February 24, 2010 at 11:07 am | | Comments 0

Reminiscences of a Stock Operator – Annotated Edition

Trading books are among my favorite to read, and I’m always on the lookout for a good one.  The ones I like the most aren’t of the how-to nature, given that I’ve been a full-time trader for so many years.  Instead, I really like those that get inside the heads of great traders.

I’ve pointed out my favorite reads in this category before, and that hasn’t changed.  I still re-read them each year, and I either pick up new lessons or am reminded of timeless lessons each time I go through them.  It’s a good investment of my time.

Perhaps at the top of the list is Reminiscences of a Stock Operator by Edwin Lefévre.  My original copy is marked up from cover to cover where I’ve underlined portions of the text and made my own notes in the margin.

It’s based on real-life trader Jesse Livermore, but technically the book is fictional.  Having read several other books by and about Livermore, this one does chronicle much of his trading past in an accurate fashion.  However, I’ve always wondered about the facts behind the book and have wanted to know more.

So, when I was asked if I’d be interested in receiving a copy of the new Annotated Edition by Jon Markman, I jumped at the chance.  After having read through it in the past few weeks, I’m impressed with it to say the least.  Here are a few of my favorite takeaways from the book:

  • Foreword by Paul Tudor Jones. Need I say more?  A Market Wizard weighs in on why this timeless classic is among his favorites, including an in-depth Q&A in the back of the book.
  • How Lefévre got Livermore’s story. I had wondered how Lefévre told Livermore’s stories with such accuracy and keen insight, and it’s clear their combination created a better work than either of them could have told individually.
  • Explanation of Livermore’s ‘hunches.’ The book helps explain how a pro like Livermore can act boldly when he felt the urge to go big, based on pattern recognition and his experience as a tape reader.
  • Selected quotes by chapter. Dozens of snippets from the book which could each be taped to my monitor on any given day, such as:  “Remember that stocks are never too high for you to begin buying or too low to begin selling.”
  • How Livermore manipulated stocks. It was interesting to see how Livermore shifted from a trader to an ‘operator.’  It’s an art form how a whale like him can accumulate and distribute large positions, and additional light was shed on how and when he made his big moves, minimizing slippage along the way.

This new Annotated Edition is filled with side notes, insights, and the historical context in which the events took place – right alongside the original text of the book.  Cultural settings are explained, and economic and political circumstances are discussed.  Backgrounds of key characters are highlighted, helping to further clarify each scene.

The photos and detailed descriptions of the conditions under which Livermore was trading also shine considerable light on each circumstance.  As a result, I not only learned some interesting history of the market, but along the way I also gained some valuable, timeless insights to apply in today’s trading environment.

Thank you Jon for sending me a copy of the book!  And in case some of you haven’t read this classic, pick up a copy of it today – I have no doubt it’ll quickly become your favorite.

Trade Like a Bandit!

Jeff White

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