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Weekend: The Greatest Trader Who Ever Lived

Written By Brian Hicks

Posted March 26, 2011

Welcome to the Wealth Daily Weekend Edition — our insights from the week in investing and links to our most-read Wealth Daily and sister publication articles.

It goes without saying the stock market has produced its share of heroes and villains over the years. And while villains have been many, the heroes have been few.

One of the good guys (for me, at least) has always been Jesse L. Livermore — considered by many of today’s top Wall Street traders to be the greatest trader who ever lived.

Leaving home at age 14 with no more than five bucks in his pocket, Livermore went on to pocket millions on Wall Street as his colorful legend grew to epic proportions back in the days when they still literally read the tape.

Long or short, it didn’t matter to Jesse.

Instead, he was happy to take whatever the markets gave him because he knew what every good trader knows: Markets never go straight up or straight down.

In one of Livermore’s more famous moves, he made a massive fortune betting against the markets in 1929, earning $100 million in short-selling profits during the crash. In today’s dollars, that would be a cool $12.6 billion.

That’s part of the reason an earlier biography of his life, entitled Reminiscences of a Stock Operator, has been a must-read for experienced traders and beginners alike.

A gambler and speculator to the core, his insights into human nature and the markets have been widely quoted ever since.

Here are just a few of them that I read from time to time to remind myself of the nature of the markets themselves…

On the school of hard knocks:

The game taught me the game. And it didn’t spare me rod while teaching. It took me five years to learn to play the game intelligently enough to make big money when I was right.

On losing trades:

Losing money is the least of my troubles. A loss never troubles me after I take it.  I forget it overnight. But being wrong — not taking the loss that is what does the damage to the pocket book and to the soul.

On trading the trends:

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 the game is to buy and hold until you believe the bull market is near its end.

On sticking to his plan:

What beat me was not having brains enough to stick to my own game that is, to play the market only when I was satisfied that precedents favoured my play. There is the plain fool, who does the wrong thing at all times everywhere, but there is also the Wall Street fool, who thinks he must trade all the time.

No man can have adequate reasons for buying or selling stocks daily or sufficient knowledge to make his play an intelligent play.

On speculation:

If somebody had told me my method would not work I nevertheless would have tried it out to make sure for myself, for when I am wrong only one thing convinces me of it, and that is, to lose money. And I am only right when I make money. That is speculating.

On respecting the tape:

A speculator must concern himself with making money out of the market and not with insisting that the tape must agree with him. Never argue with it or ask for reasons or explanations.

On human nature and trading:

The speculator’s deadly enemies are: Ignorance, greed, fear and hope.  All the statue books in the world and all the rule books on all the Exchanges of the earth cannot eliminate these from the human animal.

On riding the trend to the big money:

Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance.

On the nature of Wall Street:

Wall Street never changes, the pockets change, the suckers change, the stocks change, but Wall Street never changes, because human nature never changes.

So, what ever happened to Jesse L. Livermore?

He made and lost more fortunes than most traders can even contemplate.

But he didn’t die a poor man not by any stretch of the imagination… He took his own life, believing he was “a failure” and proving once again that money can’t buy happiness.

But money certainly doesn’t hurt, either

Which is why our editors have put together a few of their best investment ideas for the years to come…

Below you’ll find this week’s top-read articles from Wealth Daily and Energy & Capital.

Have a great weekend.

Your bargain-hunting analyst,

steve sig

Steve Christ
Editor, Wealth Daily

Precious Metals Bull Market: The Best Free Investment You’ll Ever Make
Publisher Brian Hicks details how you can get $54,300 worth of investment research for free along with 10 ounces of silver bullion.

Ford Set to Gain in the Electric Car Market: How Ford Just Cornered the Electric Vehicle Market
Editor Jeff Siegel discusses how Ford may have just taken the lead in electric vehicle development.

Biotech Blockbuster: Everything You Think about Medicine is About to Change
The next biotech boom is upon us, says Editor Steve Christ… And when this stock starts moving, there’s no stopping the run.

The World Debt Bubble Just Popped: Gold Bears Will Learn the Hard Way
The gargantuan financial risks that exist in our global markets are staggering. Greg McCoach explains how investors can hedge against these risks and protect wealth with gold and silver.

China’s Next Oil War: Malthusian Oil Grab
Editor Chris DeHaemer reports as China tosses down the gauntlet in the South China Sea.

How to Leverage the Worst Business in the World: FAA plus Oil plus F… How Does It All Add Up to 495%?
In a follow-up to last week’s article, Editor Adam Lass explains how to leverage the Black Tide’s next victim for 204%… and the one American company that is taking the Japanese Crisis to the bank.

The Williston Basin: Overlooking Billions of Barrels of Oil
Editor Keith Kohl explains why Obama’s bout of oil amnesia keeps the U.S. addicted to foreign oil.

Gulf of Mexico Drilling Permits Back On: More of These Are Coming in Just Days
Editor Ian Cooper takes a look at recent Gulf of Mexico drilling permit approvals and offers several ways to profit as the Administration runs out of options.

The Japan Buying Opportunity: Put On the Blinders, Stay in Your Lane
The takeaway is this: We are at the beginning of a decades-long energy bull market induced by population-driven demand and limited supply… Mining accidents, oil spills, and earthquakes don’t change that.

Three Signs for the End of Gold: Two Miles Down in Durban Deep
Editor Christian DeHaemer describes for readers his trip into Durban Deep and explains why the end of gold is nigh…

Your Government Lies: Get Over It
The U.S. gov’t, in its entirety, has been doing so for years… But the gravity of how far it’ll go, and how good it is at doing it, didn’t sink in until recently, when I came across some old pictures.

Silver at Record Prices: Doubles in Less than a Year
Publisher Brian Hicks brings readers the second part of a video interview with precious metals guru Greg McCoach, who talks about silver’s move to the fifty-dollar mark.