Reminiscences of a Stock Operator

Author: Edwin Lefèvre
Published in: 1923
Pages: 288

A couple of days ago I’ve had a chance to finish a magnificent book that is “Reminiscences of a Stock Operator”, one of the investment classics.

About the book

This book tells the story about one of all-time best stock traders: Jesse Lauriston Livermore aka Boy Plunger.

According to Wikipedia, Jesse himself wrote the book and Edwin Lefevre acted as the editor and coach. Story is told from the first person perspective, by the way.

About Jesse Livermore

During his lifetime, Livermore made and lost multi-million dollar fortunes a couple of times; from broke to rich and vice versa.

At the age of 14, this brilliant man started his trader career that lead him to bucket shops. He was so successful that those shops banned him soon afterwards. As a result, Jesse moved to New York and began trading.

Unfortunately, it was too much of a difference and Boy Plunger lost everything there. Started trading in the bucket shops again (using others, etc.), earned money and went back to NY.

What happened then?

He made millions of dollars and then lost everything. Actually, he borrowed millions and lost most of it as well. Ultimately, he earned everything back, paid bills, made more cash and become one of the well-known speculators.

Obviously, this is just a short summary that does not reflect even a tiny fraction of this amazing writing.

This book is full of wisdom, memorable quotes and life lessons:

“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.” ~ Jesse Livermore

Tell me more…

On November 28, 1940, he shot himself…. Why? Depression, women and new market regulations…

Jesse himself, several hours before his suicide

He left the following note to his wife:

“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”.

Rating

10/10

Please note: rating may be biased, as I am a speculator myself.

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The Power of Full Engagement: Managing Energy, Not Time, is the Key to High Performance and Personal Renewal

Author: Jim Loehr and Tony Schwartz
Published in: 2003
Pages: 256

Followed by a couple of recommendations, I have finally decided to buy “The Power of Full Engagement” book and check what this fuss is all about.

Was it worth it? Absolutely, so far, it’s one of the best books I’ve read this year.

What have I learned?

This book is packed with so many valuable tips that I don’t even know where to begin… Okay, let’s start with this:

It’s not one of those books that just give you tips, for example: eat healthy, start exercising.
No, those are followed by facts, stories and even studies that fascinated me most.

Managing energy, not time is the keyword here.

What energy?

Before you actually start to manage energy, be aware of its different levels, such as: mental, physical, spiritual (not in religious sense) and emotional.

Those are the four primary sources of energy. Each as important as every other one.

Every chapter discusses the importance of each level, how and why they affect your performance in business or personal life. No, actually, it’s not just about the performance; there is a much deeper connection here.

Thought that stress is bad for you?

Not really. Stressing your body, be it physical, mental, physical or spiritual muscle, is beneficial, as long as it’s followed by recovery.

People tend to skip recovery part and just continue to harass their bodies. Guess what, recovery is as important as the stress itself.

Let’s take physical strength, during intensive exercise routine (in which your body is stressed), muscles don’t really grow; actually, they are tiered apart. Only when you are sleeping, your body repairs and builds the tissue. However, what happens if you continue using same weights over and over again? Muscles stop growing. That’s why continuous stress with full time recovery is a key element to high performance.

Same thing happens with any other muscle group. Stress and renewal are two inseparable elements that must be well balanced.

Stress without renewal = over burnt body
Stress with too much renewal = sloppy performance

What about the rituals?

Book authors also emphasize the importance of daily rituals, be it a 15 minute Yoga routine, exercising or pretty much anything else. As long as it’s aligned with your values and helps you to renew yourself, clear your mind, spirit and body.

Personally, I went with morning water and exercise routine afterwards.

Conclusion

Overall, it’s a highly recommended book that not only gives you a bunch of advices, but is also packed with dozens of inspiring stories and examples. There is a full training program included as well. My “review” is just a tiny fraction of what can be said about this great book. A must buy for pretty much everyone.

Rating

9.5/10

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I just wanted to give a quick shout out regarding my “The Power of Now” book review.

Although I gave it only 6.5 points out of 10, it’s still a recommended read and has helped me a lot.

In fact, when I told you to “accept things”, it did not really “hit” you, didn’t it? It was just another “meaningless” sentence.

Well, let’s change the perspective a little bit: we are not talking about complete acceptance of everything (that would decrease the quality of your life), in fact, when you can change things, you must do that!

However, what about things like rain? Have you ever found yourself complaining about the weather (by the way, your life must be a blast, if all you can complain about is the weather), the one thing that you can’t change?

So, if you cannot change it, why complain? Accept the fact and let it go. Not only it’s counter-productive but also, you spread negative energy, and really, who enjoys being surrounded by negative people?

Just take a deep breath and say to yourself (in your mind): I accept the current moment.

If you still don’t get it, just grab a book, it will give you a different perspective on things. In fact, after reading that book, I haven’t had yet a negative thought; let’s say “complained” (even in my mind) about things that I cannot change.

P.S. You can actually change the weather, that’s what Chinese did during Olympics. They were using canons and missile launchers to shoot silver iodide into the skies, shocking rain from the clouds before the opening and closing ceremonies.

Market Wizards: Interviews with Top Traders

Author: Jack D. Schwager
Published in: 1992
Pages: 480

Market Wizards (not to be confused with “The New Market Wizards”) is one the classics that every investor should read. Even if you are not interested in such markets, book serves as a great inspirational source, since it focuses on interviews and has nothing to do with the theory itself.

What have I learned?

The most fascinating interview for me personally, was the one with Michael Marcus.

Here is the first page of it:

How did you first get interested in trading futures?
I was something of a scholar. In 1969, I graduated from Johns Hopkins, Phi Beta Kappa, near the top of my class. I had a Ph.D. fellowship in psychology at Clark University, and fully expected to live the life of a professor. Through a mutual friend, I met this fellow named John, who claimed he could double my money every two weeks, like clockwork. That sounded very appealing [he laughs]. I don’t think I even asked John how he could do it. It was such an attractive idea that I didn’t want to spoil things by finding out too many facts. I was afraid I would get cold feet.

Weren’t you skeptical? Didn’t he sound too much like a used car salesman?
No, I had never invested in anything, and I was very naive. I hired John, who was a junior at my school, to be my commodity trading advisor at $30 a week. Occasionally, I threw in free potato chips and soda. He had a theory that you could subsist on that diet. That’s all you paid him?

Weren’t there any profit incentives—extra potato chips if he did well?
No.

How much money did you allot for trading?
About $1,000 that I had saved up.

Then what happened?
My first trip to a brokerage house was very, very exciting. I got dressed up, putting on my only suit, and we went to the Reynolds Securities office in Baltimore. It was a big, posh office, suggesting a lot of old money. There was mahogany all over the place and a hushed, reverential tone permeated the office. It was all very impressive.

The focal point was a big commodity board at the front of the office, the kind that clicked the old-fashioned way. It was really exciting to hear the click, click, click. They had a gallery from which the traders could watch the board, but it was so far away that we had to use binoculars to see the prices. That was also very exciting, because it was just like watching a horse race.

My first realization that things might become a little scary was when a voice came over the loudspeaker recommending the purchase of soybean meal. I looked at John, expecting to see an expression of confidence and assurance on his face. Instead, he looked at me and asked, “Do you think we should do it?” [he laughs]. It quickly dawned on me that John didn’t know anything at all.

I remember soybean meal was trading quietly: 78.30,78.40,78.30, 78.40. We put the order in, and as soon as we got the confirmation back, almost mystically, the prices started clicking down. As soon as it knew that I was in, the market took that as a signal to start descending. I guess I had good instincts even then, because I immediately said to John, “We’re not doing too well, let’s get out!” We lost about $100 on that trade.

The next trade was in corn, and the same thing happened. John asked me whether we should do the trade. I said, “Well all right, let’s try com.” The outcome was the same.

Did you know anything at all about what you were doing? Had you read anything about commodities or trading?
No, nothing.

Did you even know the contract sizes?
No, we didn’t.

Did you know how much it was costing you per tick?
Yes.

Apparently, that was about the only thing you knew.
Right. Our next trade, in wheat, didn’t work either. After that, we went back to corn and that trade worked out better, it took us three days to lose our money. We were measuring success by the number of days it took us to lose.

Were you always getting out after about a $100 loss?
Yes, although one trade lost almost $200.1 was down to about $500 when John came up with an idea that was “going to save the day.” We would buy August pork bellies and sell February pork bellies because the spread was wider than the carrying charges [the total cost of taking delivery in August, storing, and redelivering in February]. He said we couldn’t lose on that trade.

I vaguely understood the idea and agreed to the trade. That was the first time we decided to go out to lunch. All the other times we had been too busy scrutinizing the board, but we thought this was a “can’t lose” trade, so it was safe to leave. By the time we came back, I was just about wiped out. I remember this feeling of shock, dismay, and incredulity.

I will never forget the image of John—he was a very portly guy with thick, opaque glasses—going up to the quote board, pounding and shaking his fist at it, and shouting, “Doesn’t anyone want to make a guaranteed profit!” Later on, I learned that August pork bellies were not deliverable against the February contract. The logic of the trade was flawed in the first place.

Had John ever traded before?
No.

So where did he come up with this story about doubling your money every two weeks?
I don’t know, but after that trade, I was wiped out. So I told John that, in light of what happened, I thought I knew as much as he did—which was nothing—and that I was going to fire him. No more potato chips; no more diet soda. I’ll never forget his response. He told me, “You are making the greatest mistake of your life!” I asked him what he was going to do. He said, “I am going to Bermuda to wash dishes to make a trading stake. Then I am going to become a millionaire and retire.” The thing that amused me was that he didn’t say, “I’m going to Bermuda and take a job to make a trading stake.” He was very specific; he was going to wash dishes to get his trading stake.

What eventually happened to John?
To this day, I have no idea. For all I know, he might be living in Bermuda as a millionaire because he washed dishes. After that, I managed to rustle up another $500 and placed a few silver trades. I wiped out that stake as well. My first eight trades, five with John and three on my own, were all losers.

—

It does not stop here; Michael continued losing money, a lot of it. However, he believed in himself, he had no thoughts about giving up and just kept going.

He borrowed money from his mother ($20,000), he lost most of it, including his own $30,000, again and again.

Then… over a ten year period, he multiplied his company account by 2,500-fold!

So, what have I learned?

To be fair, there is nothing what you did not know already. It just re-confirms everything and serves more as a great inspirational book. You can achieve anything if you set your mind to. How many people would have given up? A lot! Persistence, not perfection.

Why 9 out of 10? There are a couple of interviews that I felt were included just for the purpose of adding them, offering no real value whatsoever.

Rating

9/10

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Up until the very few weeks ago, I usually read just before going to bed.

What’s the reason for that? Obviously, couldn’t find any spare time. However, I have discovered a brilliant way to have at least 1 extra hour for such activity. Everything is really simple, actually.

Instead of driving to the gym (which takes ~40 minutes total (20 mins. to each side)), I’ve started using public transport.

Wait? What? Public transport wastes your time!

Let me explain. Although it takes 30 minutes to reach my destination, I can actually use that time to… yes, read! As I no longer have to concentrate on driving. So therefore, by “wasting” only 20 extra minutes of my life, I have a total of 60 minutes for the personal growth.

Simple, yet brilliant.

Of course, I am not encouraging you to completely stop using your car. It’s a great, quick and comfortable transport.

However, I am sure you can scan through your daily life and find a way to incorporate such “strategy”.

Some people use a bus to reach their work. Instead of looking through the window, why not grab a book and start improving the quality of your life? Don’t worry about the background noise, you will get used to it. Additionally, you can always grab a pair of headphones.

1, 2, 3, Go!

The Power of Now: A Guide to Spiritual Enlightenment

Author: Eckhart Tolle
Published in: 1999
Pages: 208

This book was purchased a couple of months ago, based on many positive reviews in Amazon, as well as a catchy title. I was expecting something completely different, to be fair. However, Eckhart Tolle has some very interesting points, that I would like to share.

What have I learned?

According to the book, the secret of true happiness and spiritual enlightenment is being present, or as the author says: being in the now. There is no other time than now. You do not live in the future nor the past, you live in this moment.

What do I mean by that?

When you go skydiving, base-jumping, have a near death experience, etc. do you really think about the issues such as: have I locked my car? Is my salary good enough? What should I wear tomorrow? No. You become present.

Observe yourself, emotions, thoughts, notice if you are spending time thinking about the future instead of being present and doing something about it now.

How do you do that?

Well, author says that you need to be aware of it. That’s pretty much it. Don’t think, don’t try to understand, just be aware of it. Essentially, you could “squeeze” that into 10 pages or more/less. Rest of the book is used to answer editor questions, etc.

Book also has a lot of mambo jumbo, twisted religious figures sayings just to support the author point.

I could sum up this book in one sentence: accept the current moment and let it go.

Update: please read the following post to clarify few things.

Rating

6.5/10

Purchase

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