That is a great one --> "The American stock market is similar to watching a person walk up the stairs with a yo-yo. People focus on the yo-yo going up and down, while the real story is the consistent movement of the person up the stairs."
“Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money.”
It’s interesting that Livermore’s strategy here is really just a limited version of Buffet/Munger strategy. The difference being one only of degree, as the latter buy right and sit tight… forever.
Agreed! When I started reading, I didn't expect there to be so many similarities between Livermore's approach and Buffett/Munger's. Like you said, he just never took it far enough and seemingly couldn't give up trading in and out of the market.
When you price a market in a good that can be produced in any quantity desired, the number can easily be made to go up. That’s how we find ourselves in a world where the markets are rising while the real economy is evaporating.
Bet against confetti money? A silly game. As the old turkey rightfully understood.
Kevin, thanks for the fine review! You nudge me to read Reminiscences again, first read 30 years ago. Being in a bull market is like marrying well: make a very good decision, don’t worry about overpaying for an engagement ring, learn to live with volatility, and enjoy years of happy compounding. Sound simple!
I had meant to added earlier that the last time I heard Paul Samuelson talk he noted that he had known people who had gotten out of the market before the ‘29 Crash, but they were so traumatized that they didn’t get back in for so long that they would have been better off, if they had just stayed put. Incidentally, Samuelson was a ‘large’ investor in Berkshire.
Thanks -- I did not know that about Samuelson. It's really serendipitous, too. I was just reading Poor Charlie's Almanack and in one speech he mentions an unnamed famous economist who owned a lot of Berkshire stock and I've been wondering who he was referring to there. It must be Paul Samuelson.
Kevin— very coincidental, I’m just reading Charlie’s talk where he mentioned the un-named economist. He couldn’t mention names, because at the time Samuelson was still alive. I shouldn’t now for similar reasons, but the source is handwritten. I’ve often wondered, if Samuelson made more money in Berkshire than he did from his multi-edition textbook. Apparently, it was well-known among economists around Cambridge that Samuelson was a large Berkshire shareholder. Given Samuelson’s belief in market efficiency, the investment was considered the product of a split brain. I suppose that might make one exceptional… and fortunate!
That is a great one --> "The American stock market is similar to watching a person walk up the stairs with a yo-yo. People focus on the yo-yo going up and down, while the real story is the consistent movement of the person up the stairs."
Definitely ranks up there as one of the best descriptions of the stock market that I've ever heard.
“Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money.”
It’s interesting that Livermore’s strategy here is really just a limited version of Buffet/Munger strategy. The difference being one only of degree, as the latter buy right and sit tight… forever.
Agreed! When I started reading, I didn't expect there to be so many similarities between Livermore's approach and Buffett/Munger's. Like you said, he just never took it far enough and seemingly couldn't give up trading in and out of the market.
When you price a market in a good that can be produced in any quantity desired, the number can easily be made to go up. That’s how we find ourselves in a world where the markets are rising while the real economy is evaporating.
Bet against confetti money? A silly game. As the old turkey rightfully understood.
Kevin, thanks for the fine review! You nudge me to read Reminiscences again, first read 30 years ago. Being in a bull market is like marrying well: make a very good decision, don’t worry about overpaying for an engagement ring, learn to live with volatility, and enjoy years of happy compounding. Sound simple!
That's such a great way to put it!
I had meant to added earlier that the last time I heard Paul Samuelson talk he noted that he had known people who had gotten out of the market before the ‘29 Crash, but they were so traumatized that they didn’t get back in for so long that they would have been better off, if they had just stayed put. Incidentally, Samuelson was a ‘large’ investor in Berkshire.
Thanks -- I did not know that about Samuelson. It's really serendipitous, too. I was just reading Poor Charlie's Almanack and in one speech he mentions an unnamed famous economist who owned a lot of Berkshire stock and I've been wondering who he was referring to there. It must be Paul Samuelson.
Kevin— very coincidental, I’m just reading Charlie’s talk where he mentioned the un-named economist. He couldn’t mention names, because at the time Samuelson was still alive. I shouldn’t now for similar reasons, but the source is handwritten. I’ve often wondered, if Samuelson made more money in Berkshire than he did from his multi-edition textbook. Apparently, it was well-known among economists around Cambridge that Samuelson was a large Berkshire shareholder. Given Samuelson’s belief in market efficiency, the investment was considered the product of a split brain. I suppose that might make one exceptional… and fortunate!
That was excellent, Kevin. It was also a great reminder that trying to time the market is a fool's game.
After all, let's be honest; we all think we are smarter than we are!
Absolutely. Humility is so important.