1) Jesse Livermore on How to Deal with Losses
“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!”
2) Do not enter the futile game of fortune-telling. Learn to read the market’s signals instead.
“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.”
3) Jesse Livermore on Giving Stock Tips
I never hesitate to tell a man that I am bullish or bearish. But I do not tell people to buy or sell any particular stock. In a bear market, all stocks go down and in a bull market, they go up. But the average man doesn’t wish to be told that it is a bull or a bear market. What he desires is to be told specifically which particular stock to buy or sell. He wants to get something for nothing. He does not wish to work. He doesn’t even wish to have to think. It is too much bother to have to count the money that he picks up from the ground.
4) To Save or to Spend?
“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 money-making and the money-hoarding instinct equally well developed, and of course, they die disgustingly rich.”
5) Money changes people?
As a rule, a man adapts himself to conditions so quickly that he loses perspective. He does not feel the difference much that is, he does not vividly remember how it felt not to be a millionaire. He only remembers that there were things he could not do that he can do now. It does not take a reasonably young and normal man very long to lose the habit of being poor. It requires a little longer to forget that he used to be rich.
I suppose that is because money creates needs or encourages their multiplication. I mean that after a man makes money in the stock market he very quickly loses the habit of not spending. But after he loses his money it takes him a long time to lose the habit of spending.
6) Jesse Livermore on Improving your Investment Strategy
“Before I can solve a problem I must state it to myself. When I think I have found the solution I must prove I am right. I know of only one way to prove it; and that is, with my own money.”
7) Mistakes suck. They really do.
All stock-market mistakes wound you in two tender spots: your pocketbook and your vanity.
8) Everybody makes mistakes
A stock speculator sometimes makes mistakes and knows that he is making them. And after he makes them he will ask himself why he made them; and after thinking over it cold-bloodedly a long time after the pain of punishment is over he may learn how he came to make them, and when, and at what particular point of his trade; but not why. And then he simply calls himself names and lets it go at that.
9) Learn from your mistakes
If a man didn’t make mistakes he’d own the world in a month. But if he didn’t profit by his mistakes he wouldn’t own a blessed thing.
10) Jesse Livermore on setting a target
“I often took profits and waited for a reaction that never came. And I saw my stock go kiting up ten points more and I sitting there with my four-point profit safe in my conservative pocket.
They say you never grow poor taking profits. No, you don’t. But neither do you grow rich taking a four-point profit in a bull market.”
11) Jesse Livermore on setting a stop loss
The only thing to do when a man is wrong is to be right by ceasing to be wrong.
12) Listen to the market
When I am long of stocks it is because my reading of conditions has made me bullish. But you find many people, reputed to be intelligent, who are bullish because they have stocks.
13) Jesse Livermore on the Level of Investors
“Suckers differ among themselves according to the degree of experience. The tyro knows nothing, and everybody, including himself, knows it.
But the next, or the second grade thinks he knows a great deal and makes others feel that way too. He is the experienced sucker, who has studied not the market itself but a few remarks about the market made by a still higher grade of suckers. The second-grade sucker knows how to keep from losing his money in some of the ways that get the raw beginner.
It is this semi-sucker rather than the 100% beginner who is the real all-the-year-round support of the commission houses. He lasts about three and a half years on average. It is he who is always quoting the famous trading aphorisms and the various rules of the game.
He knows all the don’ts that ever fell from the oracular lips of the old stagers excepting the principal one, which is: Don’t be a sucker!”
14) The market is not your enemy
To be angry at the market because it unexpectedly or even illogically goes against you is like getting mad at your lungs because you have pneumonia.
15) Jesse Livermore on Holding Tight
“A man may see straight and clearly and yet become impatient or doubtful when the market takes its time about doing as he figured it must do.
That is why so many men in Wall Street, who are not at all in the sucker class, not even in the third grade, nevertheless lose money. The market does not beat them. They beat themselves, because though they have brains they cannot sit tight.”
16) Struggle in the stock market and real life
After being down a man enjoys being up, even if he doesn’t quite make the top.
17) Jesse Livermore on bull markets
“Disregarding the big swing and trying to jump in and out was fatal to me. Nobody can catch all the fluctuations. In a bull market, your game is to buy and hold until you believe that the bull market is near its end.”