Livermore on Beating the Market…Learning from Legends…

"Reminiscences of a Stock Operator" by Edwin Lefevre was published back in 1923. It was essentially a biography of legendary...

“Reminiscences of a Stock Operator” by Edwin Lefevre was published back in 1923. It was essentially a biography of legendary trader Jesse Livermore even though it was written as if it were a work of fiction. This qoute was one of the insights from the trader in the book.

A man may beat a stock or a group at a certain time, but no man living can beat the stock market! A man may make money out of individual deals in cotton or grain, but no man can beat the cotton market or the grain market. It’s like the track. A man may beat a horse race, but he cannot beat horse racing.”

It is interesting as far back as the 1920s there was the thought that over the long-term you could not beat the market. Over short-term time periods you may be good (lucky) and outperform, but very few can do this over very long time periods.

One of the factors that seems to differentiate those successful investors that have beaten the market over long-term time periods, like Warren Buffett, is their ability to NOT take action over the short-term. They don’t speculate, they invest.

Are you a speculator or an investor? The difference is a crucial one and something you need to decide before putting money to work for you. Speculators look for short-term trades, getting a quick profit, moving in and out of investments, shutting down their losers quickly and letting their winners run for them.

Investors take a longer term outlook, they build portfolios, they buy investments they believe will increase over time. If their investment loses value in the beginning they don’t jump out of their holdings because they know over time the investment will be worth more that they purchased it for.

Speculating is fun as is gambling for some, but investing will make you UNBROKE.


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