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REMINISCENCES OF A STOCK OPERATOR by Edwin LeFevre The Sun Dial Press,
Inc. Garden City, New York Copyright 1923, by George H. Doran Company
REMINISCENCES OF A STOCK OPERATOR
to Jesse Lauriston Livermore
Reminiscences of a Stock Operator
Chapter I
I went to work when I was just out of grammar school. I got a job as quotation-board
boy in a stockbrokerage office. I was quick at figures. At school I did three years of
arithmetic in one. I was particularly good at mental arithmetic. As quotation-board boy I
posted the numbers on the big board in the customers' room. One of the customers
usually sat by the ticker and called out the prices. They couldn't come too fast for me. I
have always remembered figures. No trouble at all.
There were plenty of other employees in that office. Of course I made friends with the
other fellows, but the work I did, if the market was active, kept me too busy from ten
a.m. to three p.m. to let me do much talking. I don't care for it, anyhow, during business
hours.
But a busy market did not keep me from thinking about the work. Those quotations did
not represent prices of stocks to me, so many dollars per share. They were numbers. Of
course, they meant something. They were always changing. It was all I had to be
interested in the changes. Why did they change? I didn't know. I didn't care. I didn't
think about that. I simply saw that they changed. That was all I had to think about five
hours every day and two on Saturdays: that they were always changing.
That is how I first came to be interested in the behaviour of prices. I had a very good
memory for figures. I could remember in detail how the prices had acted on the previous
day, just before they went up or down. My fondness for mental arithmetic came in very
handy.
I noticed that in advances as well as declines, stock prices were apt to show certain
habits, so to speak. There was no end of parallel cases and these made precedents to
guide me. I was only fourteen, but after I had taken hundreds of observations in my
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Reminiscences of a Stock Operator
mind I found myself testing their accuracy, comparing the behaviour of stocks to-day
with other days. It was not long before I was anticipating movements in prices. My only
guide, as I say, was their past performances. I carried the "dope sheets" in my mind. I
looked for stock prices to run on form. I had "clocked" them. You know what I mean.
You can spot, for instance, where the buying is only a trifle better than the selling. A
battle goes on in the stock market and the tape is your telescope. You can depend upon it
seven out of ten cases.
Another lesson I learned early is that there is nothing new in Wall Street. There can't be
because speculation is as old as the hills. Whatever happens in the stock market to-day
has happened before and will happen again. I've never forgotten that. I suppose I really
manage to remember when and how it happened. The fact that I remember that way is
my way of capitalizing experience.
I got so interested in my game and so anxious to anticipate advances and declines in all
the active stocks that I got a little book. I put down my observations in it. It was not a
record of imaginary transactions such as so many people keep merely to make or lose
millions of dollars without getting the swelled head or going to the poorhouse. It was
rather a sort of record of my hits and misses, and next to the determination of probable
movements I was most interested in verifying whether I had observed accurately; in
other words, whether I was right.
Say that after studying every fluctuation of the day in an active stock I would conclude
that it was behaving as it always did before it broke eight or ten points. Well, I would jot
down the stock and the price on Monday, and remembering past performances I would
write down what it ought to do on Tuesday and Wednesday. Later I would check up
with actual transcriptions from the tape.
That is how I first came to take an interest in the message of the tape. The fluctuations
were from the first associated in my mind with upward or downward movements. Of
course there is always a reason for fluctuations, but the tape does not concern itself with
the why and wherefore. It doesn't go into explanations. I didn't ask the tape why when I
was fourteen, and I don't ask it to-day, at forty. The reason for what a certain stock does
to-day may not be known for two or three days, or weeks, or months. But what the
dickens does that matter? Your business with the tape is now not tomorrow. The reason
can wait. But you must act instantly or be left. Time and again I see this happen. You'll
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Reminiscences of a Stock Operator
remember that Hollow Tube went down three points the other day while the rest of the
market rallied sharply. That was the fact. On the following Monday you saw that the
directors passed the dividend. That was the reason. They knew what they were going to
do, and even if they didn't sell the stock themselves they at least didn't buy it There was
no inside buying; no reason why it should not break.
Well, I kept up my little memorandum book perhaps six months. Instead of leaving for
home the moment I was through with my work, I'd jot down the figures I wanted and
would study the changes, always looking for the repetitions and parallelisms of
behaviour learning to read the tape, although I was not aware of it at the time.
One day one of the office boys he was older than I came to me where I was eating my
lunch and asked me on the quiet if I had any money.
"Why do you want to know?" I said.
"Well," he said, "I've got a dandy tip on Burlington. I'm going to play it if I can get
somebody to go in with me."
"How do you mean, play it?" I asked. To me the only people who played or could play
tips were the customers old jiggers with oodles of dough. Why, it cost hundreds, even
thousands of dollars, to get into the game. It was like owning your private carriage and
having a coachman who wore a silk hat.
"That's what I mean; play it!" he said.
"How much you got?"
"How much you need?"
"Well, I can trade in five shares by putting up $5."
"How are you going to play it?"
"I'm going to buy all the Burlington the bucket shop will let me carry with the money I
give him for margin," he said. "It's going up sure. It's like picking up money. We'll
double ours in a jiffy."
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Reminiscences of a Stock Operator
"Hold on!" I said to him, and pulled out my little dope book.
I wasn't interested in doubling my money, but in his saying that Burlington was going
up. If it was, my note-book ought to show it. I looked. Sure enough, Burlington,
according to my figuring, was acting as it usually did before it went up. I had never
bought or sold anything in my life, and I never gambled with the other boys. But all I
could see was that this was a grand chance to test the accuracy of my work, of my
hobby. It struck me at once that if my dope didn't work in practice there was nothing in