jesse livermore trading rules header imageIn this post I take a look at one of the greatest traders of all time, Jesse Livermore. Jesse was famously profiled in the classic investing tome Reminiscences of a Stock Operator, a book that has been called the best trading book every written.

This is a long piece, clocking in at around 9,000 words and it covers all of Jesse’s most important trading lessons. The quotes are taken directly from the original book by Edwin Lefèvre. Read more »


Jesse Livermore, aka the Boy Plunger, aka the Great Bear of Wall Street, is one of the great American stock traders. He made (and lost) several million dollar fortunes buying and short selling stocks in the early 20th century and traded through the great Wall Street crashes of 1907 and 1929.

His book ‘Reminiscences of a Stock Operator‘ is one of the all time best trading books and contains many of Jesse’s best trading rules.

Jesse Livermore Trading Rules & Quotes

1. Always sell what shows you a loss and keep what shows you a profit.

profit-jesse-livermore-trading-rules

Buy as a print!

2. Money cannot consistently be made trading every day or every week during the year.

3. A man must believe in himself and his judgement if he expects to make a living in this game. That is why I don’t believe in tips.

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4. Don’t trust your own opinion and back your judgment until the action of the market itself confirms your opinion.

5. Prices are never too high to begin buying or too low to begin selling.

prices-jesse-livermore-trading-rules

Available as print. Click to buy

6. Remember, don’t fight the tape!

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7. Never buy a stock because it has had a big decline from its previous high.

8. Nobody can catch all the fluctuations.

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Available as print.

9. The human side of every person is the greatest enemy of the average investor or speculator.

10. It is not good to be too curious about all the reasons behind the price movements.

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11. If you cannot make money out of the leading active issues, you are not going to make money out of the stock market as a whole.

12. Never sell a stock because it seems high-priced.

never-sell-jesse-livermore-trading-rules

Buy as a print!

13. Do not become completely bearish or bullish on the whole market because one stock in some particular group has plainly reversed its course from the general trend.

14. No diagnosis, no prognosis. No prognosis, no profit.

prognosis-jesse-livermore-trading-rules

Available as print.

15. Wishful thinking must be banished.

16. Fear keeps you from making as much money as you ought to.

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17. One should never permit speculative ventures to run into investments.

18. Never average losses.

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19. The money lost by speculation alone is small compared with the gigantic sums lost by so-called investors who have let their investments ride.

20. I was bearish in a bear market. That was wise. I had sold stocks short. That was proper. I had sold them too soon. That was costly.

bear-market-jesse-livermore-trading-rules

Available as print.

21. As long as a stock is acting right, and the market is right, do not be in a hurry to take profits.

22. The cotton showed me a loss and I kept it. The wheat showed me a profit and I sold it out. It was an utterly foolish play…

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23. Nothing new ever occurs in the business of speculating or investing in securities and commodities.

24. Markets are never wrong. Opinions often are.

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Buy as a print!

I hope you enjoyed some of these quotes. If you haven’t read Reminiscences of a Stock Operator make sure to pick it up because it’s a great entertaining read too.

By the way, these prints are available to buy! Just click on the one you are interested in. They would look good in any trading office 😉

What’s your favourite Jesse Livermore trading rule?

 



If you want to be successful at investing or trading you need to find your own way. I don’t see much point subscribing to any of these stock picking services or ‘Guru’ picks.

(Unless of course they are used to educate yourself as to how to find good trades.)

That being said, one of my favourite investors is Jim Rogers and it’s always good to hear him talk.

If you don’t know Jim I wrote a bit of a profile on him a while back. Suffice to say, Jim is a legend on Wall Street and not just for setting up the Quantum Fund with George Soros.

Video from London Real

The video below comes from one of my favourite online podcasts, London Real, and is about an hour long if you fast forward through some of the advertising at the beginning.

Jim is always happy to talk about where he is invested and it’s good to hear his thoughts on markets.

As a longer term investor, Jim’s views on markets change very slowly. He has been bullish on commodities (particularly agriculture) for years now and he is likely to be bullish for a long time yet.

He sees markets moving in cycles and believes that most cycles take 20, 30 years to play out.

He’s bullish on Asia, particularly China but also recommends Singapore and Japan in the video. He also recommends North Korea and would put all of his money into the country if he was allowed (which he isn’t).

How to play China like Jim Rogers

Jim has been bullish on China for more than 30 years and continues to be positive on the country. He picks his moments though, and after some time on the sidelines, he’s recently started to buy up a few more Chinese stocks.

Jim says that the way he is playing China is to follow the government. The Chinese government are spending lots of money this year ($2.45 trillion to be precise) and the best way to profit is to follow where the money’s going.

According to Rogers, anyone can see where the money’s going so it’s just a case of finding strong companies that may benefit and putting some money in. Railroads, water, defence and tourism. These are all areas that will see big government spending over the next couple of years as China seeks to improve infrastructure, tackle the nation’s water problem and beef up it’s national security.

play china like jim rogers chinese investment

Investment ideas

So with that information in mind, how can investors benefit? What about these ideas?

Anhui Conch Cement Co. and Sany Heavy Industry Co. are two construction-related companies that could benefit from increased government spending on infrastructure.

China Easter Airlines Corp. is China’s second-largest airline carrier set to benefit from the boom in Chinese tourism.

Jiangxi Copper Co. could do well as China rolls out national power grids mostly made from copper.

China Green Agriculture Inc. might prosper with the country’s increasing food demands.

China Water Industry Group Ltd. may be the answer to the nation’s dramatic water problems.

Can you think of any Chinese stocks that could benefit from more government spending? Please comment below.


 


– Jim Rogers investor profile and brief background

– Summary of Jim Rogers current investments based on public appearances

– Brief description of Jim Rogers’ best books, some quotes and videos

Jim Rogers Investor Profile: Background

Jim Rogers the investor is famous for setting up the Quantum Fund in partnership with George Soros, one of the most successful hedge funds of all time. The fund returned around 4200% over 10 years while the S&P returned just 47%. After beginning his career on Wall Street with just $600 in his back pocket, Jim was able to retire by the age of 37. Since then, he has continued to trade successfully, he has written several books and travelled around the world on several occasions.

Jim rogers investor profile, his book street smartsI first heard about Jim Rogers when I was working as a day trader in London and learning about the markets for the first time. I would read as many trading books as I could get my hands on and came across Jim profiled in the classic Market Wizardsbook by Jack Schwager. The interview in Market Wizards was enlightening and even though my trading methods today are not that similar to Jim’s I still regard him as one of my all-time favourite traders.

Of course, Jim loves to say that he is terrible at short-term trading but he has to be one of the best investors around.

Many people think of Jim as only a commodities trader and he is the creator of the Rogers International Commodity Index. However, I don’t think it’s very true at all. Jim invests where opportunities lie and it is simply true that commodities have been a great market to be involved in over the last few decades.

In his own words

One of the things Jim Rogers likes to say is that he is terrible at market timing. By this, he means that he is usually right about things but often far too early. As an example, he predicted the global financial crisis in 2008 but he had become aware of the bubble at least two or three years earlier. In more recent times, Rogers is known to have attempted to short US treasury bonds on a number of occasions. It’s because of this, that Jim has learnt to wait; often one, two, even three years from having an idea to putting on a position.

The other thing Jim is famous for saying is that he ‘just waits until there is money lying in the corner before going over there and picking it up’. He therefore likes to take contrarian positions and will often only buy something when it is ‘severely depressed’. Doing so means that the potential for losses on any trade are ordinarily limited. Above all though, Rogers is known for his rigorous analytical work and fundamental research. Leaving no stone unturned, Jim is fascinated about the world, it’s history, and will find investment opportunities wherever they lie.

Jim Rogers Investments

Obviously, it is not possible to see what all of Rogers’ holdings are but since Rogers takes long term positions based on solid fundamentals, he can often hold trades for many years, and therefore his views on markets usually only change very slowly. We can therefore know a little about his ideas based on his comments and public appearances.

Stocks

As of March 2014, it’s clear that Jim regards the current bull market in US stocks as largely artificial, spurred on by the huge injections of liquidity from the Federal Reserve. He continues to see the potential for significant turmoil in coming years, as debt spirals out of control and the Federal Reserve have to cut off monetary stimulus. That isn’t to say he is short however, in fact Rogers believes shorting stocks in such a scenario is extremely dangerous.

Instead, Rogers favours stocks in foreign locations. He regards Japanese stocks as a potential area for profit, particularly as the Japanese stock market is still 70% below it’s all time high. As well, he regards current loose monetary policy from the Bank of Japan as conducive to stock market performance and is known to have invested in at least one Japanese blue chip.

As well as Japan, Rogers is quoted as being bullish on Russia, North Korea, Myanmar and China. A recent story stated Rogers as looking for Chinese stocks that were investing in North Korea; a country on the brink of turnaround in Rogers’ view. On the whole though, he prefers to hold his Chinese investments rather than buy new ones at the present time.

He is also stated to be bullish on airline stocks around the globe.

Commodities

Jim has been bullish on commodities for many years and believes the super-cycle has several years left to run. He is particularly bullish on agricultural commodities such as sugar, which he sees as still being depressed on a long term time frame. He is also bullish on precious metals and sees gold going much higher over the next decade. However, Rogers is likely long from much lower prices and is not necessarily a buyer at current prices.

Bonds

Rogers is strongly bearish on US treasuries, believing them to be in a bubble and he has already tried to short them on several occasions without success. He believes it is only matter of time before bonds collapse.

Currencies

Rogers is quoted as saying he is long the US dollar, owing to the fact he expects problems in financial markets over the next few years. However, he does not particularly favour any currencies strongly, apart from perhaps the Chinese Remnimbi.

Bubbles

Rogers recently stated that he believes there exist many bubbles in the world; US treasuries, US tertiary education, Chinese & Hong Kong real estate and European football clubs are a few.

Jim Rogers Quotes

“Bottoms in the investment world don’t end with four-year lows; they end with 10- or 15-year lows.”
 
“Historically, there has been a bull market in commodities every 20 or 30 years.”
 
“Do not buy the hype from Wall St. and the press that stocks always go up. There are long periods when stocks do nothing and other investments are better.”
 
“The most sensible skill that I can give to somebody born in 2003 is a perfect command of Mandarin.”
 
“The price of a commodity will never go to zero. When you invest in commodities futures, you’re not buying a piece of paper that says you own an intangible piece of company that can go bankrupt.”
 
“If you can find ways to invest in Myanmar you will be very, very rich over the next 20, 30, 40 years.”
 
“The United States is the larger debtor nation in the history of the world.”

Jim Rogers Books

Jim Rogers investor profile, his book Adventure capitalist

As I mentioned above, I first heard of Rogers through the Market Wizards book but Jim has written several books himself. For me, his finest is Adventure Capitalist: The Ultimate Road Trip. Not because it contains the most material about investing but because it mixes investing with an incredible trip around the world. Jim travelled through 116 countries in a custom built yellow Mercedes breaking a number of Guinness world records in the process. For me, it is just a fascinating read.

Jim rogers investor profile, his book street smarts

Having said that, Jim’s most recent book, Street Smarts: Adventures on the Road and in the Markets is considered by some to be his best. I picked up a signed copy in Singapore and read it pretty much in one sitting (on the plane home to London) so I can testify that it is also a good one.

 

 

jim rogers investor profile, his book hot commodities As well as Street Smarts and Adventure Capitalist, Rogers has penned Hot Commodities: How Anyone Can Invest Profitably in the World’s Best Market which is more educational than the others, Investment Biker: Around the World with Jim Rogers detailing another fascinating journey around the world, A Bull in China: Investing Profitably in the World’s Greatest Market and also A Gift to My Children, in which Rogers gives investment lessons to be passed on to his own daughters.

Jim Rogers Videos

Jim is also a regular public speaker and frequently appears on finance channels such as CNBC, Bloomberg and the rest. Here are a couple of videos featuring Jim:

Lesser known fact

Jim Rogers studied at Oxford University, England, for a time and was the University’s cox for the famous Oxford and Cambridge boat race in 1966.

I hope you enjoyed this Jim Rogers investor profile. For more tips and tricks and to read about my other favourite investors, be sure to check out my new book which is discounted and on Amazon for a limited time:

link for my book how to beat wall street