse Livermore and the subprime fiasco, I thought I’d make a near-end-of-year post looking at the biggest winning trade of the year.
Risk and Stock Trading
Portfolio managers talk about risk not in terms of loss but in terms of variability of their returns. This way of looking at risk can also be valuable to stock traders.
Pretty Girls – You are Bad Trades
Okay, I’m tired of beating around the bush. I’m a beautiful (spectacularly beautiful) 25 year old girl. I’m articulate and classy.
Mathematicians and Physicists Emerge From Geekiness To Dominate Hedge Fund Trading
London has become an international centre for the world’s most talented mathematicians, who try to make fortunes writing financial models and trading algorithms for hedge funds and investment banks.
100th Anniversary Of Jesse Livermore Making His First Million
On October 24 1907, Jesse Livermore made his first $1,000,000.
Private: Jesse Livermore Trading Rules and the Sub-Prime Fiasco
I don’t write too often about recent market action. Jesse Livermore liked to say that speculation was as old as the hills and I’ve tried to make most of my writing here “timeless” rather than “market commentary”.
Nine Facts about Jesse Livermore – Short and Sweet
(1) Jesse Livermore was born July 26, 1877. Some other events that took place in this year were: Queen Victoria became Empress of India, Crazy Horse fought his last battle with the US Cavalry, Mars’ outer moon Phobos was discovered and Thomas Edison invented the phonograph.
Five Reasons to think Twice Before Shorting Stocks
Jesse Livermore, one of the greatest stock traders in history, made his biggest market killings when he shorted stocks.
Practice, Luck and Mistakes in Trading the Markets
Napoleon, when hearing good things about potential senior officers liked to ask, “but is he lucky”?
Stock Trading: The Deadly Enemies – Greed, Fear and Hope
Jesse Livermore described the emotions of hope, greed and fear at various times as:
Christian Siva-Jothy – Reminiscences of a Stock Operator
Christian Siva-Jothy was Head of Proprietary Trading with Goldman Sachs. (Prop trading is when firms trade for themselves rather than on behalf of customers for fees.)
Market Myth – Prices rise because Buyers outnumber Sellers
“Prices rise because there are more buyers than sellers.” This is a hoary old saying that needs to be put to bed once and for all…
130th Anniversary of Jesse Livermore’s Birth
I thought I’d make a quick post to commemorate the fact that it’s 130 years since Jesse Livermore was born.
In the Eye of which Beholder?
When I wrote last month about trades that are worth taking, I was careful to say we should be looking for trades that engage the interest of other investors or traders.
Stock Market Ripples and Trading Tactics
Jesse Livermore concluded, through trial and error, that the biggest profits are made through being fully invested while markets are trending strongly.
Accurate Stock Picks vs Precise Stock Picks
Once upon a time, I taught physics. Among hundreds of other topics I covered, I taught students the difference between accuracy and precision.
Index Funds an Expensive Mistake?
To save for your retirement, you need to find a suitable investment vehicle.
Trading and Masterful Inactivity
Learning to be masterfully inactive doesn’t come easily, but it pays.
Traders, Kings, Princes and Paupers
Long term investors prefer to leave their money in the markets to reap the rewards of compounding.
Which Trades are Worth Taking?
Jesse Livermore wrote: “Analyze in your own mind the effect, marketwise, that a certain piece of news may have… Try to anticipate the psychological effect of this particular item on the market. If you believe it’s likely to have a definite bullish or bearish effect, don’t back your judgement UNTIL THE ACTION OF THE MARKET ITSELF CONFIRMS YOUR OPINION.”
Pyramiding, Locking in Profits, or Enjoying the Ride
If you’ve never done much trading, the problem of how to deal with trades that move nicely in the right direction won’t seem like a problem – but it is. When a trade moves in the right direction you need to make as much money out of it as you can; remember that quote from George Soros I mentioned earlier this month, “It doesn’t matter how often you are right or wrong – it only matters how much you make when you are right versus how much you lose when you are wrong.”
Stock Trading Wisdom – Not For Suckers
I liked the quote from George Soros I used earlier this month, so I thought I’d dig out a few more words of wisdom.
Insider Trading – Some Things Never Change
I see the SEC is prosecuting a married couple for allegedly making $600,000 through insider trading. In Jesse Livermore’s day, ripping off the public through insider trading was legal but that, thankfully, changed a long time ago. The greed that attracts people to insider trading will never change though.
Investing Books – A Lesson from History
Danger, Danger
Too many first time investors / traders read a few books and, having absorbed the authors’ wisdom, launch themselves (and their savings) into market activity.
Why Continue Holding Overvalued Stocks?
One of the tenets of fundamental analysis is that you should buy stocks when they are undervalued and sell them when they are overvalued.
How To Trade In Stocks – Preface
Having just added a post about Edward Jerome Dies’ book Street Of Adventure, I thought I’d finish writing about him by reproducing the preface he wrote for Livermore’s How To Trade In Stocks – The Livermore Formula for Combining Time Element and Price.
Edward Jerome Dies – Street of Adventure
In 1940, Edward Jerome Dies wrote the preface to Jesse Livermore’s How to Trade in Stocks.
Collected Works; History of the Stock Market and Trading
I noticed an article in The Economist the other day reviewing a collection of trading books and publications that’s on the market for $738,000.
Bad News Is Good News
Jesse Livermore was called The Boy Plunger (Plunger = A Reckless Speculator). He was happy to play the market long or short but his biggest successes came when he sold short prior to big market falls.
Jesse Livermore in 1907
February 1907 – exactly one century ago – was an exciting year for Jesse Livermore. In 1906, he had hit the big time – profiting by over a quarter million dollars – by shorting the market just before the San Francisco earthquake.
Jesse Livermore News
It’s interesting to see today’s writers still referencing Jesse Livermore.
Which Version of Reminiscences Of A Stock Operator Is Best?
I thought it was about time that I got myself a new copy of Reminiscences of a Stock Operator. I splashed out on the hardback version (first published in 2005) which includes the “classic artwork as it appeared in the Saturday Evening Post” in the 1920s.
If Jesse Livermore Were Alive Today
While I was reviewing my finances earlier this evening, I got to wonder what Jesse Livermore would be doing if he were alive today. Would he be using the trading strategies that worked for him in the first part of the 20th century? Would he be trading stocks and commodities? Or would he be trading options or CFDs or some other derivative?
Jesse Livermore – A Great Trader? Really?
On a site dedicated to Jesse Livermore, you would expect nothing but praise for the man. There are however, significant question marks over Jesse Livermore’s trading record.