[jackb]

Many years ago when I first got into trading (before the Web existed) and began asking around about what books I should read, Reminiscences of a Stock Operator was seemingly somewhere near the top of everyone's list. Even today (and even on this forum) this continues to be true.

After reading it many years ago, I was fascinated by the story and wanted to know what other greatness the "Boy Plunger" went on to achieve from the point where the book left off. Sadly, it turns out that Livermore ended up losing all the money he had made during the '29 crash and eventually went bankrupt in '34. And it wasn't just Livermore's trading account that was on a vicious rollercoaster. He went through 5 marriages before he finally decided that life's ride was too much. He committed suicide in 1940.

Ever since learning the whole story, I have always been quick to ask of those that recommend the book whether or not they know of the ugly epilogue. Twenty years later and I still get the same response of "no" (despite the ease that Web now offers to research such matters).

As such, I'm not sure what to make of it all. To recommend only the book as some model of trading wisdom without reference to Livermore's sequel and final act, I find to be inappropriate and highly suspect. However, there is some truly great psychological wisdom to be discovered in telling the whole story. As far as trading wisdom, the book speaks volumes about inappropriate money management more so than it does in terms of trading strategies.

Thank you in advance for checking out the poll and for any feedback.

[electroniclocal]

jackb, the fact that JL later lost the plot (was it bipolar disorder) really takes nothing away from what the book teaches and the insight it gives. Like anything else I am taught, I take from it what I find useful and discard or ignore what I don't. I do not believe until I can prove it for myself.

The book is one that every trader in training should read. That and probably Edwards and Magee.

EL

[bakrob99]

Your Poll Questions seem to be tailored rather specifically to get a specific result. I liked the story of it, and the techniques that he employed to gain an edge and keep from being influenced by others. There are many excellent parallels for trading today. One example of this is the length to which he maintained his independence from Wall Street noise. Consider the parallel with respect to the "media" and ignoring the influence of "experts".

The fate of Livermore lies more in his mental instability than his profession. But like any trend follower... and he held on to positions like a trend follower... the strategy has large swings. He would get locked into huge positions without enough liquidity to exit. Cotton for example where he controlled the market. That is quite a bit different than any trader these days. No one is bigger than the market.

The one question in your poll that seems missing is: " Have You Learned anything from Reminisences which helps your trading today." and I can say without hesitation that his notion of "Making more by sitting (in a position) than by trading" is what I think about when the thoughts of taking early profits flow through my head.

[thalestrader]

Reminiscences is held in such high esteem by market operators because it is comprehensive in its depiction of Livermore - it is emphatically not one sided. He himself tells us that far and greed lead to ruin, and then throughout the course of the narrative shows how he himself had repeatedly ruined by the very things he advises his readers that they must control.

Reminiscences was not a "How to..." type reference book or instruction manual. It does teach, but it does so subtly, in the manner in which a novel or play or Platonic dialogue teaches. That is, one must read "between the lines," so to speak, and interpret the book as one does a piece of literature, which, of course, is not the same as reading it literally as a "do everything JL does here." Especially when he himself is so critical of so much of what he does.

Best Wishes,

Thales

[Ingot54]

I agree with Bakrob99 that the poll has a bias to achieve a certain result.

I have read ROSO a couple of times, and it is nothing but a good read about a trader, and about an era where bucket shops and high rollers gambled away their lives.

I would not recommend ROSO as a trading "must read" for anything other than an insight into the kind of greedy actions of bucket shop operators, the traditions of which are still carried out today by operators like Goldman Sachs.

Today, we have operators building huge computer complexes right next to NYSE in order to maximise the speed at which they are able to intercept and manipulate market orders. And we see the churning of clients' accounts and the use of algorithms to step up/down the price in order to achieve volume, for which they receive huge rebates; and in order to achieve a respectable VWAP for clients.

In Livermore's day the bucket shops used the telephone and the tape to gain an edge over the sucker stock gambler.

Today they use computers and the widening of spread to knock out trades at strategic levels. And the electronic triggering of stop-loss orders, which leads to a cascade of sell orders, followed by the fortuitous triggering of clairvoyantly-placed conditional buy orders, is still happening today.

NYSE Euronext > Exchanges >

I would venture that what went on in LIvermore's day pales into obscurity when compared to what those who are "doing God's work" get up to today.

I'm doing 'God's work'. Meet Mr Goldman Sachs - Times Online

These people are untouchable. The model Goldman Sach uses, is to head-hunt the brightest young things from Harvard and the like, and train them up to be brilliant derivatives traders and super-salespeople.

Next, they get a ticket to Washington, where they are able to effectively block any legislative attempt to clean up the Financial Services Industry by Congress. Neither side of US Politics has been able to get any reform past the house in recent years, that might have a moderating effect on the antics of Goldman Sachs in their relentless and ruthless march for financial glory.

Finally, after years of faithful political service to the company in Washington, the employee is welcomed back into the GS fold, and can be asured of the very best lifestyle money can buy until death us do part.

This is not fairytale stuff ... has anyone heard of Hank Poulsen, the former CEO of Goldmans Sachs, and the Secretary of the Treasury of the United States of America?

You don't have to read all of this link ... just scroll down to the "Conflict of Interest" item:

Henry Paulson - Wikipedia, the free encyclopedia

Particularly poignant is this:

"The Goldman Sachs benefit from AIG bailout was recently estimated as USD 12.9 billion and GS was the largest recipient of the public funds from AIG.[35] Creating the collateralized debt obligations (CDO's) forming the basis of the current crisis was an active part of Goldman Sach's business during Paulson's tenure as CEO. Opponents[who?] argued that Paulson remained a Wall Street insider who maintained close friendships with higher-ups of the bailout beneficiaries."

Now, why would you idolise a book like ROSO, when the financial manipulation going on today has left the corruption of Livermore's day far behind?

The true lesson to be learned here, is to be aware with whom you are playing, when you dabble as a wannbe trader in financial markets.

Sorry for the long post, but it had to be said.

A sixth question for the poll should have been added:

Did you gain any useful information from ROSO that could assist your trading today?

I believe the overwhelming response to that question would have been a large "NO".

As such, the book is overrated, and nothing more than a good bedtime story, for those who like to read about quaint historical figures and their antics. The real financial world story today would appear like a horror story if compared to Livermore's experiences.

[SIUYA]

George Kodak Eastman also ended his own life, all be it under different circumstances.....so I would not think it fair to judge his great acts and lessons to be learnt from based off his final act.
The nature of speculation and risk taking means that there will be multitudes of failure along the way, maybe the ultimate lesson is that risking it all will result in both spectacular gains and spectacular blowups.......
you can choose to be more cautious.

[rdhtci]

I agree with Bakrob99 -- there is no poll result I can take which freflects my view. Which is that it Reminiscences is a great read with some wisdom to be gleaned, and JL's failures, in life or in trading, do not diminish that for me.

I was aware of his later life downtrend, but that wouldn't stop me reading the book, assigning the same value to it as if he had fewer problems, nor recommending it to anyone elase on that basis.

I think you need to extend your poll options to account for those who don't agree that the whole experience is negative.

[davidjohnhall]

I agree with most other replies here. It's a fine line between genius and insanity and to try and marry the book to the man is a mistake in my opinion. A great many successful and talented men have taken their own life. Hemingway blew his head off with a shotgun. Does that make his literature any less readable?

Works of art are ultimately judged by the public for whom they are made. Seems to me the public has passed their verdict on Reminiscences. It's a classic must read. What I would look at and inspect here, is your own emotional reaction to the story behind the story and the need to create this poll. Perhaps it can give you some insight into your own trading and how you view wealth, success and failure. I think the results of that introspection would be much more valuable than the results of this poll.