One should never use the habits of the Boy Wonder as a source for emulation except in the field of romance and good times before the inevitable last days. Certainly everything he did in speculation was wrong except for his ability to cheat the bucket shops by betting on reversals arising from the concentration of limits at the bid and the asked.

Ken Drees comments: 

I don't know if you are judging him too harshly or not, but I read somewhere that he suffered from clinical depression and at that time was not a known ailment– maybe this led to his "trade–all the time" mentality and other outlets for passions. Beating the bucket shops who cheated the public at their own game seems counting card like to me– which led those cheats to get a bigger and bigger shoe– to keep the metaphor extended.

And maybe I am too harsh on the schooling aspect– but less chit chat, what do you think about the market talk is better for me as I try to extract longer term trend trades and stay with them. As an example, the Middle East shakeup in my mind means one thing, trade wise, and that's higher oil price. I try to minimize the back and forth headlines as much as possible. In that vein, Livermore's isolated trading office was set up to keep outside influence away. I think there is something good to take from that.

Victor Niederhoffer replies: 

One would think that he suffered more from excessive inebriation and the aftermath of womanizing too much than clinical depression. The depression was likely caused by his extravagant and unsustainable life style and vig paying.





Speak your mind

5 Comments so far

  1. Craig Bowles on March 21, 2011 7:16 am

    Jim Sinclair says Livermore’s being broke at the end wasn’t true. He also talks about the angel numbers. Never heard of them before.

  2. Anonymous on March 21, 2011 8:38 am

    Quite surreal Victor that this morning I began reading this book for the second time and that you should post on it. I am looking at the copy on my desk and the cover in your post as I type. I would concur with you that the depression was probably caused by his alcohol problems and the fallouts from his excessive womanizing. One aspect of his trading that I felt he was really right about was the fact that he considered himself a perpetual student of the market and not an expert. It is a great biography and filled with many life lessons. He also employed your rule of not having any employee speak during trading hours. BTW, I just returned from a wonderful three days in Manhattan with my family. The weather was excellent!

  3. Ralph Di Fiore on March 21, 2011 8:53 am

    A strange synchronicity as I picked up this book from my book shelf this morning and began reading it again about an hour before I see it in your post Victor. I would concur with you that his excessive womanizing and alcohol problems probably caused his depression as much as anything else. The book is very instructive and filled with many life lessons (on what not to do for the most part). Livermore did make a good observation about himself which many should heed, that is, that he was a perpetual student of the market and not an expert. He also employed the no talking rule for his employees during trading hours.

  4. vic on March 21, 2011 12:40 pm

    His 5 bankruptcy filings would have uncovered any evidence of hidden assets. and the last one in 1934 written about by Time Magazine memorialized his debts to several folies bergeres girls among other such debts for breach of promise. My review of Markmans annotated bio had to be toned down when I documented all this out of respect for Markman’s hero and good work. vic

  5. dvdw on March 23, 2011 2:00 pm

    Ken stated; an example, the Middle East shakeup in my mind means one thing, trade wise, and that’s higher oil price.

    Higher for how long, short term you will be right, medium and long term USA supply data say you will be wrong. there has been mention here about the divergence between WTI and Brent. This will remain a source for obfuscation, as the USA is forced to buy and pay brent prices no matter that the import of foriegn oil is about to go into rapid decline.

    As of today there are 1200 odd oil wells on the Bakken confidential list (90 day non disclosure of IP data). These wells might average 700 barrels a day…..oila, approximates libyas daily production. that was easy and it gets easier as the oil indusrty foresakes the soda straw for the complexity of the long lateral, and multi point penetration from a single pad.

    Whats happening in oil, should not be presumed to be as obvious as most think. Our information systems Produce the content, which shapes our opinions.

    Big money is already betting, that in the mid term, our dependence on foriegn oil is about to end.


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