Livermorewassoonplayingthemarketinbucketshops(fringebrokerages)andhadmadehisfirst$1,000bytheageof15。

Soonafter,the“BoyTrader”headedfortheNewYorkStockExchange。

Hestucktohisbasictechnique,whichwouldnowbecalledmomentumtrading。

Hewouldidentifyatrendfromthetickertape–“thelineofleastresistance”–andfollowit,testingthewaterbystakingsmallamountsuntilhewassurehehadcalledthebearorbullmovementcorrectly。

“Stocksarenevertoohightobuyortoolowtosell”,providedthetrendisclear,wasonesaying。

Flat,directionlessmarketssuchasthespellbetween1911and1914,whennoteven“askunkcouldmakeascent”,forcedhimtositonthesidelines。

Hissystemmadehimamillionfromshortingstocksinthe1907bearmarketandforaysintocommodities。

Butwhenhelethimselfbeswayedbytipsorthe“urgingsofamagneticpersonality”,hegotintotrouble。

ListeningtolegendarycottontraderPercyThomas,forinstance,virtuallybankruptedhim。

Thatepisodecoinedanotherwidespreadinvestmentaphorism:nevertrytoaveragealosinggame;sellwhatshowsalossandkeepwhatshowsaprofit。

HavingbeenconvincedbyThomasthatcottonshouldrise,heboughtmoretoboostfallingpricesandsoldoutofawinningwheatposition。

“Amanmustbelieveinhimselfandhisjudgement”。

Butit’snaturaltobeswayedbyhopeandfear。

“Whateverhappensinthestock?

markettodayhashappenedbeforeandwillhappenagain…thegamedoesnotchangeandneitherdoeshumannature。



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