Lessons from a stockmarket legend

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For some final words of investment wisdom, let’s return to the legendary American investor Jesse Livermore.

Livermore is one of the most remarkable investors in history, making and consequently losing four fortunes through not adhering to his own maxims. He was a trend investor or “momentum trader”, and was born in 1877.

In 1929, at the height of the American stock market collapse, he was worth over $100 million - equivalent to $4 billion in today’s terms.

Livermore established and left us a set of trend investing operating rules that are as relevant today as they were at the turn of the 19th century. Here are four of his sayings that reinforce what I have already written:

“The game of financial speculation is the most uniformly fascinating game in the world. It is not for the stupid, the mentally lazy or the get-rich adventurer. They will all die poor.”

“The only thing to do when a man is wrong is to be right by ceasing to be wrong.” “A stock operator has to fight a lot of expensive enemies within himself.”

“Losing money is the least of my troubles. A loss never bothers me after I take it. I forget it overnight. But being wrong – not taking the loss – that is what does the damage to the pocket book and the soul.”

You can see that his message - and the lesson for us - is that it is important to recognise a loss-making situation and step away.

He is also saying that it is not necessary to get rich quickly. After all, what is so bad about getting rich slowly?

Also, you do not have to be super clever to make a good investor, you just must not be greedy and you must be prepared to leave your mistakes behind and move on.

Read next > I wish you a fair voyage