Lessons from Jesse Livermore - One of the Greatest Speculators of all Time

(The following excerpts were taken from Edwin Lefevre's Reminiscences of a Stock Operator)

On the importance of selective speculation: There is a time for all things, but I didn't know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is a plain fool, who does all the wrong things everywhere, but there is the Wall Street fool, who thinks that he must trade all the time. No man can always have adequate reasons for buying or selling stocks daily - or sufficient knowledge to make his play an intelligent play. (p.21)

On markets and their participants: But the one thing a Stock Exchange firm will not do is to split commissions. The governors would rather a member committed murder, arson, and bigamy than do business with outsiders for less than a kosher eighth. The very life of the Stock Exchange depends upon their not violating that one rule. (p. 47)

On mistakes and wisdom: 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. (p. 97)

Of course, if a man is both wise and lucky, he will not make the same mistake twice. But he will make any one of the ten thousand brothers or cousins of the original. The mistake family is so large that there is always one of them around when you want to see what you can do in the fool-play line. (p. 119)

A man can excuse his mistakes only by capitalizing on them to subsequent profit. (p. 147)

On the speculator and his emotions: I sometimes think that specultion must be an unnatural sort of business, because I find that the average speculator has arrayed against him his own nature. The weaknesses that all men are prone to are fatal to success in speculation - usually those very weaknesses that make him likable to his fellows or that he himself particularly guards against in those other ventures of his where they are not nearly so dangerous as when he is trading in stocks or commodities.

The speculators' chief enemies are always boring from within. It is inseparable from human nature to hope and to fear. In speculation when a the market goes against you, you hope that every day will be the last day. It is absolutely wrong to gamble in stocks the way the average man does. (p. 130-131)