What is the big deal about Livermore (reminiscences of a stock operator)?
Lots of people recommend this book, even some very well known traders. I've read it and while it's entertaining, I wonder if those who swear by it know he blew up multiple times. From the comments ragging on Citadel / Paulson on this forum ("a real fund should never take a headshot like down 50%") I don't understand how Livermore and his method are that amazing. I honestly don't understand - someone please tell me what i'm missing?
You can't directly compare Livermore to a modern hedge fund. The dude is mostly trading on his own, and the psychology and way he has of looking at bull/bear markets should resonate with just about anybody.
It's a riveting read imo and shows how timeless a lot of the wisdom that forms the basis of good trading is. So what if he blew up a bunch of times and committed suicide? He was by all accounts one of the biggest traders of his time, and never has their been such an account of someone's day-to-day before or since.
Market Wizards, Soros and Niederhoffer books try to capture some of that feel but don't quite make it.
It was a lot harder to come from nothing and make it back then. Keep in mind he was an untreated manic depressive, I doubt he would have committed suicide or blown up so many times had he been given modern day treatments.
it is not his method or that he was a great trader, it is that he expresses a lot of common sense truisms even if his results show he didn't apply them well. "you dont kow until you bet", "I always played a lone hand", "the money is made in understanding the general conditions (ie a bull or bear market)", "the money is made in sitting" etc are all great quotes...but yes you are right anyone who blew up four times and ended up killing himself cant really be a model for responsible trading. But the book is great I recommend the new annotated version which gives you the great story and teaches you a lot about the history of trading.
A very good read, simplifies the trading down to basic principles, I would say it is mostly about the common sense rather than any technical details, but looking at the general picture is often more beneficial. He explains very well how the general movements in the economy/in the market can be looked at when making decisions.
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