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Review: Trade Like Jesse Livermore


Title: Trade Like Jesse Livermore
Author: Richard Smitten
ISBN: 0-471-65585-6
Price: £27.95
Reviewer: Colin Eastaugh

I recently read an article that made the point that people who are interested in self-help buy books on the subject by the bucket full. The same applies to those interested in making money from investing on the stock market, publishers are aware of this fact, in most bookshops these days there is section on financial investing.

Trade Like Jesse Livermore has been designed for this market, specifically for those who believe that technical analysis is the way to riches and fame. TA fans believe that the future can be predicted by looking at past share movements.

The author, who has also written a biography of Livermore, attempts to show how Jesse made money being a “true” technical analyst. The final chapter has copies of actual ‘charts’ (although confusingly they are not charts, they are records of price movements). I found the charts difficult to follow but I took solace from them as evidence of how serious the author has been in his attempt to discover Livermore’s secrets. But the charts also show up a weakness of the book, there is a very dated feel to the book, we are transported back to 1930s and the 1940s rather than Livermore being transported to the 21st century. Livermore employed many people to write out the prices of stocks, he analysed the ticker-tape, etc. What would Livermore have made of the internet, and more importantly, how would he have benefited from the internet?

Another weakness of the book is that we do not learn much about the mistakes that Livermore made – he made four fortunes, so one would assume that he lost three. He committed suicide – why? It seems hardly a life to emulate although many would love to be able to shut themselves away like Livermore so that they can ponder the mysteries of the stock market.

I also found irritating the following statement that is made a number of times in the book – forget why things are happening, only observe what is happening. This smacks of some quasi-religion where followers have some special but vague gift which will bring them happiness in this world, and possibly the next.

Having got of the way the criticisms, the author has made a very good attempt at describing how Livermore operated, Smitten clearly has an in-depth knowledge of the man and he makes some good points, admittedly some are common sense – selling is more difficult than buying, keep your emotions under control, never lose more than 10% on any trade.

This book will never replace actually doing research using data on the stock market and individual shares, but that is dull and boring. For the rest of us, who make up the vast majority of share punters, Trade Like Jesse Livermore is a pleasant read, particularly if you are of a technical analysis persuasion.


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