Monday, May 31, 2010

If there were only one book to read

“Boys, the stock market must be studied, not casually either, but deeply, thoroughly. It's my conclusion that most people pay more care and attention to the purchase of an appliance for their house. or when buying a car, than they do to the purchase of stocks. The stock market, with its allure of easy money and fast action, induces people into foolishness and the careless handling of their hard— earned money, like no other entity
“See, the purchase of a stock is simple, easily done by placing your purchase order with a broker, and later a phone call to sell completes the trade. If you profit from this transaction it appears to be easy money with seemingly no work. You didn't have to get to work by nine and labor for eight hours a day. It was simply a paper transaction. requiring no labor. It appears to be an easy way to get rich. Simply buy the stock at ten dollars and sell it later for more than ten dollars. The more you trade. the more you make, that's how it appears. That's ignorance, and ignorance is dangerous.
“There's also fear to deal with, which you will find out when you grow up. Fear and violence lie buried just beneath the stir- face of all normal human life. Fear, like violence, can appear in a single heartbeat, a fast breath and the blink of an eye, the grab of a hand. the noise of a gun. when it appears, natural survival tactics come alive, normal reasoning is distorted. Reasonable people act unreasonably when they are afraid. And people become afraid when they start to lose money, their judgment becomes impaired."

“The unsuccessful investor is best friends with hope, and hope skips along life's path hand in hand with greed when it comes to the stock market. Once a stock trade is entered, hope springs to life. It is human nature to be positive, to hope for the best. Hope is an important survival technique. But hope, like its stock market cousins ignorance, greed, and fear, distorts reason. See, boys, the stock market only deals in facts, in reality, in reason, and the stock market is never wrong. Traders are wrong. Like the spinning of a roulette wheel, the little black ball tells the final outcome, not greed. fear, or hope. The result is objective and final, with no appeal."
Jesse Livermore: World's Greatest Stock Trader
By Richard Smitten
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