Reminiscences of a Stock Operator

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Trend Commandments: Trading for Exceptional Returns by Michael W. Covel

Alan Greenspan, Albert Einstein, Alvin Toffler, behavioural economics, Bernie Madoff, Black Swan, business cycle, buy and hold, commodity trading advisor, correlation coefficient, delayed gratification, disinformation, diversified portfolio, en.wikipedia.org, Eugene Fama: efficient market hypothesis, family office, full employment, global macro, Jim Simons, Lao Tzu, Long Term Capital Management, managed futures, market bubble, market microstructure, Market Wizards by Jack D. Schwager, Mikhail Gorbachev, moral hazard, Myron Scholes, Nick Leeson, oil shock, Ponzi scheme, prediction markets, quantitative trading / quantitative finance, random walk, Reminiscences of a Stock Operator, Sharpe ratio, systematic trading, the scientific method, three-martini lunch, transaction costs, tulip mania, upwardly mobile, Y2K, zero-sum game

For a third and final example, let us introduce Jesse Livermore, a very central figure in the history of trend following, about whom more will be said later. Here is a significant quote from him: “…the big money is not in the individual fluctuations but in the main movements—that is, not in reading the tape but in sizing up the entire market and its trend.”3 This last quote is from Edwin Lefèvre’s “Reminiscences of a Stock Operator,” a series of articles from the Saturday Evening Post in 1922-1923, reprinted in book form many times. Although the speaker is stated to be Larry Livingston, it is generally agreed, based on known biographical information, that Lefèvre’s interviewee was Jesse Livermore. The quotation, in turn, is Livermore’s interpretation of an oft-repeated statement made by “Old Partridge,” a brokerage-house acquaintance of Livermore’s, that “It’s a bull market, you know.”

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See http://www.criticalthinking.org/aboutCT/define_critical_thinking.cfm. Origins 1. James Grant, The Great Metropolis, second series volume II (London, 1837), p. 81. 2. Arthur W. Cutten, “The Story of a Speculator.” Saturday Evening Post (December 3, 1932), p.13. 3. Edwin Lefèvre, Reminiscences of a Stock Operator. Garden City, New York: The Sun Dial Press, 1923, p. 54. 4. Ibid., p. 54. 5. Ibid., p. 115. 6. Henry Clews, Twenty-eight Years in Wall Street. New York: Irving Publishing, 1888, p. 20. 7. Robert R. Prechter, Jr., R. N. Elliott’s Masterworks: The Definitive Collection. Gainsville: New Classics Library, 1994, p. 50. 8.

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Richard D. Wyckoff, Studies in Tape Reading. New York: Financial Guardian Publishing Company, 1924, p. 7. 11. Richard D. Wyckoff, Stock Market Technique Number 2. Fraser Publishing Company, 1989, reprint of 1934 edition, p. 197. 12. Wyckoff, Studies in Tape Reading. p. 131. 13. Lefèvre, Reminiscences of a Stock Operator. p. 101. 14. Ibid., p. 213. 262 Tre n d C o m m a n d m e n t s 15. Jesse L. Livermore, How to Trade in Stocks: The Livermore Formula for Combining Time Element and Price. New York: Duel, Sloan & Pearce, 1940, p. 20. 16. Ibid., p. 24. 17. Alfred E. Cowles III and Herbert E. Jones, “Some a Posteriori Probabilities in Stock Market Actions.”

Flash Crash: A Trading Savant, a Global Manhunt, and the Most Mysterious Market Crash in History by Liam Vaughan

algorithmic trading, backtesting, bank run, barriers to entry, Bernie Madoff, Black Monday: stock market crash in 1987, Black Swan, Bob Geldof, centre right, collapse of Lehman Brothers, data science, Donald Trump, Elliott wave, eurozone crisis, family office, financial engineering, Flash crash, Great Grain Robbery, high net worth, High speed trading, information asymmetry, Jeff Bezos, Kickstarter, land bank, margin call, market design, market microstructure, Market Wizards by Jack D. Schwager, Navinder Sarao, Nick Leeson, offshore financial centre, pattern recognition, Ponzi scheme, proprietary trading, Ralph Nelson Elliott, Reminiscences of a Stock Operator, Ronald Reagan, selling pickaxes during a gold rush, sovereign wealth fund, spectrum auction, Stephen Hawking, the market place, Timothy McVeigh, Tobin tax, tulip mania, yield curve, zero-sum game

We used to call him ‘The Chav.’ ” For eight weeks, Nav’s group was taken through the theoretical underpinnings of trading in IDT’s pokey classroom. A former Liffe trader led classes on economics, markets, financial products, and risk management, and set homework assignments reading classic texts like Market Wizards, Reminiscences of a Stock Operator, and Steidlmayer on Markets. Goldberg gruffly explained the nuts and bolts of placing and canceling trades using the trading software. Paolo regaled the group with war stories. They learned how to read charts and gauge market profile, and discussed the importance of psychology by examining the crowd effect, the history of various market crashes, and seventeenth-century Holland’s tulip mania.

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Eventually, he snuck in and spent the rest of the night hiding from the doormen. For old-school traders like Paolo, who proudly displayed their success, it was bewildering. What was the point of making all that money if you were never going to spend it? The closest thing to a bible for traders is Reminiscences of a Stock Operator by Edwin Lefèvre. Published in 1923, it recounts the early life and wisdom of Jesse Livermore, a trading guru who went from watching prices on a bucket shop ticker tape at fourteen to making and losing a fortune many times over. At Futex, wet-behind-the-ears graduates and grizzled veterans alike mined well-thumbed copies for insights.

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Outside of my own reporting, I relied extensively on the work of academics, authors, lawyers, finance professionals, and fellow journalists, particularly in the sections on HFT and the Flash Crash. They are cited in the notes. Before I wrote a word I read Michael Lewis’s Flash Boys, Scott Patterson’s Dark Pools and The Quants, John Sussex’s Day One Trader, and Edwin Lefevre’s Reminiscences of a Stock Operator, which all proved invaluable. When I embarked on this project at the start of 2018, Nav had already pleaded guilty to spoofing and wire fraud. As part of his plea deal he agreed to provide the U.S. government with ongoing assistance in building other cases, and his sentencing was delayed.

Reminiscences of a Stock Operator by Edwin Lefèvre, William J. O'Neil

activist fund / activist shareholder / activist investor, bank run, behavioural economics, Black Monday: stock market crash in 1987, book value, British Empire, business process, buttonwood tree, buy and hold, buy the rumour, sell the news, clean water, Cornelius Vanderbilt, cotton gin, Credit Default Swap, Donald Trump, fiat currency, Ford Model T, gentleman farmer, Glass-Steagall Act, Hernando de Soto, margin call, Monroe Doctrine, new economy, pattern recognition, Ponzi scheme, price stability, refrigerator car, Reminiscences of a Stock Operator, reserve currency, short selling, short squeeze, technology bubble, tontine, trade route, transcontinental railway, traveling salesman, Upton Sinclair, yellow journalism

Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. For more information about Wiley products, visit our web site at www.wiley.com Library of Congress Cataloging-in-Publication Data: Lefèvre, Edwin, 1871-1943. Reminiscences of a stock operator : with new commentary and insights on the life and times of Jesse Livermore / Edwin Lefèvre.—Annotated ed. / by Jon D. Markman. p. cm. Includes bibliographical references. eISBN : 978-0-470-59322-6 1. New York Stock Exchange. 2. Speculation. 3. Livermore, Jesse L. (Jesse Lauriston), 1877-1940. 4.

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The author apparently viewed the trader’s little-known rags-to-riches story as an ideal vessel into which he could mix his own views about all that was deceitful, wretched, and corrupt, yet also energizing and transcendent, about Wall Street. Although Livermore was reclusive and shy, he proved more than willing to share his life’s story with someone of such rich creative talent. The tale that emerged—Reminiscences of a Stock Operator—was without doubt far greater than either could have told alone. In fact, Livermore later wrote his own book about trading, and Lefevre wrote another book centered on a single trader, and neither of those efforts came close to the glory that they had found when teaming together. First published as a series of illustrated articles appearing in the Saturday Evening Post throughout 1922, the work in your hands became a classic for its pitch-perfect dialogue, insightful epigrams, daring raids, and heart-breaking failures.

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Moreover, the book may start with the protagonist’s innocent attempts to make money as a gambler in bucket shops and as an increasingly cagey trader in equity and commodity markets, but the last half centers on his efforts as a stock “operator”—a term of art for a market pro hired by investment pools to manipulate a moribund stock for the benefit of insiders. It is not quite right to call this fraud, because it was mostly legal at the time, but Lefevre lets us know that the fine art of ripping off the public was not exactly admirable. Most readers of Reminiscences of a Stock Operator today do not realize that while the Livingston name is fiction, about 90 percent of the other proper names of people and places in the book are real. The fact that the book can be appreciated without knowing anything about its historical context and its cast of characters is a testament to the strength of the central narrative.

Alpha Trader by Brent Donnelly

Abraham Wald, algorithmic trading, Asian financial crisis, Atul Gawande, autonomous vehicles, backtesting, barriers to entry, beat the dealer, behavioural economics, bitcoin, Boeing 747, buy low sell high, Checklist Manifesto, commodity trading advisor, coronavirus, correlation does not imply causation, COVID-19, crowdsourcing, cryptocurrency, currency manipulation / currency intervention, currency risk, deep learning, diversification, Edward Thorp, Elliott wave, Elon Musk, endowment effect, eurozone crisis, fail fast, financial engineering, fixed income, Flash crash, full employment, global macro, global pandemic, Gordon Gekko, hedonic treadmill, helicopter parent, high net worth, hindsight bias, implied volatility, impulse control, Inbox Zero, index fund, inflation targeting, information asymmetry, invisible hand, iterative process, junk bonds, Kaizen: continuous improvement, law of one price, loss aversion, low interest rates, margin call, market bubble, market microstructure, Market Wizards by Jack D. Schwager, McMansion, Monty Hall problem, Network effects, nowcasting, PalmPilot, paper trading, pattern recognition, Peter Thiel, prediction markets, price anchoring, price discovery process, price stability, quantitative easing, quantitative trading / quantitative finance, random walk, Reminiscences of a Stock Operator, reserve currency, risk tolerance, Robert Shiller, secular stagnation, Sharpe ratio, short selling, side project, Stanford marshmallow experiment, Stanford prison experiment, survivorship bias, tail risk, TED Talk, the scientific method, The Wisdom of Crowds, theory of mind, time dilation, too big to fail, transaction costs, value at risk, very high income, yield curve, you are the product, zero-sum game

I hope you can use some of these tactics and fold some of my ideas into your process. I could say this 100 times and it would not be enough: The number one rule of trading is: avoid ruin. Before we hit Chapter 12, let’s take a little detour here to talk about Jesse Livermore and the book Reminiscences of a Stock Operator. END OF CHAPTER DETOUR : A QUICK BOOK REVIEW KINDA THING Reminiscences of a Stock Operator is a quintessential (and slightly misunderstood) piece of trading literature. This 1923 classic is a slightly fictionalized biography of Jesse Livermore written by Edwin Lefèvre. Livermore was a famous speculator and Bobby-Axelrod-style celebrity-rich-guy.

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I think perhaps algorithms which are less emotional and react less predictably to news, are partly to blame for the decline in the importance of price action, but there could also be the simple fact that everyone knows about this style of analysis, so it has lost its edge. The current generation of 30-to 45-year-old traders were all brought up on Reminiscences of a Stock Operator and Market Wizards and thus we are always scouring the price action for a signal. Throw in the massive price distortions from non-price sensitive central bank buying of various assets and it’s not hard to see how whatever signal price action might have carried in the past has been destroyed by central banks, and arbitraged away by speculators who all learned from the same books and interviews.

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And thank you reader, for dedicating the time to read my book. I appreciate it. Special thanks to Stephen K. Donnelly, for all the hours he poured into editing this project. Good luck. Be nimble. New Canaan, Connecticut 2021 APPENDIX A FURTHER READING BOOKS Trading classics Market Wizards (series), Jack Schwager (1989) Reminiscences of a Stock Operator, Edwin Lefèvre (1923) Luck vs. skill, process vs. outcome The Success Equation, Michael Mauboussin (2012) Thinking in Bets, Annie Duke (2018) Be disciplined Willpower, Baumeister and Tierney (2012) The Science of Self-Discipline, Peter Hollins (2017) The Disciplined Trader, Mark Douglas (1990) Behavioral finance bibles Thinking, Fast and Slow, Daniel Kahneman (2011) Irrational Exuberance, Robert Shiller (2000) Get organized The Seven Habits of Highly Effective People, Stephen Covey (1988) The Checklist Manifesto, Atul Gawande (2009) The Power of Habit, Charles Duhigg (2012) Be self-aware The Power of Now, Eckhart Tolle (1997) Breath, James Nestor (2020) The Hour Between Dog and Wolf, John Coates (2012) Get quantitative Fortune’s Formula, William Poundstone (2005) Superforecasting, Dan Gardner and Philip Tetlock (2015) Fooled by Randomness, Nassim Taleb (2001) Fooled by Technical Analysis, Michael Harris (2015) A Man for All Markets, Edward Thorp (2017) Risk, Dan Gardner (2008) How to Lie with Statistics, Darrell Huff (1954) BLOGS, PODCASTS AND NEWSLETTERS Aspen Trading daily and intraday trading newsletter, Dave Floyd Epsilon Theory website, podcast and newsletter, Ben Hunt and Rusty Guynn Exante blog on Substack, Jens Nordvig et al.

A Mathematician Plays the Stock Market by John Allen Paulos

Alan Greenspan, AOL-Time Warner, Benoit Mandelbrot, Black-Scholes formula, book value, Brownian motion, business climate, business cycle, butter production in bangladesh, butterfly effect, capital asset pricing model, confounding variable, correlation coefficient, correlation does not imply causation, Daniel Kahneman / Amos Tversky, diversified portfolio, dogs of the Dow, Donald Trump, double entry bookkeeping, Elliott wave, endowment effect, equity risk premium, Erdős number, Eugene Fama: efficient market hypothesis, four colour theorem, George Gilder, global village, greed is good, index fund, intangible asset, invisible hand, Isaac Newton, it's over 9,000, John Bogle, John Nash: game theory, Larry Ellison, Long Term Capital Management, loss aversion, Louis Bachelier, mandelbrot fractal, margin call, mental accounting, Myron Scholes, Nash equilibrium, Network effects, passive investing, Paul Erdős, Paul Samuelson, Plato's cave, Ponzi scheme, power law, price anchoring, Ralph Nelson Elliott, random walk, Reminiscences of a Stock Operator, Richard Thaler, risk free rate, Robert Shiller, short selling, six sigma, Stephen Hawking, stocks for the long run, survivorship bias, transaction costs, two and twenty, ultimatum game, UUNET, Vanguard fund, Yogi Berra

Unfortunately, since there are always rumors of every conceivable and contradictory sort (sometimes posted by the same individual), one cannot conclude anything from their existence except that they’re likely to contribute to feelings of hope, fear, anger, and anxiety. Pump and Dump, Short and Distort The rumors are often associated with market scams that exploit people’s normal psychological reactions. Many of these reactions are chronicled in Edwin Lefevre’s 1923 classic novel, Reminiscences of a Stock Operator, but the standard “pump and dump” is an illegal practice that has gained new life on the Internet. Small groups of individuals buy a stock and tout it in a misleading hyperbolic way (that is, pump it). Then when its price rises in response to this concerted campaign, they sell it at a profit (dump it).

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Gilovich, Thomas, How We Know What Isn’t So, New York, Simon and Schuster, 1991. Hart, Sergiu, and Yair Tauman, “Market Crashes Without Exogenous Shocks,” The Hebrew University of Jerusalem, Center for Rationality DP-124, December 1996 (forthcoming in Journal of Business). Kritzman, Mark P., Puzzles of Finance, New York, John Wiley, 2000. Lefevre, Edwin, Reminiscences of a Stock Operator, New York, John Wiley, 1994 (orig. 1923). Lo, Andrew, and Craig MacKinlay, A Non-Random Walk Down Wall Street, Princeton, Princeton University Press, 1999. Malkiel, Burton, A Random Walk Down Wall Street, New York, W. W. Norton, 1999 (orig. 1973). Mandelbrot, Benoit, “A Multifractal Walk Down Wall Street,” Scientific American, February 1999.

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Petersburg paradox stock-newsletter scam based on stock options and probability theory progressive taxation psychology anchoring effect availability error behind buying more stock as price drops confirmation bias counterproductive behavior endowment effect scandal cover-ups status quo bias trying to outguess the masses publicly available information. see also common knowledge accounting scandals and Efficient market hypothesis and pump and dump strategy put options. see also stock options buying/selling puts on S&P as hedge against decline of stock selling strategies for using valuation tools for pyramid schemes quarterly estimates RagingBull railroads, depression of Ramsey, Frank random events appearance of order in Efficient market hypothesis and investing with meaning vs. predictability random sequences A Random Walk Down Wall Street (Malkiel) random walk theory rate of return arithmetic mean outstripping geometric mean Beta (B) values and determining expected excess return fixed, with treasury bills IPO purchases/sales and median vs. average minimizing risk without reducing “single index model” and standard deviation and stocks vs. bonds ratio of the excess return on a portfolio reality, inability to model reforms, accounting practices regression to the mean as contrarian measure Sport Illustrated cover jinx as illustration of widespread examples of Reminiscences of a Stock Operator (Lefevre) resistance levels risks aversion, illustrated by online chatrooms diversification and graphing against expected value (Markowitz optimal portfolios) market-related and stock-related mathematics of minimizing without hurting rate of return options and rate of return and selling short and stocks vs. bonds taking unnecessary Roschach blots Ross, Sheldon roulette rules. see trading strategies rules of thumb, as time saving device rumors conclusions based on not being able to ignore when considering investments S-shaped curve, P/E ratio S&P 500, buying/selling puts Salomon Smith Barney Samuelson, Paul scaling laws. see power law scams card tricks Ponzi schemes, chain letters, and pyramid schemes sports betting scam stock-newsletter scam scandals. see accounting scandals; fraud Scholes, Myron script, sports scam secrecy complexity resulting from lack of investment strategies and Securities and Exchange Commission (SEC) charging WorldCom of inflated earnings decimalization reforms parable of common knowledge and Security Analysis (Graham and Dodd) self-fulfilling beliefs selling on the margin. see short selling sensitive dependence, nonlinear systems sequences complexity of (mathematics of) random sequences random walk theory and share price, P/E ratio. see also prices, of stocks Sharpe, William Sherra, Jesse Shiller, Robert short selling short-term investors shorting and distorting strategy Shubik, Martin Sidgmore, John Siegel, Jeremy “single index model” (Sharpe) six sigma performance Slovic, Paul Sluggish Market Hypothesis Smith, Adam socially regressive funds Spitzer, Eliot Sport Illustrated spread, making money on St.

Trend Following: How Great Traders Make Millions in Up or Down Markets by Michael W. Covel

Albert Einstein, Alvin Toffler, Atul Gawande, backtesting, Bear Stearns, beat the dealer, Bernie Madoff, Black Swan, buy and hold, buy low sell high, California energy crisis, capital asset pricing model, Carl Icahn, Clayton Christensen, commodity trading advisor, computerized trading, correlation coefficient, Daniel Kahneman / Amos Tversky, delayed gratification, deliberate practice, diversification, diversified portfolio, Edward Thorp, Elliott wave, Emanuel Derman, Eugene Fama: efficient market hypothesis, Everything should be made as simple as possible, fiat currency, fixed income, Future Shock, game design, global macro, hindsight bias, housing crisis, index fund, Isaac Newton, Jim Simons, John Bogle, John Meriwether, John Nash: game theory, linear programming, Long Term Capital Management, managed futures, mandelbrot fractal, margin call, market bubble, market fundamentalism, market microstructure, Market Wizards by Jack D. Schwager, mental accounting, money market fund, Myron Scholes, Nash equilibrium, new economy, Nick Leeson, Ponzi scheme, prediction markets, random walk, Reminiscences of a Stock Operator, Renaissance Technologies, Richard Feynman, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, shareholder value, Sharpe ratio, short selling, South Sea Bubble, Stephen Hawking, survivorship bias, systematic trading, Teledyne, the scientific method, Thomas L Friedman, too big to fail, transaction costs, upwardly mobile, value at risk, Vanguard fund, William of Occam, zero-sum game

When Livermore was in his 20s, he moved to New York City to speculate in the stock and Chapter 2 • Great Trend Followers 91 commodities markets. After 40 years of trading, he developed a knack for speculating on price movements. One of his foremost rules was, “Never act on tips.” The unofficial biography of Livermore was Reminiscences of a Stock Operator first published in 1923 and written by journalist Edwin Lefevre. Readers likely guessed Lefevre as a pseudonym for Livermore himself. Reminiscences of a Stock Operator went on to become a Wall Street classic. Numerous quotations and euphemisms from the book are so embedded in trading lore that traders today don’t have the slightest idea of their origination. I’ve selected a few of his best:108 1.

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Futures Industry Association Review: Interview: Money Managers. See www.fiafii.org. 106. Barbara S. Dixon, Discretionary Accounts. Managed Account Reports. Report No. 20, No. 14, 5. 107. Barbara S. Dixon, Discretionary Accounts. Managed Account Reports. Report No. 20, No. 14, 5. 108. Edwin Lefevre. Reminiscences of a Stock Operator. New York: George H. Doran Company, 1923. 109. Andrew Leckey, Dabble, Don’t Dive, in Futures. Chicago Tribune, October 2, 1986, C1. 110. Dickson G. Watts, Speculation as a Fine Art. Reprint. Flint Hill, Virgina: Fraser Publishing Co., 1997. Chapter 3 1. Sir Arthur Conan Doyle, “A Scandal in Bohemia” in The Adventures of Sherlock Holmes.

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Sources of Power: How People Make Decisions. Cambridge, MA: MIT Press, 1998. Krauland, and P.C. Mabon. Going Once, Going Twice. Discover (August 2002). Bibliography Le Bon, Gustave. The Crowd: A Study of the Popular Mind. Atlanta: Cherokee Publishing Company, 1982. Lefevre, Edwin. Reminiscences of a Stock Operator. Canada: John Wiley & Sons, Inc., 1994. Lerner, Robert L. The Mechanics of the Commodity Futures Markets, What They Are and How They Function. Mount Lucas Management Corp., 2000. Liebovitch, L. S. Fractals and Chaos Simplified for the Life Sciences. New York: Oxford University Press, 1998.

Market Wizards: Interviews With Top Traders by Jack D. Schwager

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", Alan Greenspan, Albert Einstein, asset allocation, backtesting, beat the dealer, Bretton Woods, business cycle, buy and hold, commodity trading advisor, computerized trading, conceptual framework, delta neutral, Edward Thorp, Elliott wave, fixed income, implied volatility, index card, junk bonds, locking in a profit, margin call, market bubble, market fundamentalism, Market Wizards by Jack D. Schwager, Michael Milken, money market fund, Nixon triggered the end of the Bretton Woods system, pattern recognition, Paul Samuelson, Ralph Nelson Elliott, random walk, Reminiscences of a Stock Operator, short selling, Teledyne, transaction costs, uptick rule, yield curve, zero-sum game

Are you largely a self-taught trader, or did other traders teach you lessons that were worthwhile? I would say I am self-taught. What is really amazing is how little published literature there is on trading. Is there anything you can recommend to people who are interested in trading? I think Edwin Lefevre’s Reminiscences of a Stock Operator [reputedly a semifictionalized biography of Jesse Livermore, the legendary stock trader] is interesting and captures the feel of trading pretty well, but that book was written sixty-five years ago. Are there some key trading strategies that you can talk about without revealing any secrets?

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One client made about $15 million and decided to withdraw his money and manage it himself; another made over $10 million and decided to buy a house on the beach and retire. What source did you learn from before designing your first system? I was inspired and influenced by the book Reminiscences of a Stock Operator and also by Richard Donchian’s five- and twenty-day moving average crossover system and his weekly rule system. I consider Donchian to be one of the guiding lights of technical trading. What was your first trading system? My first system was a variation of Donchian’s moving average system.

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Essential reading on top of the list is O’Neil’s book, How to Make Money in Stocks (McGraw-Hill, New York, NY 1988). Another book that is must reading is How I Made Two Million Dollars in the Stock Market by Nicholas Darvas (Lyle Stuart, Inc., Secaucus, NJ, 1986). A lot of people laugh at that title, but it is fun reading and you learn a ton. Another book I would recommend is Reminiscences of a Stock Operator by Edwin Lefevre [reputedly about Jesse Livermore]. Livermore himself wrote a very good thin volume, How to Trade in Stocks (Institute for Economic & Financial Research, Albuquerque, NM, 1986). Any others? A good one on what to look for in individual stocks is Super Performance Stocks by Richard Love (Prentice Hall, Englewood Cliffs, NJ, 1977).

Hedgehogging by Barton Biggs

activist fund / activist shareholder / activist investor, Alan Greenspan, asset allocation, backtesting, barriers to entry, Bear Stearns, Big Tech, book value, Bretton Woods, British Empire, business cycle, buy and hold, diversification, diversified portfolio, eat what you kill, Elliott wave, family office, financial engineering, financial independence, fixed income, full employment, global macro, hiring and firing, index fund, Isaac Newton, job satisfaction, junk bonds, low interest rates, margin call, market bubble, Mary Meeker, Mikhail Gorbachev, new economy, oil shale / tar sands, PalmPilot, paradox of thrift, Paul Samuelson, Ponzi scheme, proprietary trading, random walk, Reminiscences of a Stock Operator, risk free rate, Ronald Reagan, secular stagnation, Sharpe ratio, short selling, Silicon Valley, transaction costs, upwardly mobile, value at risk, Vanguard fund, We are all Keynesians now, zero-sum game, éminence grise

Guys I know who are professional commodity traders effusively offered advice, most of which was to buy strength and sell weakness, in other words to go with the flow. They unabashedly told me their short-selling trading tactic invariably was “Don’t fight a losing position. If it doesn’t show you a profit, cover it.” Not very helpful, because we were and are value investors. In my agony, I took out and reread passages from my trading bible, Reminiscences of a Stock Operator by Edwin Lefevre. The book was first published in 1923 and is long out of print, but it can be bought from time to time on the Internet.There is little doubt that the stock operator who is the narrator in the book was the legendary Jesse Livermore. The late Gerald Loeb, who wrote The Battle for Investment Survival (“Put all your eggs in one basket and then watch the basket”), and who often acted as Livermore’s broker, told me that Livermore had used Lefevre as his scribe for Reminiscences.

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“Right now the markets are telling me that they are going higher, that Asia is a tiger again, and that the U.S. economy is coming on, so I want to own stocks. Maybe the markets know something about the world economy we don’t. I want to own stocks with strong cyclical earnings streams.” ccc_biggs_ch10_133-148.qxd 136 11/29/05 7:02 AM Page 136 HEDGEHOGGING Listening to Dave, I couldn’t help but think of similar comments in Reminiscences of a Stock Operator, which I wrote about in Chapter 3.The protagonist, the Old Turkey, who describes himself as a momentum trader and a student of greed, at one point in the narrative, gave this advice when suddenly stocks stop responding to good news: When the market leaders begin to lose relative strength even though the news is still very good, and buying strength and selling weakness no longer works, get out of stocks in general because the game is over.

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Actually the procedure one should follow is to sell the bad position and keep the good position. ccc_biggs_ch14_192-203.qxd 11/29/05 7:04 AM Page 197 Great Investment Managers Are Disciplined Maniacs 197 Baruch wrote that one of his most important rules of investing was to “learn how to take your losses quickly and cleanly.” In Reminiscences of a Stock Operator by Edwin Lefevre, Jesse Livermore says over and over again that you should buy on a scale-up and sell on a scale-down. “Never make a second transaction in a stock,” he writes,“unless the first shows you a profit.Always sell what shows you a loss. Only suckers buy on declines.” Livermore did not have a hard-and-fast rule on when to eliminate a losing position, arguing instead that the timing depends on the feel of the stock and the market.

Big Mistakes: The Best Investors and Their Worst Investments by Michael Batnick

activist fund / activist shareholder / activist investor, Airbnb, Albert Einstein, AOL-Time Warner, asset allocation, Bear Stearns, behavioural economics, bitcoin, Bretton Woods, buy and hold, buy low sell high, Carl Icahn, cognitive bias, cognitive dissonance, Credit Default Swap, cryptocurrency, Daniel Kahneman / Amos Tversky, endowment effect, financial engineering, financial innovation, fixed income, global macro, hindsight bias, index fund, initial coin offering, invention of the wheel, Isaac Newton, Jim Simons, John Bogle, John Meriwether, Kickstarter, Long Term Capital Management, loss aversion, low interest rates, Market Wizards by Jack D. Schwager, mega-rich, merger arbitrage, multilevel marketing, Myron Scholes, Paul Samuelson, Pershing Square Capital Management, quantitative easing, Reminiscences of a Stock Operator, Renaissance Technologies, Richard Thaler, Robert Shiller, short squeeze, Snapchat, Stephen Hawking, Steve Jobs, Steve Wozniak, stocks for the long run, subprime mortgage crisis, transcontinental railway, two and twenty, value at risk, Vanguard fund, Y Combinator

Daniel Kahneman, Thinking, Fast and Slow (New York: Farrar, Straus and Giroux, 2013), 7. 2. Tom Rubython, Jesse Livermore – Boy Plunger (Dorset, England: Myrtle Press, 2015), 24. 3. Ibid., 49. 4. Ibid., 51–53. 5. Edwin Lefèvre, Reminiscences of a Stock Operator (Hoboken, NJ: Wiley), 2006. 6. Rubython, Jesse Livermore, 61. 7. Lefèvre, Reminiscences of a Stock Operator. 8. Ibid. 9. Rubython, Jesse Livermore, 169. 10. Ibid. 11. Ibid. CHAPTER 3 Mark Twain Don't Get Attached If you get into anybody far enough, you've got yourself a partner. —Mark Twain When dollars are transferred from our pocket to an investment, the expectation is that they'll be worth more in the future.

Trade Your Way to Financial Freedom by van K. Tharp

asset allocation, backtesting, book value, Bretton Woods, buy and hold, buy the rumour, sell the news, capital asset pricing model, commodity trading advisor, compound rate of return, computer age, distributed generation, diversification, dogs of the Dow, Elliott wave, high net worth, index fund, locking in a profit, margin call, market fundamentalism, Market Wizards by Jack D. Schwager, passive income, prediction markets, price stability, proprietary trading, random walk, Reminiscences of a Stock Operator, reserve currency, risk tolerance, Ronald Reagan, Savings and loan crisis, Sharpe ratio, short selling, Tax Reform Act of 1986, transaction costs

It is the process of looking at every part of a situation as if it were a diamond slowly turning on a pedestal so you can observe all of its facets and see them as unique rather than the same. It belongs to those of you who love to solve the impossible riddle. Edwin Lefèvre, in the book Reminiscence of a Stock Operator,12 describes what happened in the early 1920s with the advent of the telephone. All stock quotes from the New York Stock Exchange were sent out by teletyping houses that we now know as bucket shops. It was very similar to off-track betting. The shops allowed a person to know a quote and then place an order to buy or sell.

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An old AFL team won the 1998 Super Bowl, and you also know how much the market went up in 1998–1999. In 2000 and 2001 an old NFL team won, and you know how much the market fell in those years. 11. John Murphy, Intermarket Technical Analysis (New York: Wiley, 1986). 12. Edwin Lefèvre, Reminiscence of a Stock Operator (New York: Wiley Investment Classics, 2006; first published in 1923). 13. Louis B. Mendelsohn is president and chief executive officer of Market Technologies, LLC, in Wesley Chapel, Florida, and the developer of VantagePoint Intermarket Analysis Software. He also is involved in a free educational Web site at www.TradingEducation.com.

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Of Permanent Value: The Story of Warren Buffett. Birmingham, Ala.: AKPE, 1996. Fun reading. LeBeau, Charles, and David W. Lucas. The Technical Traders’ Guide to Computer Analysis of the Futures Market. Homewood, Ill: Irwin, 1992. One of the best books ever written on systems development. Lefèvre, Edwin. Reminiscence of a Stock Operator. New York: Wiley Investment Classics, 2006. New edition of an old classic first published in 1923. Lowe, Janet. Warren Buffett Speaks: Wit and Wisdom from the World’s Greatest Investor. New York: Wiley, 1997. Fun reading with great wisdom. Lowenstein, Roger. Buffett: The Making of an American Capitalist.

Unknown Market Wizards by Jack D. Schwager

3D printing, algorithmic trading, automated trading system, backtesting, barriers to entry, Black Monday: stock market crash in 1987, Brexit referendum, buy and hold, commodity trading advisor, computerized trading, COVID-19, cryptocurrency, diversification, Donald Trump, eurozone crisis, family office, financial deregulation, fixed income, forward guidance, index fund, Jim Simons, litecoin, Long Term Capital Management, margin call, market bubble, Market Wizards by Jack D. Schwager, Nick Leeson, performance metric, placebo effect, proprietary trading, quantitative easing, Reminiscences of a Stock Operator, risk tolerance, risk-adjusted returns, Sharpe ratio, short squeeze, side project, systematic trading, tail risk, transaction costs

Here I was going through all the trouble of getting charts faxed every day and trading every day, and then I make far more money because I am away in Africa and can’t see or do anything. That experience had a significant effect on me. It was like Jesse Livermore used to say, “You make your money in the sitting.” [Shapiro was referring to a quote in the book Reminiscences of a Stock Operator by Edwin Lefevre, whose unnamed protagonist is widely assumed to be based on Jesse Livermore. The specific quote is: “After spending many years in Wall Street and after making and losing millions of dollars, I want to tell you this: it never was my thinking that made the big money for me.

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So if you didn’t get the text, or if you had been several minutes slower in getting your orders through, you would have given back almost all your profits on the remaining position. Yes, that was probably a $700,000 text message. What had caused the abrupt, enormous crash in the stock price? To me, it seemed to be like a play straight out of Reminiscences of a Stock Operator. [This classic book on speculation, whose protagonist is widely assumed to be Jesse Livermore, is set in the financial backdrop of an age replete with bucket shops and market manipulation.] The insiders owned 750 million shares. Two months earlier, they couldn’t even have sold 100 million shares at one penny.

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If you get stopped out of a trade, will you look to reenter it if conditions are right? It’s easy for me to buy it again. I have no qualms about buying higher. Did any books influence the way you trade? It probably took more than a year of trading before I read my first financial book. Which book? Reminiscences of a Stock Operator. Did that book influence your trading, and if so, how? It reinforced what I was already doing—most importantly, placing large bets when you had the right set up, and keeping bets small when you didn’t. My winning percentage on trades is way less than 50%, but I still do well because I can recognize the one or two times a year when all the pieces of the puzzle are in place, and I need to bet big on a trade.

Hedge Fund Market Wizards by Jack D. Schwager

asset-backed security, backtesting, banking crisis, barriers to entry, Bear Stearns, beat the dealer, Bernie Madoff, Black-Scholes formula, book value, British Empire, business cycle, buy and hold, buy the rumour, sell the news, Claude Shannon: information theory, clean tech, cloud computing, collateralized debt obligation, commodity trading advisor, computerized trading, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, delta neutral, diversification, diversified portfolio, do what you love, Edward Thorp, family office, financial independence, fixed income, Flash crash, global macro, hindsight bias, implied volatility, index fund, intangible asset, James Dyson, Jones Act, legacy carrier, Long Term Capital Management, managed futures, margin call, market bubble, market fundamentalism, Market Wizards by Jack D. Schwager, merger arbitrage, Michael Milken, money market fund, oil shock, pattern recognition, pets.com, Ponzi scheme, private sector deleveraging, proprietary trading, quantitative easing, quantitative trading / quantitative finance, Reminiscences of a Stock Operator, Right to Buy, risk free rate, risk tolerance, risk-adjusted returns, risk/return, riskless arbitrage, Rubik’s Cube, Savings and loan crisis, Sharpe ratio, short selling, statistical arbitrage, Steve Jobs, systematic trading, technology bubble, transaction costs, value at risk, yield curve

The loose end, of course, is how the court jester happens to know so much about how markets work—and how he happens to know how to express what he knows in an effective way. While we may never know the answer for sure, my personal hunch is that the court jester makes frequent visits to the royal library and reads Reminiscences of a Stock Operator by Edwin Lefèvre, The Crowd by Gustav LeBon, Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay, and the entire Market Wizards series by Jack Schwager. Trading, it turns out, is the solution to most economic problems; free markets, sanctity of trading, and healthy economy are all ways to say the same thing.

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Now Hedge Fund Market Wizards extends, enhances, and perfects the tradition. Traders regularly use passages and chapters from Schwager’s books as a reference for their own methods and to guide their own trading. His work is an inseparable part of the consciousness and language of trading itself. Some 30 years ago, Jack reads Reminiscences of a Stock Operator and notices its meaningfulness and relevance, even 60 years after its publication. He adopts that standard for his own writing. I notice that books that actually meet that standard tend to wind up in the libraries of traders and court jesters alike, on the same shelf with Reminiscences, The Crowd, and Extraordinary Popular Delusions and the Madness of Crowds.

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Readers who are seeking to improve their own trading abilities, however, should find much that is useful in the following interviews. I believe the trading lessons and insights shared by the traders are timeless. I believe that although markets are always changing, because of constancies in human nature, in some sense, they are also always the same. I remember, when first reading Reminiscences of a Stock Operator by Edwin Lefèvre nearly 30 years ago, being struck by how relevant the book remained more than 60 years after it was written. I do not mean or intend to draw any comparisons between this volume and Reminiscences, but merely to define the goal I had in mind in writing this book—that it still be meaningful and useful to readers trading the market 60 years from now. 1All the performance statements made in reference to hedge funds as an investment category implicitly assume hedge fund of funds data.

Rigged Money: Beating Wall Street at Its Own Game by Lee Munson

affirmative action, Alan Greenspan, asset allocation, backtesting, barriers to entry, Bear Stearns, Bernie Madoff, Bretton Woods, business cycle, buy and hold, buy low sell high, California gold rush, call centre, Credit Default Swap, diversification, diversified portfolio, estate planning, fear index, fiat currency, financial engineering, financial innovation, fixed income, Flash crash, follow your passion, German hyperinflation, Glass-Steagall Act, global macro, High speed trading, housing crisis, index fund, joint-stock company, junk bonds, managed futures, Market Wizards by Jack D. Schwager, Michael Milken, military-industrial complex, money market fund, moral hazard, Myron Scholes, National best bid and offer, off-the-grid, passive investing, Ponzi scheme, power law, price discovery process, proprietary trading, random walk, Reminiscences of a Stock Operator, risk tolerance, risk-adjusted returns, risk/return, Savings and loan crisis, short squeeze, stocks for the long run, stocks for the long term, too big to fail, trade route, Vanguard fund, walking around money

For me it was a lesson in pragmatism. Pit Bull by Martin “Buzzy” Schwartz: A fairly accurate account of the personal toll that becoming a successful trader takes on a person. If you want to learn how to have a life-work balance, you have to learn from somebody who struggled with it for 20 years. Reminiscences of a Stock Operator by Edwin Lefèvre: This is not on my recommended reading list for you to buy a copy to put on your bookshelf. Read it for real. Make somebody give you a test on it. I have never seen a book purchased by so many and read by so few. Thank goodness it makes my life easier as a trader. If you want to understand the crowds, a word to the wise is sufficient.

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See Section 28(e) penny stocks pension pension manager Philip Morris pie charts bar charts versus Pit Bull play-it-safe investment portfolio, moderate risk premium price compression price discovery The Price Is Right price, best prime broker prognostication reports Q QQQ. See NASDAQ 100 ETF R A Random Walk Down Wall Street rebalancing Registered Investment Adviser (RIA) reinvestment Reminisces of a Stock Operator research firms, independent research purpose third-party Revenue Act of 1978 RIA. See Registered Investment Adviser risk budgeting risk, level Rule 19b–3 S S&P 500, volatility versus San Francisco Earthquake scenarios, investment Schwab Affiliate Funds Schwager, Jack Schwartz, Martin Buzzy SEC.

Inside the House of Money: Top Hedge Fund Traders on Profiting in a Global Market by Steven Drobny

Abraham Maslow, Alan Greenspan, Albert Einstein, asset allocation, Berlin Wall, Bonfire of the Vanities, Bretton Woods, business cycle, buy and hold, buy low sell high, capital controls, central bank independence, commoditize, commodity trading advisor, corporate governance, correlation coefficient, Credit Default Swap, currency risk, diversification, diversified portfolio, family office, financial engineering, fixed income, glass ceiling, Glass-Steagall Act, global macro, Greenspan put, high batting average, implied volatility, index fund, inflation targeting, interest rate derivative, inventory management, inverted yield curve, John Meriwether, junk bonds, land bank, Long Term Capital Management, low interest rates, managed futures, margin call, market bubble, Market Wizards by Jack D. Schwager, Maui Hawaii, Mexican peso crisis / tequila crisis, moral hazard, Myron Scholes, new economy, Nick Leeson, Nixon triggered the end of the Bretton Woods system, oil shale / tar sands, oil shock, out of africa, panic early, paper trading, Paul Samuelson, Peter Thiel, price anchoring, proprietary trading, purchasing power parity, Reminiscences of a Stock Operator, reserve currency, risk free rate, risk tolerance, risk-adjusted returns, risk/return, rolodex, Sharpe ratio, short selling, Silicon Valley, tail risk, The Wisdom of Crowds, too big to fail, transaction costs, value at risk, Vision Fund, yield curve, zero-coupon bond, zero-sum game

I never really thought about it in terms of success. I just found the markets absolutely fascinating and challenging. I guess I’m still doing it, so I would appear to have some kind of edge. Are there any books that you recommend to your traders? My favorite book in relation to the market is Reminiscences of a Stock Operator, by Edwin Lefevre. I’ve probably read it four or five times, and I love it every time I read it. He talks about everything, about risk, about hubris, about passion, everything. What worries you with traders who work for you? I used to be worried about having a rogue trader on the team, but my view on that is if you ever lose sleep, then the guy shouldn’t be there.

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There were also the classic management mistakes, such as having parking slots for the officers of the company but not the workers. After a while, I started thinking, “Is this what I want to do with my life?” I looked at my friends’ careers, and the people who liked their lives the most were the proprietary traders. I started spending my spare time in upstate New York reading finance stuff: Reminiscences of a Stock Operator, Bonfire of the Vanities, Market Wizards, Money Masters—anything I could get my hands on. My game plan was to go to business school; get a job in proprietary trading; work 10 years on the sell side developing my knowledge, experience, contacts, and track record; and then make a move to the buy side.

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See also Siva-Jothy, Christian Protectionism, 44 Putin,Vladimir, 237–238 Put options, 63–64, 77, 85, 236, 331, 334 Quantitative analysis, 346 Quantum Endowment, 28 Quantum Fund, 28, 30, 184, 217, 271, 273, 277–278 RAROC (risk-adjusted return on capital), 39 Raw material boom, 239 Reading recommendations, 92, 158–159 INDEX Real estate, 62–63, 242. See also Home builders; Housing bubble Real estate investment trusts (REITs), 63, 290 Real money, 53, 62, 70 Recession, 14, 115, 264 Redemptions, 58, 69 Relative value (RV), 25, 68, 126–127, 141–142, 147–148, 156, 173, 310–311, 330, 336, 337, 346 Reminiscences of a Stock Operator (Lefevre), 92, 244 Researcher. See Drobny,Andres, Dr. Return(s), 55, 99, 254, 344–346. See also Absolute returns Reverse repurchase agreements, 51 Reward/risk ratio, 174 Reward-to-volatility ratio, 342 Risk-adjusted returns, 254, 344–346 Risk arbitrage, 33, 80–81. See also Arbitrage Risk aversion, 107, 115 Risk capital, 24 Risk curve, 328 Risk-free rate, 196, 342 Risk management strategies, 7–8, 25, 32, 50, 53–54, 61–62, 131, 137–138, 172, 192, 204, 206, 213–214, 285, 293–294, 333–334 Risk premium, 55 Risk/reward analysis, 98, 110–111, 126, 296 Risk-to-return ratio, 62 Robertson, Julian, xi, 8, 10, 21, 23, 27–28, 245–247, 277 Roditi, Nick, 269, 278 Rogers, Jim, 8, 210, 217–221, 223–239, 269–271, 278 Rogers International Commodity Index, 218 Rubin, Robert, 32, 245 Rumors, 249, 268 Russia/Russian rubles, 22–23, 49–50, 64–65, 203–204, 211, 237–238, 277, 280, 283, 286, 289, 290 Russian crisis 1998, 10, 21–23, 26, 54, 64, 80, 292–294, 299–300, 310 Russian Equity Index, 65 Russian stock market index (RTSI$), 22 INDEX S&P 500 index, 27–28, 193, 212–213, 217, 273–274, 282 Safe harbor, 205 Salomon Brothers, 24 Samuelson, Paul, 9 Scholes, Myron, 24, 207 Secular trends, 234 Sell-offs, 20, 118, 175, 295, 302 SemperMacro, 71, 72 Seykota, Ed, 9 Sharpe ratio, 62, 342–343 Short-dated volatility, 55 Short positions, xii, 58.

The Invisible Hands: Top Hedge Fund Traders on Bubbles, Crashes, and Real Money by Steven Drobny

Albert Einstein, AOL-Time Warner, Asian financial crisis, asset allocation, asset-backed security, backtesting, banking crisis, Bear Stearns, Bernie Madoff, Black Swan, bond market vigilante , book value, Bretton Woods, BRICs, British Empire, business cycle, business process, buy and hold, capital asset pricing model, capital controls, central bank independence, collateralized debt obligation, commoditize, commodity super cycle, commodity trading advisor, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency peg, debt deflation, diversification, diversified portfolio, equity premium, equity risk premium, family office, fiat currency, fixed income, follow your passion, full employment, George Santayana, global macro, Greenspan put, Hyman Minsky, implied volatility, index fund, inflation targeting, interest rate swap, inventory management, inverted yield curve, invisible hand, junk bonds, Kickstarter, London Interbank Offered Rate, Long Term Capital Management, low interest rates, market bubble, market fundamentalism, market microstructure, Minsky moment, moral hazard, Myron Scholes, North Sea oil, open economy, peak oil, pension reform, Ponzi scheme, prediction markets, price discovery process, price stability, private sector deleveraging, profit motive, proprietary trading, purchasing power parity, quantitative easing, random walk, Reminiscences of a Stock Operator, reserve currency, risk free rate, risk tolerance, risk-adjusted returns, risk/return, savings glut, selection bias, Sharpe ratio, short selling, SoftBank, sovereign wealth fund, special drawing rights, statistical arbitrage, stochastic volatility, stocks for the long run, stocks for the long term, survivorship bias, tail risk, The Great Moderation, Thomas Bayes, time value of money, too big to fail, Tragedy of the Commons, transaction costs, two and twenty, unbiased observer, value at risk, Vanguard fund, yield curve, zero-sum game

He learned the ropes taking true, directional macro risks, then going on to work with some of the biggest names in the hedge fund business, and ultimately striking out on his own, where he now sits atop a multibillion dollar macro-hedge fund. How did you get into the markets? I read Reminiscences of a Stock Operator by Edwin Lefèvre when I was 17, which was in 1987, the year the stock market crashed. It proved to be a formative experience. I read the book in the summer, the stock market crashed in the fall, and as I watched television, I realized that many people were not making much sense. I began to read everything I could about financial markets and joined a bank straight out of college, which was when I started trading.

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Have the courage to be different, the courage to risk the ire of others for the sake of being right; to fight rather than embrace compromises everywhere. We have to encourage rebellious notions such as playfulness and curiosity. There is no one correct way of doing things that is set in stone. Periodically managers should be open to trying different approaches. If you read Edwin Lefèvre’s book, Reminiscences of a Stock Operator, the fictionalized version of the early years of Jesse Livermore, he gives a great account of this kind of behavior. Livermore goes long before he goes short. That’s genius. He would buy because he wanted to experience the thrill of owning something. Taking a position changes the chemical balance of the body and the brain and you start to understand what it is you were missing.

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See Risk premia payment Price/earnings (P/E) multiples, exchange rate valuation (relationship) Primary Dealer Credit Facility, placement Prime broker risk Princeton University (endowment) Private equity cash flow production tax shield/operational efficiency arguments Private sector debt, presence Private-to-public sector risk Probability, Bayesian interpretation Professor, The bubble predication capital loss, avoidance capital management cataclysms, analysis crowding factor process diversification efficient markets, disbelief fiat money, cessation global macro fund manager hedge fund space historical events, examination idea generation inflation/deflation debate interview investment process lessons LIBOR futures ownership liquidity conditions, change importance market entry money management, quality opportunities personal background, importance portfolio construction management positioning process real macro success, personality traits/characteristics (usage) returns, generation risk aversion rules risk management process setback stocks, purchase stop losses time horizon Titanic scenario threshold trades attractiveness, measurement process expression, options (usage) personal capital, usage quality unlevered portfolio Property/asset boom Prop shop trading, preference Prop trader, hedge fund manager (contrast) Protectionism danger hedge process Public college football coach salary, public pension manager salary (contrast) Public debt, problems Public pensions average wages to returns endowments impact Q ratio (Tobin) Qualitative screening, importance Quantitative easing (QE) impact usage Quantitative filtering Random walk, investment Real annual return Real assets Commodity Hedger perspective equity-like exposure Real estate, spread trade Real interest rates, increase (1931) Real macro involvement success, personality traits/characteristics (usage) Real money beta-plus domination denotation evolution flaws hedge funds, differentiation impacts, protection importance investors commodity exposure diversification, impact macro principles management, change weaknesses Real money accounts importance long-only investment focus losses (2008) Real money funds Commodity Hedger operation Equity Trader management flexibility frontier, efficiency illiquid asset avoidance importance leverage example usage management managerial reserve optimal portfolio construction failure portfolio management problems size Real money managers Commodity Investor scenario liquidity, importance long-term investor misguidance poor performance, usage (excuse) portfolio construction valuation approach, usage Real money portfolios downside volatility, mitigation leverage, amount management flaws Rear view mirror investment process Redemptions absence problems Reflexivity Rehypothecation Reichsmarks, foreign holders (1922-1923) Relative performance, inadequacy Reminiscences of a Stock Operator (Lefèvre) Renminbi (2005-2009) Repossession property levels Republic of Turkey examination investment rates+equities (1999-2000) Reserve currency, question Resource nationalism Returns forecast generation maximization momentum models targets, replacement Return-to-worst-drawdown, ratios (improvement) Reward-to-variability ratio Riksbank (Sweden) Risk amount, decision aversion rules capital, reduction collars function positive convexity framework, transition function global macro manager approach increase, leverage (usage) measurement techniques, importance parameters Pensioner management pricing reduction system, necessity Risk-adjusted return targets, usage Risk assets, decrease Risk-free arbitrage opportunities Risk management Commodity Hedger process example game importance learning lessons portfolio level process P&L, impact tactic techniques, importance Risk premia annualization earning level, decrease specification Risk/reward trades Risk-versus-return, Pensioner approach Risk-versus-reward characteristics opportunities Roll yield R-squared (correlation) Russia crisis Russia Index (RTSI$) (1995-2002) Russia problems Savings ratio, increase Scholes, Myron Sector risk, limits Securities, legal lists Self-reinforcing cycles (Soros) Sentiment prediction swings Seven Sisters Sharpe ratio increase return/risk Short-dated assets Short selling, ban Siegel’s Paradox example Single point volatility 60-40 equity-bond policy portfolio 60-40 model 60-40 portfolio standardization Smither, Andrew Socialism, Equity Trader concern Society, functioning public funds, impact real money funds, impact Softbank (2006) Soros, George self-reinforcing cycles success Sovereign wealth fund Equity Trader operation operation Soybeans (1970-2009) Special drawing rights (SDR) Spot price, forward price (contrast) Spot shortages/outages, impact Standard deviation (volatility) Standard & Poor’s 500 (S&P500) (2009) decrease Index (1986-1995) Index (2000-2009) Index (2008) shorting U.S. government bonds, performance (contrast) Standard & Poor’s (S&P) shorts, coverage Stanford University (endowment) State pension fund Equity Trader operation operation Stochastic volatility Stock index total returns (1974-2009) Stock market increase, Predator nervousness Stocks hedge funds, contrast holders, understanding pickers, equity index futures usage shorting/ownership, contrast Stops, setting Stress tests, conducting Subprime Index (2007-2009) Sunnies, bidding Super Major Survivorship bias Sweden AP pension funds government bond market Swensen, David equity-centric portfolio Swiss National Bank (SNB) independence Systemic banking crisis Tactical asset allocation function models, usage Tactical expertise Tail hedging, impact Tail risk Take-private LBO Taleb, Nassim Tax cut sunset provisions Taxes, hedge Ten-year U.S. government bonds (2008-2009) Theta, limits Thundering Herd (Merrill Lynch) Time horizons decrease defining determination shortening Titanic funnel, usage Titanic loss number Titanic scenario threshold Topix Index (1969-2000) Top-line inflation Total credit market, GDP percentage Total dependency ratio Trade ideas experience/awareness, impact generation process importance origination Traders ability Bond Trader hiring characteristics success, personality characteristics Trades attractiveness, measurement process hurdle money makers, percentage one-year time horizon selection, Commodity Super Cycle (impact) time horizon, defining Trading decisions, policy makers (impact) floor knowledge noise level ideas, origination Tragedy of the commons Transparency International, Corruption Perceptions Index Treasury Inflation-Protected Securities (TIPS) trade Triangulated conviction Troubled Asset Relief Program (TARP) Turkey economy inflation/equities (1990-2009) investment rates+equities (1999-2000) stock market index (ISE 100) Unconventional Success (Swensen) Underperformance, impact Undervaluation zones, examination United Kingdom (UK), two-year UK swap rates (2008) United States bonds pricing debt (1991-2008) debt (2000-2008) home prices (2000-2009) hyperinflation listed equities, asset investment long bonds, market pricing savings, increase stocks tax policy (1922-1936) trade deficit, narrowing yield curves (2004-2006) University endowments losses impact unlevered portfolio U.S.

More Than You Know: Finding Financial Wisdom in Unconventional Places (Updated and Expanded) by Michael J. Mauboussin

Alan Greenspan, Albert Einstein, Andrei Shleifer, Atul Gawande, availability heuristic, beat the dealer, behavioural economics, Benoit Mandelbrot, Black Swan, Brownian motion, butter production in bangladesh, buy and hold, capital asset pricing model, Clayton Christensen, clockwork universe, complexity theory, corporate governance, creative destruction, Daniel Kahneman / Amos Tversky, deliberate practice, demographic transition, discounted cash flows, disruptive innovation, diversification, diversified portfolio, dogs of the Dow, Drosophila, Edward Thorp, en.wikipedia.org, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, fixed income, framing effect, functional fixedness, hindsight bias, hiring and firing, Howard Rheingold, index fund, information asymmetry, intangible asset, invisible hand, Isaac Newton, Jeff Bezos, John Bogle, Kenneth Arrow, Laplace demon, Long Term Capital Management, loss aversion, mandelbrot fractal, margin call, market bubble, Menlo Park, mental accounting, Milgram experiment, Murray Gell-Mann, Nash equilibrium, new economy, Paul Samuelson, Performance of Mutual Funds in the Period, Pierre-Simon Laplace, power law, quantitative trading / quantitative finance, random walk, Reminiscences of a Stock Operator, Richard Florida, Richard Thaler, Robert Shiller, shareholder value, statistical model, Steven Pinker, stocks for the long run, Stuart Kauffman, survivorship bias, systems thinking, The Wisdom of Crowds, transaction costs, traveling salesman, value at risk, wealth creators, women in the workforce, zero-sum game

Mauboussin, “Revisiting Market Efficiency: The Stock Market as a Complex Adaptive System,” Journal of Applied Corporate Finance 14, no. 4 (Winter 2002): 47-55. 6 See Joseph de la Vega’s Confusion de Confusiones (1688), Charles MacKay’s Extraordinary Delusions and the Madness of Crowds (1841), and Edwin Lefevre’s Reminiscences of a Stock Operator (1923). 7 Warren E. Buffett, Berkshire Hathaway Annual Letter to Shareholders, 1987, http://berkshirehathaway.com/letters/1987.html. 8 Benjamin Graham and David L. Dodd, Security Analysis (New York: McGraw Hill, 1934), 11. 9 Irving Lester Janis, Groupthink: Psychological Studies of Policy Decisions and Fiascoes (New York: Houghton Mifflin, 1982). 38.

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Lee, Youngki, Luís A. Nunes Amaral, David Canning, Martin Meyer, and H. Eugene Stanley. “Universal Features in the Growth Dynamics of Complex Organizations.” Physical Review Letters 81, no. 15 (October 1998): 3275-3278. http://polymer.bu.edu/hes/articles/lacms98.pdf. Lefevre, Edwin. Reminiscences of a Stock Operator. 1923. Lessand, Donald. “The Soft Revolution: Achieving Growth By Managing Intangibles.” The Journal of Applied Corporate Finance 11, no. 2 (Summer 1998): 8-27. Lev, Baruch. Intangibles: Management, Measurement, and Reporting. Washington, D.C.: Brookings Institution Press, 2001. Lewellen, Jonathan.

Finding Alphas: A Quantitative Approach to Building Trading Strategies by Igor Tulchinsky

algorithmic trading, asset allocation, automated trading system, backpropagation, backtesting, barriers to entry, behavioural economics, book value, business cycle, buy and hold, capital asset pricing model, constrained optimization, corporate governance, correlation coefficient, credit crunch, Credit Default Swap, currency risk, data science, deep learning, discounted cash flows, discrete time, diversification, diversified portfolio, Eugene Fama: efficient market hypothesis, financial engineering, financial intermediation, Flash crash, Geoffrey Hinton, implied volatility, index arbitrage, index fund, intangible asset, iterative process, Long Term Capital Management, loss aversion, low interest rates, machine readable, market design, market microstructure, merger arbitrage, natural language processing, passive investing, pattern recognition, performance metric, Performance of Mutual Funds in the Period, popular capitalism, prediction markets, price discovery process, profit motive, proprietary trading, quantitative trading / quantitative finance, random walk, Reminiscences of a Stock Operator, Renaissance Technologies, risk free rate, risk tolerance, risk-adjusted returns, risk/return, selection bias, sentiment analysis, shareholder value, Sharpe ratio, short selling, Silicon Valley, speech recognition, statistical arbitrage, statistical model, stochastic process, survivorship bias, systematic bias, systematic trading, text mining, transaction costs, Vanguard fund, yield curve

Security analysis, popularized by Benjamin Graham and David Dodd in their 1934 classic investing tome (2009), is the in-depth study of these statements on a per company basis to gauge the potential for excess returns based on a company’s underlying qualities. This analysis is used by fundamental value investors, Warren Buffett being the most famous practitioner. It contrasts with studying the movements and order flow of stock prices, as discussed by Edwin Lefèvre in Reminiscences of a Stock Operator (2006), or other technical analysis approaches, such as momentum-­ based strategies, which make bets based on an expectation that price trends will continue into the future (see Chan et al. 1996 and references therein). Financial statement analysis attempts to systematically measure the effect of factors computed using these statements and to determine their ability to predict future returns; investors can use it to rank, sort, and filter companies to seek to create a portfolio with improved financial strength.

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McGraw-Hill Book Company. References285 Huber, P. and Ronchetti, E. (2009) Robust Statistics (2nd edition). Wiley. Hull, J. (2008) Options, Futures and Other Derivatives. Pearson Prentice Hall. Kahneman, D. (2011) Thinking, Fast and Slow. Farrar, Straus and Giroux. Lefèvre, E. (2006) Reminiscences of a Stock Operator. Wiley. Maronna, R., Martin, D., and Yohai, V. (2006) Robust Statistics: Theory and Methods. Wiley. Mertz, D. (2006) Text Processing in Python. Addison Wesley. Also available from Gnosis Software: http://gnosis.cx/TPiP Nicholas, J.G. (2004) Hedge Fund of Funds Investing: An Investor’s Guide.

Heads I Win, Tails I Win by Spencer Jakab

Alan Greenspan, Asian financial crisis, asset allocation, backtesting, Bear Stearns, behavioural economics, Black Monday: stock market crash in 1987, book value, business cycle, buy and hold, collapse of Lehman Brothers, correlation coefficient, crowdsourcing, Daniel Kahneman / Amos Tversky, diversification, dividend-yielding stocks, dogs of the Dow, Elliott wave, equity risk premium, estate planning, Eugene Fama: efficient market hypothesis, eurozone crisis, Everybody Ought to Be Rich, fear index, fixed income, geopolitical risk, government statistician, index fund, Isaac Newton, John Bogle, John Meriwether, Long Term Capital Management, low interest rates, Market Wizards by Jack D. Schwager, Mexican peso crisis / tequila crisis, money market fund, Myron Scholes, PalmPilot, passive investing, Paul Samuelson, pets.com, price anchoring, proprietary trading, Ralph Nelson Elliott, random walk, Reminiscences of a Stock Operator, risk tolerance, risk-adjusted returns, Robert Shiller, robo advisor, Savings and loan crisis, Sharpe ratio, short selling, Silicon Valley, South Sea Bubble, statistical model, Steve Jobs, subprime mortgage crisis, survivorship bias, technology bubble, transaction costs, two and twenty, VA Linux, Vanguard fund, zero-coupon bond, zero-sum game

And of course he would earn multiples of that charging a 2 percent fee and 20 percent of profits as hedge funds do for managing other people’s money. Naturally, no hedge fund ever has made triple-digit returns with any consistency. An entertaining and practical explanation of why traders with relatively little money have extremely short careers can be found in my favorite investing book of all, Reminiscences of a Stock Operator. Nominally a piece of fiction and a great read, it’s actually a thinly disguised biography of speculator Jesse Livermore (Larry Livingston) written by Edwin Lefèvre. In the early part of the book, Livingston gets his start in what were called bucket shops, which were eventually outlawed, before the turn of the twentieth century.

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., 29–30 Baron Rothschild card game, 35–36, 38 Barron’s, 144, 231–32, 240 Bartiromo, Maria, 248 bear market, 22, 32, 35, 38, 46–47, 54–56, 61, 63, 93, 117, 120, 184–85, 237–38, 242, 245, 250 Bear Stearns, 40, 126, 199 Beardstown Ladies, 18–19, 31 behavioral finance, 21–22, 41–42, 70–72, 245 Berkshire Hathaway, 3, 157, 170–71, 235 Berman, Ken, 213 Bernstein, Richard, 145 Bespoke Investment Group, 46, 135 beta (market return), 105, 172, 193, 224 Betterment, 83 Black, Fischer, 240 Black Monday, 39, 240–41 Black Tuesday, 51, 240–41 Blodget, Henry, 88 Bloomberg, 138, 144 Bogle, John, 23, 156–58, 222, 224 bonds, 3, 14–15, 26, 35–36, 58, 62–63, 72–77, 82–83, 95, 145, 153, 158, 165, 175, 189, 205–8, 248 books All I Really Need to Know I Learned in Kindergarten (Fulghum), 150 The Beardstown Ladies’ Common-Sense Investment Guide, 18–19 Confusión de Confusiones (Vega), 234 Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression (Prechter), 125, 238 Contrarian Investment Strategies: The Psychological Edge (Dreman), 129 Dow 100,000: Fact or Fiction, 70, 238 Dow 36,000 (Hassett and Glassman), 69–74, 84, 238 Dow 40,000, 70, 238 The Education of a Speculator (Niederhoffer), 169 Extraordinary Popular Delusions and the Madness of Crowds (Mackay), 241 Financial Reckoning Day, 238 The Great Depression Ahead, 238 The Half-Life of Facts (Arbesman), 102 The Intelligent Investor (Graham), 235–36 Liar’s Poker (Lewis), 165 Manias, Panics, and Crashes (Kindleberger), 245 Market Wizards (Schwager), 108 Money Masters of Our Time (Train), 108 The Next Great Bubble Boom, 238 One Up on Wall Street (Lynch), 148–50, 192–93 Proofiness: How You’re Being Fooled by the Numbers (Seife), 125 A Random Walk Down Wall Street (Malkiel), 106, 146–47, 158, 193–94 Reminiscences of a Stock Operator (Lefèvre), 212 Security Analysis (Graham and Dodd), 158, 194, 218–19, 232 The Stock Trader’s Almanac, 42 Unconventional Success: A Fundamental Approach to Personal Investment (Swensen), 81–82 Where Are the Customers’ Yachts?: Or, A Good Hard Look at Wall Street (Schwed), 149–50 You Can Be a Stock Market Genius (Greenblatt), 192 Brandes Institute, 194–95 Bridgewater Associates, 172 brokerage accounts/firms, 2, 19, 23, 32, 56, 83, 143, 196–97, 207, 209–11, 216–17, 228, 257 Brown Brothers Harriman, 90 Buckingham, John, 128–29 Buffett, Warren, 3, 30, 160 advice of, 34, 157–58, 161–62, 235–36 and bet with Seides, 171, 174–75 criticizes hedge funds, 169–71 and Graham-and-Doddsville, 218–19, 223 inspired by Graham, 194, 218–19, 232 and value investing, 113, 157–58, 220 bull market, 32, 38, 42–43, 46, 51–52, 55–61, 70, 75, 88, 90–92, 117, 124, 149, 214 Bureau of Economic Analysis, 57 Burns Advisory Group, 151 BusinessWeek, 126, 144, 213, 238 CalPERS, 186–87 Capital Decimation Partners, 164, 168, 172 Carlson, Ben, 30–31, 44, 61 CGM Focus Fund, 111 Charles Schwab, 83 Chicago Board Options Exchange (CBOE), 239–40 Clipper Fund, 105 Cohen, Abby Joseph, 128 Columbia University, 108, 217–18 commissions, 18, 135, 156, 181, 197, 202, 209, 211, 217 commodity investing, 73, 81, 205–6, 251 compound annual return, 19, 52–54, 64, 67, 95, 111, 219 average return, 75–76, 110 interest, 2, 4, 14, 30–31, 44, 91 contango phenomenon, 205–6 Cook, Michael, 154 Countrywide Financial, 109 Courtney, Tim, 150–52 Cramer, Jim, 118, 128 crashes, 76, 234, 242 of 1929, 39, 51, 54, 92–93, 123–24, 232–33, 236, 238, 240–41, 243 of 1973–74, 75, 237 of 1987, 33, 39–40, 51, 125–26, 233, 236, 240–41 of 1998, 33, 166–67, 238 of 2008, 33, 40, 47, 50, 61, 84, 126, 174–75, 236, 239, 241–42 Credit Suisse, 181 CXO Advisory Group, 128–29 cyclically adjusted P/E (CAPE), 92–95 Dalbar, 13–14, 16, 32–33, 37, 74 decision markets, 146 DiMaggio, Joe, 98, 102, 104 Direxion Daily Small Cap Bull & Bear 3x ETF, 204 dividend investing, 54, 216–17, 226–29 Dodd, David, 194, 218–19 dot-com boom, 132, 179, 186, 193, 195, 237, 242 Dow Jones Industrials, 42, 251 beating it, 219 dividend-yielding stocks of, 192 drops in, 33, 45, 52, 125–26 increases in, 46, 88 and mutual funds, 152 predictions of, 121, 123–26 Dreman, David, 128–29 Drudge Report, The, 46–47 Eastman Kodak, 101, 109 economic contractions, 50, 52–54 growth, 49, 52, 57, 71 recessions, 47–52, 56–58, 143–44, 232 statistics, 57, 59–60 Economist, 30 efficient market theory, 98, 108, 112, 146, 149, 158, 219, 225 Einhorn, David, 173 Einstein, Albert, 30, 44 Elliott, Ralph Nelson, 124 emerging markets, 83, 86, 135, 187, 238 emotional investing, 18, 21, 180, 200, 223, 234–36, 249–50 Employee Benefit Research Institute, 80 endowments, 81–82, 174, 187 energy companies/stocks, 100, 104, 109, 200.

The Revolution That Wasn't: GameStop, Reddit, and the Fleecing of Small Investors by Spencer Jakab

4chan, activist fund / activist shareholder / activist investor, barriers to entry, behavioural economics, Bernie Madoff, Bernie Sanders, Big Tech, bitcoin, Black Swan, book value, buy and hold, classic study, cloud computing, coronavirus, COVID-19, crowdsourcing, cryptocurrency, data science, deal flow, democratizing finance, diversified portfolio, Dogecoin, Donald Trump, Elon Musk, Everybody Ought to Be Rich, fake news, family office, financial innovation, gamification, global macro, global pandemic, Google Glasses, Google Hangouts, Gordon Gekko, Hacker News, income inequality, index fund, invisible hand, Jeff Bezos, Jim Simons, John Bogle, lockdown, Long Term Capital Management, loss aversion, Marc Andreessen, margin call, Mark Zuckerberg, market bubble, Masayoshi Son, meme stock, Menlo Park, move fast and break things, Myron Scholes, PalmPilot, passive investing, payment for order flow, Pershing Square Capital Management, pets.com, plutocrats, profit maximization, profit motive, race to the bottom, random walk, Reminiscences of a Stock Operator, Renaissance Technologies, Richard Thaler, ride hailing / ride sharing, risk tolerance, road to serfdom, Robinhood: mobile stock trading app, Saturday Night Live, short selling, short squeeze, Silicon Valley, Silicon Valley billionaire, SoftBank, Steve Jobs, TikTok, Tony Hsieh, trickle-down economics, Vanguard fund, Vision Fund, WeWork, zero-sum game

Saunders could have shrugged it off, as so many other executives should have, but didn’t when subject to short bets. Instead, he waged war and nearly won, but lost everything. Saunders hired the famed speculator Jesse Livermore, known in his youth as “the boy plunger” and the real character behind Larry Livingston in the semiautobiographical Wall Street classic Reminiscences of a Stock Operator, to engineer a corner. Livermore bought about half of the two hundred thousand available shares for Saunders at around $40 apiece, and the campaign soon pushed Piggly Wiggly’s price to around $70, inflicting some paper losses on the short sellers. But Livermore then dropped out of the fight, not seeing a way that the corner would work.

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., 150–52, 154, 156 Raytheon, 153–54 RC Ventures LLC, 114 Reagan, Ronald, 156, 234 Reddit, xi, xii, 11–12, 19, 22, 23, 25, 36–39, 41, 42, 107, 122, 125, 162, 164, 199 founding of, 37–38 Gill’s influence on, 141–42; see also Gill, Keith; WallStreetBets karma on, 47, 141–42 mechanics and demographics of, and GameStop, 37 offensive subreddits on, 38 r/ClassActionRobinHood, 196 r/GMEbagholders, 140 r/investing, ix, 46 r/wallstreetbets, see WallStreetBets Super Bowl ad of, 12 Volkswagen squeeze and, 78 Reddit Revolution, xv, 41, 42, 75, 99, 152, 170, 192, 206, 211, 219, 220, 230, 246, 261 see also GameStop, GameStop short squeeze; WallStreetBets rehypothecation, 80, 92 reinforcement learning, 35 Reminiscences of a Stock Operator (Lefèvre), 78 Renaissance Technologies, 237 retail trading, xiii, xiv, xvi, 4, 7, 9–14, 49, 56–59, 63–64, 66, 67, 81, 98, 140–41, 143, 169–70, 178, 181, 183, 186, 194, 218, 237, 238, 244, 247 retirement accounts and pension funds, 5, 13, 27, 31–32, 41, 69, 76, 77, 81, 171, 182, 234, 235, 245, 252, 255, 256 Rise of the Planet of the Apes, 135–36 RiskReversal Advisors, 192 Ritter, Jay, 63, 65 Roaring Kitty (Gill’s YouTube persona), 2, 18, 45, 48–49, 92, 130, 133, 144, 171, 174–75, 191, 211, 213 Roaring Kitty LLC, 171 Robinhood, xi, xiii, xv, 4–6, 13–14, 19, 22–35, 41–42, 50, 53, 55, 57, 61, 66, 70, 81, 98, 139, 141, 153, 154, 157, 158, 161, 176, 178, 183, 184, 187–90, 193, 194, 195–210, 212–13, 219, 237–38, 243, 245, 246, 259 account transfer fees of, 54 average revenue per user of, 66–67 Buffett on, 240–41 call options and, 97–98 Citadel and, 10, 11 clearinghouse of, 187 commissions and, 49, 50 customer loan write-offs of, 205 daily average revenue trades of, 59 daily deposit requirement of, 205 former regulators hired by, 239–40 founding of, 3, 23–25, 90 funding crisis of, 187–88, 193, 198, 203, 205–6 gamification and, 29–31 Gold accounts, 32, 58, 97, 202 growth of, 25–26, 50 herding events and, 238 Hertz and, 61 hyperactive traders and, 193, 202, 207, 236 initial public offering of, 200–201, 219 Instant accounts, 32 Kearns and, 103–4 lawsuits against, 196 margin loans of, 58–59, 205 median account balances with, 50, 54 options and, 34–35, 102–4, 106, 108–9 payment for order flow and, 10, 33, 196, 206–9 revenue from securities lending, 73 risky behavior encouraged by, 202–3 Robintrack and, 53, 61 SPACs and, 64 stimulus checks and, 56 Super Bowl ad of, 28, 30, 200 technical snafus by, 53–54 Top 100 Fund and, 61 trading restricted by, 187–89, 194, 195–200, 203, 206, 209 valuation of, 49 WallStreetBets and, 22–23 wholesalers and, 33–35, 49, 104, 106 Robin Hood (charitable foundation), 196–97 robo-advisers, xv, 27, 257–58 Betterment, 27, 54, 183, 193, 242, 257, 258, 261 SoFi, 27, 56, 57, 158 Rockefeller, John D., 9 Rodriguez, Alex, 64 Rogers, Will, 163 Rogozinski, Jaime, 23, 39, 46, 50, 53, 55, 70–71, 97, 122, 138, 144, 190, 231 Roper, Barbara, 29–30, 35, 54, 185, 241 Rozanski, Jeffrey, 46 Rukeyser, Louis, 156 Russell 2000 Value Index, 125, 191 S S3 Partners, 76, 81, 130, 133, 170, 217 SAC Capital Advisors, 7, 110 Sanders, Bernie, 65–66, 198 S&P (Standard & Poor’s), 83 S&P Dow Jones Indices, 70, 254 S&P 500, 76 Sanford C.

Extreme Money: Masters of the Universe and the Cult of Risk by Satyajit Das

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", "there is no alternative" (TINA), "World Economic Forum" Davos, affirmative action, Alan Greenspan, Albert Einstein, algorithmic trading, Andy Kessler, AOL-Time Warner, Asian financial crisis, asset allocation, asset-backed security, bank run, banking crisis, banks create money, Basel III, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, Bonfire of the Vanities, bonus culture, book value, Bretton Woods, BRICs, British Empire, business cycle, buy the rumour, sell the news, capital asset pricing model, carbon credits, Carl Icahn, Carmen Reinhart, carried interest, Celtic Tiger, clean water, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, corporate raider, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, Daniel Kahneman / Amos Tversky, deal flow, debt deflation, Deng Xiaoping, deskilling, discrete time, diversification, diversified portfolio, Doomsday Clock, Dr. Strangelove, Dutch auction, Edward Thorp, Emanuel Derman, en.wikipedia.org, Eugene Fama: efficient market hypothesis, eurozone crisis, Everybody Ought to Be Rich, Fall of the Berlin Wall, financial engineering, financial independence, financial innovation, financial thriller, fixed income, foreign exchange controls, full employment, Glass-Steagall Act, global reserve currency, Goldman Sachs: Vampire Squid, Goodhart's law, Gordon Gekko, greed is good, Greenspan put, happiness index / gross national happiness, haute cuisine, Herman Kahn, high net worth, Hyman Minsky, index fund, information asymmetry, interest rate swap, invention of the wheel, invisible hand, Isaac Newton, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", job automation, Johann Wolfgang von Goethe, John Bogle, John Meriwether, joint-stock company, Jones Act, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kevin Kelly, laissez-faire capitalism, load shedding, locking in a profit, Long Term Capital Management, Louis Bachelier, low interest rates, margin call, market bubble, market fundamentalism, Market Wizards by Jack D. Schwager, Marshall McLuhan, Martin Wolf, mega-rich, merger arbitrage, Michael Milken, Mikhail Gorbachev, Milgram experiment, military-industrial complex, Minsky moment, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, mortgage tax deduction, mutually assured destruction, Myron Scholes, Naomi Klein, National Debt Clock, negative equity, NetJets, Network effects, new economy, Nick Leeson, Nixon shock, Northern Rock, nuclear winter, oil shock, Own Your Own Home, Paul Samuelson, pets.com, Philip Mirowski, Phillips curve, planned obsolescence, plutocrats, Ponzi scheme, price anchoring, price stability, profit maximization, proprietary trading, public intellectual, quantitative easing, quantitative trading / quantitative finance, Ralph Nader, RAND corporation, random walk, Ray Kurzweil, regulatory arbitrage, Reminiscences of a Stock Operator, rent control, rent-seeking, reserve currency, Richard Feynman, Richard Thaler, Right to Buy, risk free rate, risk-adjusted returns, risk/return, road to serfdom, Robert Shiller, Rod Stewart played at Stephen Schwarzman birthday party, rolodex, Ronald Reagan, Ronald Reagan: Tear down this wall, Satyajit Das, savings glut, shareholder value, Sharpe ratio, short selling, short squeeze, Silicon Valley, six sigma, Slavoj Žižek, South Sea Bubble, special economic zone, statistical model, Stephen Hawking, Steve Jobs, stock buybacks, survivorship bias, tail risk, Teledyne, The Chicago School, The Great Moderation, the market place, the medium is the message, The Myth of the Rational Market, The Nature of the Firm, the new new thing, The Predators' Ball, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, trickle-down economics, Turing test, two and twenty, Upton Sinclair, value at risk, Yogi Berra, zero-coupon bond, zero-sum game

In the end, Groucho spends $6 on the master code book and a set of four Breeder’s Guides to decipher the master code book. By the time he has assembled his library of literary material on horses, the race Groucho wanted to bet on is over. As I leave the seminar, Mary and Greg are signing up for ST’s trading system. I think of the famous speculator Jesse Livermore, immortalized in Edwin Lefèvre’s Reminiscences of a Stock Operator: The sucker play is always the same: To make easy money. That is why speculation never changes. The appeal is the same: Greed, vanity, and laziness. The merchant who would not dream of buying and selling stockings or percales on the advice of fools goes to Wall Street and cheerfully risks his money on the say so of men whose interest is not his interest, or tipsters who have not grown rich at the game they want him to play.

…

Quoted in John Kay “A stakeholding society—what does it mean for business?” (1997) Scottish Journal of Political Economy 44/4: 425–36. 5. John Kenneth Galbraith (1975) The Great Crash 1929, Penguin Books, London: 187. 6. Quoted in “The pop star and the private equity firms” (26 June 2009) New York Times. 7. Edwin Lefèvre (2005) Reminiscences of a Stock Operator, John Wiley, New Jersey: 12. 8. F. Scott Fitzgerald (1973) The Great Gatsby, Penguin Books, London: 188. 9. Alain de Botton (2002) The Art of Travel, Penguin Books, London: 40. 10. Ibid: 57. 11. Quoted in Andrew Ross Sorkin “A ‘bonfire’ returns as heartburn” (24 June 2008) New York Times.

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Amielle Lake, Andrew Kakabadse and Nada Kakabadse (2008) The Elephant Hunters: Chronicles of the Moneymen, Palgrave Macmillan, London. John Lanchester (2010) Whoops! Why Everyone Owes Everyone and No One Can Pay, Allen Lane, London. Randall Lane (2010) The Zeroes: My Misadventures in the Decade Wall Street Went Insane, Scribe Publications, Melbourne. Edwin Lefèvre (2005) Reminiscences of a Stock Operator, John Wiley, New Jersey. Michael Lewis (1989) Liar’s Poker: Two Cities, True Greed, Hodder & Stoughton, London. Michael Lewis (1991) The Money Culture, Penguin Books, New York. Michael Lewis (1999) The New New Thing: A Silicon Valley Story, Coronet, London. Michael Lewis (ed.) (2008) Panic: The Story of Modern Financial Insanity, Penguin Books, London.

The Age of Turbulence: Adventures in a New World (Hardback) - Common by Alan Greenspan

addicted to oil, air freight, airline deregulation, Alan Greenspan, Albert Einstein, asset-backed security, bank run, Berlin Wall, Black Monday: stock market crash in 1987, Bretton Woods, business cycle, business process, buy and hold, call centre, capital controls, carbon tax, central bank independence, collateralized debt obligation, collective bargaining, compensation consultant, conceptual framework, Corn Laws, corporate governance, corporate raider, correlation coefficient, cotton gin, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cuban missile crisis, currency peg, currency risk, Deng Xiaoping, Dissolution of the Soviet Union, Doha Development Round, double entry bookkeeping, equity premium, everywhere but in the productivity statistics, Fall of the Berlin Wall, fiat currency, financial innovation, financial intermediation, full employment, Gini coefficient, Glass-Steagall Act, Hernando de Soto, income inequality, income per capita, information security, invisible hand, Joseph Schumpeter, junk bonds, labor-force participation, laissez-faire capitalism, land reform, Long Term Capital Management, low interest rates, Mahatma Gandhi, manufacturing employment, market bubble, means of production, Mikhail Gorbachev, moral hazard, mortgage debt, Myron Scholes, Nelson Mandela, new economy, North Sea oil, oil shock, open economy, open immigration, Pearl River Delta, pets.com, Potemkin village, price mechanism, price stability, Productivity paradox, profit maximization, purchasing power parity, random walk, Reminiscences of a Stock Operator, reserve currency, Right to Buy, risk tolerance, Robert Solow, Ronald Reagan, Savings and loan crisis, shareholder value, short selling, Silicon Valley, special economic zone, stock buybacks, stocks for the long run, Suez crisis 1956, the payments system, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tipper Gore, too big to fail, total factor productivity, trade liberalization, trade route, transaction costs, transcontinental railway, urban renewal, We are all Keynesians now, working-age population, Y2K, zero-sum game

Maybe it was because my father was on Wall Street, or maybe it was my affinity for numbers, but what aroused my curiosity was business and finance. One of the first books I read was about the British stock market—I was fascinated to discover that they used exotic terminology like "ordinary shares." I read Reminiscences of a Stock Operator, a book by Edwin Lefevre about Jesse Livermore, a famous 1920s speculator whose nickname was the Boy Plunger of Wall Street. Legend had it that he made $100 million by short-selling on the eve of the 1929 crash. He got rich and went broke three times before finally committing suicide in 1940.

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The General Theory of Employment, Interest and Money. N e w York: Harcourt, Brace, 1936. Klein, Joe. The Natural: The Misunderstood Presidency of Bill Clinton. N e w York: Coronet, 2 0 0 2 . Lazear, Edward P. "Teacher Incentives." Swedish Economic Policy Review 10 (2003): 179-214. Lefevre, Edwin. Reminiscences of a Stock Operator. Hoboken, N.J.: John Wiley & Sons, 2005. Locke, John. The Second Treatise of Civil Government. London: A. Millar, 1764. w w w .constitution.org/jl/2ndtreat.htm (accessed April 6, 2007). Luce, Edward. In Spite of the Gods: The Strange Rise of Modern India. London: Little, Brown, 2 0 0 6 .

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(Herbert Greenspan), 21 Regan, Don, 9 2 - 9 3 , 98 regulation, 370-76, 388, 4 3 0 - 3 1 , 491-92 AG's rules of t h u m b for, 374-75 counterparty surveillance, 3 7 0 - 7 1 , 373, 489 economic future and, 467, 468, 4 8 9 - 9 3 , 502 government, 15, 256, 264-65, 273, 279, 280, 291,292,372-76,489,502 Reinhart, Vincent, 377 religion, 17, 140n, 252, 271, 272 Reminiscences of a Stock Operator (Lefevre), 28 Republicans, Republican Party, 58, 75, 86, 96, 1 1 1 13, 122, 148, 158, 208, 211, 221, 222, 2 3 3 ^ 8 , 504 budget surplus and, 184, 185 F O M C a n d , 152 Republic Steel, 45, 47 Reserve Bank of Australia, 292, 293 Resolution Trust Corporation (RTC), 116-17, 290 retirement, 174, 406, 409-22, 482, 504 age at, 413n defined-benefit pensions and, 419-22 extension of labor force participation vs., 411 ratio of dependent elderly to workers and, 409-10 see also Medicare; pensions, pension funds; Social Security Reuss, Henry, 70 Revolutionary War, 480 Reynolds, 49, 50 risk taking, risk, 140, 256, 272-73, 276, 356, 365, 434, 488-89, 492, 498, 503 aversion to, 17, 273, 360, 365 moral hazard and, 189 profits and, 3 6 8 - 7 0 Rivers, Larry, 27 Rivlin, Alice, 145, 162, 173, 176 Rockefeller, David, 8 1 , 84 Rockefeller, John D., 444, 449 Rockefeller, Nelson, 80 Rogers, John H., 361 n Roosa, Robert, 84 Roosevelt, Franklin Delano, 3 1 , 159, 246, 337, 431, 439 New Deal and, 2 1 , 30, 279, 504 Roosevelt, Theodore, 336 Roth, William, 92 Rove, Karl, 223 Royal Dutch Shell, 336, 339n, 438 Rubin, Robert, 7, 145, 146, 157-62, 170, 210, 220, 405 Asian contagion and, 188, 189-90, 195 budget surplus and, 185 Russian crisis and, 193 stock market and, 174-75, 179 Rubinomics, 161, 236 rule of law, 15, 16, 255-56, 297, 365, 396, 502 economic future and, 467, 468, 469-70, 503 in Europe, 277, 287 in Russia, 190, 327, 331-32, 500 Smith and, 261 in United States, 52, 278 Rumsfeld, Donald, 62, 64, 209, 210 Russia, 135-36, 139-40, 259, 275, 293, 310, 3 2 2 23, 334n debt default of, 190-96, 250, 328, 331 future of, 500 market capitalism in, 123-24, 139-40, 323-27, 503 oil and gas in, 190, 3 2 4 - 3 1 , 440, 443 oligarchs in, 139, 140, 190, 324, 326 property rights in, 139-40, 190, 327, 331-32, 389, 500 shock therapy in, 138—40 technology in, 3 3 1 , 388 see also Soviet Union Safire, William, 57 Sala-i-Martin, Xavier, 259n-60n Samuelson, Robert, 230 S&P 500, 207, 224, 426n, 465 Sao Tome and Principe, 258-59 Sarbanes, Paul, 154-55, 2 2 1 , 478 Sarbanes-Oxley Act (2002), 374, 430-31 Sarkozy, Nicolas, 288, 500 Saudi Arabia, 79-80, 334n, 351, 438n oil of, 79, 438n Saudi Aramco, 79, 439, 440, 442 savings, 12, 138, 185, 270, 348-52, 362, 369, 3 8 4 88, 4 7 8 , 4 9 9 cross-border, 348, 352, 484 in developing vs. industrialized countries, 13, 386, 484 domestic, current account balance and, 348—49, 350 excess of, 13-14 future standards of living and, 413 investment vs., 348-49, 385, 386-87 savings accounts, 114, 115 savings and loans (S&Ls), 6, 114-17, 290, 357n SBC Communications, 229 Scargill, Arthur, 283 Scholes, Myron, 193 527 More ebooks visit: http://www.ccebook.cn ccebook-orginal english ebooks This file was collected by ccebook.cn form the internet, the author keeps the copyright.

Damsel in Distressed: My Life in the Golden Age of Hedge Funds by Dominique Mielle

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", activist fund / activist shareholder / activist investor, airline deregulation, Alan Greenspan, banking crisis, Bear Stearns, Black Monday: stock market crash in 1987, blood diamond, Boris Johnson, British Empire, call centre, capital asset pricing model, Carl Icahn, centre right, collateralized debt obligation, Cornelius Vanderbilt, coronavirus, COVID-19, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Donald Trump, Elon Musk, Eugene Fama: efficient market hypothesis, family office, fear of failure, financial innovation, fixed income, full employment, glass ceiling, high net worth, hockey-stick growth, index fund, intangible asset, interest rate swap, John Meriwether, junk bonds, Larry Ellison, lateral thinking, Long Term Capital Management, low interest rates, managed futures, mega-rich, merger arbitrage, Michael Milken, Myron Scholes, Northpointe / Correctional Offender Management Profiling for Alternative Sanctions, offshore financial centre, Paul Samuelson, profit maximization, Reminiscences of a Stock Operator, risk free rate, risk tolerance, risk-adjusted returns, satellite internet, Savings and loan crisis, Sharpe ratio, Sheryl Sandberg, SoftBank, survivorship bias, Tesla Model S, too big to fail, tulip mania, union organizing

The Tulip mania of 1637, the first record of a speculative bubble, when prices of tulips in Holland soared and then collapsed for reasons still uncertain today; the Great Depression of 1929; Black Monday in 1987; the dot-com bubble in 2000—they all had the same root causes. One of the oldest books about Wall Street, Reminiscences of a Stock Operator by Edwin Lefèvre, which recounts the life of stock trader Jesse Livermore around 1890 to 1920, said it categorically a hundred years ago: “There is nothing new on Wall Street. There can’t be, because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again.”

The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated by Gautam Baid

Abraham Maslow, activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, Albert Einstein, Alvin Toffler, Andrei Shleifer, asset allocation, Atul Gawande, availability heuristic, backtesting, barriers to entry, beat the dealer, Benoit Mandelbrot, Bernie Madoff, bitcoin, Black Swan, book value, business process, buy and hold, Cal Newport, Cass Sunstein, Checklist Manifesto, Clayton Christensen, cognitive dissonance, collapse of Lehman Brothers, commoditize, corporate governance, correlation does not imply causation, creative destruction, cryptocurrency, Daniel Kahneman / Amos Tversky, deep learning, delayed gratification, deliberate practice, discounted cash flows, disintermediation, disruptive innovation, Dissolution of the Soviet Union, diversification, diversified portfolio, dividend-yielding stocks, do what you love, Dunning–Kruger effect, Edward Thorp, Elon Musk, equity risk premium, Everything should be made as simple as possible, fear index, financial independence, financial innovation, fixed income, follow your passion, framing effect, George Santayana, Hans Rosling, hedonic treadmill, Henry Singleton, hindsight bias, Hyman Minsky, index fund, intangible asset, invention of the wheel, invisible hand, Isaac Newton, it is difficult to get a man to understand something, when his salary depends on his not understanding it, Jeff Bezos, John Bogle, Joseph Schumpeter, junk bonds, Kaizen: continuous improvement, Kickstarter, knowledge economy, Lao Tzu, Long Term Capital Management, loss aversion, Louis Pasteur, low interest rates, Mahatma Gandhi, mandelbrot fractal, margin call, Mark Zuckerberg, Market Wizards by Jack D. Schwager, Masayoshi Son, mental accounting, Milgram experiment, moral hazard, Nate Silver, Network effects, Nicholas Carr, offshore financial centre, oil shock, passive income, passive investing, pattern recognition, Peter Thiel, Ponzi scheme, power law, price anchoring, quantitative trading / quantitative finance, Ralph Waldo Emerson, Ray Kurzweil, Reminiscences of a Stock Operator, reserve currency, Richard Feynman, Richard Thaler, risk free rate, risk-adjusted returns, Robert Shiller, Savings and loan crisis, search costs, shareholder value, six sigma, software as a service, software is eating the world, South Sea Bubble, special economic zone, Stanford marshmallow experiment, Steve Jobs, Steven Levy, Steven Pinker, stocks for the long run, subscription business, sunk-cost fallacy, systems thinking, tail risk, Teledyne, the market place, The Signal and the Noise by Nate Silver, The Wisdom of Crowds, time value of money, transaction costs, tulip mania, Upton Sinclair, Walter Mischel, wealth creators, Yogi Berra, zero-sum game

Vartak, SageOne Investment Advisors Letter, August 10, 2017, http://sageone​investments.com/wp-content/uploads/2017/08/SageOne-Investor-Memo-Aug-2017.pdf. 8. Morgan Housel, “The Agony of High Returns,” Motley Fool, February 9, 2016, https://www.fool.com/investing/general/2016/02/09/the-agony-of-high-returns.aspx. 9. Edwin Lefèvre, Reminiscences of a Stock Operator (Hoboken, NJ: Wiley, 2006). 10. Peter Lynch, One Up on Wall Street: How to Use What You Already Know to Make Money in the Market (New York: Simon and Schuster, 2000). 27. Updating Our Beliefs in Light of New Evidence 1. Michael Rothschild, Bionomics: Economy as Business Ecosystem (Beard Books, 1990). 2.

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Wall Street Journal, March 20, 2008. https://blogs.wsj.com/deals/2008/03/20/bull-and-bear-markets-according-to-oaktrees-howard-marks. LeBaron, Dean, and Romesh Vaitilingam. Dean LeBaron’s Treasury of Investment Wisdom: 30 Great Investing Minds. Hoboken, NJ: Wiley, 2001. Le Bon, Gustave. The Crowd: A Study of the Popular Mind. Mineola, NY: Dover, 2002. Lefèvre, Edwin. Reminiscences of a Stock Operator. Hoboken, NJ: Wiley, 2006. Leo, Jacqueline. Seven: The Number for Happiness, Love, and Success. New York: Twelve, 2009. Lev, Baruch, and Feng Gu. The End of Accounting. Hoboken, NJ: Wiley, 2016. “Leverage.” Investment Masters Class. http://mastersinvest.com/leveragequotes. Levy, Steven.

A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan by Ben Carlson

Albert Einstein, asset allocation, backtesting, Bernie Madoff, Black Monday: stock market crash in 1987, Black Swan, book value, business cycle, buy and hold, buy low sell high, commodity super cycle, corporate governance, delayed gratification, discounted cash flows, diversification, diversified portfolio, do what you love, endowment effect, family office, financial independence, fixed income, Gordon Gekko, high net worth, index fund, John Bogle, junk bonds, loss aversion, market bubble, medical residency, Occam's razor, paper trading, passive investing, Ponzi scheme, price anchoring, Reminiscences of a Stock Operator, Richard Thaler, risk tolerance, Robert Shiller, robo advisor, South Sea Bubble, sovereign wealth fund, stocks for the long run, technology bubble, Ted Nelson, transaction costs, Vanguard fund, Vilfredo Pareto

Morgan Housel, “Growing Economy Doesn't Guarantee Stock Gains,” Wall Street Journal, November 7, 2014,http://online.wsj.com/articles/a-growing-economy-doesnt-guarantee-stocks-will-rise-1415372093. 6. John Templeton, “16 Rules for Investment Success,” Franklin Templeton Investments, 1993. 7. Howard Marks, The Most Important Thing (New York: Columbia Business School Publishing, 2011). 8. Edwin Lefevre, Reminiscences of a Stock Operator (Hoboken, NJ: John Wiley & Sons, 2010). 9. William Bernstein, The Four Pillars of Investing: Lessons for Building a Winning Portfolio (New York: McGraw-Hill, 2010). 10. Rob Arnott, “The Biggest Urban Legend in Finance,” Research Affiliates, March 2011, www.researchaffiliates.com/Our%20Ideas/Insig hts/Fundamentals/Pages/F_2011_March_The_Biggest_Urban_Legend.aspx. 11.

Day One Trader: A Liffe Story by John Sussex

algorithmic trading, Boris Johnson, credit crunch, fixed income, John Meriwether, Long Term Capital Management, Neil Kinnock, Nick Leeson, offshore financial centre, proprietary trading, Reminiscences of a Stock Operator, statistical arbitrage

Floor brokers would speak at length with dealers from investment funds and bank proprietary trading desks about the ebb and flow of the markets. This gave them an intimate knowledge of the behaviour of various financial instruments and the impact of economic and geopolitical events on dealing at major exchanges. But these dealers were still novices when it came to trading with their own money. Edwin Lefèvre’s classic tome Reminiscences of a Stock Operator, which was first published in 1923, summed up the difficulties such ‘ghost gamblers’ had when their own money was put on the line. ‘It is like the old story of the man who was going to fight a duel the next day,’ wrote Lefèvre. His second asked him, ‘Are you a good shot?’ ‘Well,’ said the duelist, ‘I can snap the stem of a wineglass at twenty paces,’ and he looked modest.

The Education of a Value Investor: My Transformative Quest for Wealth, Wisdom, and Enlightenment by Guy Spier

Albert Einstein, Atul Gawande, Bear Stearns, Benoit Mandelbrot, big-box store, Black Swan, book value, Checklist Manifesto, classic study, Clayton Christensen, Daniel Kahneman / Amos Tversky, Exxon Valdez, Gordon Gekko, housing crisis, information asymmetry, Isaac Newton, Kenneth Arrow, Long Term Capital Management, Mahatma Gandhi, mandelbrot fractal, mirror neurons, Nelson Mandela, NetJets, pattern recognition, pre–internet, random walk, Reminiscences of a Stock Operator, risk free rate, Ronald Reagan, South Sea Bubble, Steve Jobs, Stuart Kauffman, TED Talk, two and twenty, winner-take-all economy, young professional, zero-sum game

Four other books that deserve to be read and reread many times are Seth Klarman’s Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor; Joel Greenblatt’s You Can be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits; The Aggressive Conservative Investor by Martin J. Whitman, Martin Shubik, and Gene Isenberg; and John Mihaljevic’s The Manual of Ideas: The Proven Framework for Finding the Best Value Investments. Before I discovered value investing, I was also captivated by two other investment classics: Edwin Lefèvre’s Reminiscences of a Stock Operator and The Alchemy of Finance by George Soros. Heroes, Mentors, and Role Models Roger Lowenstein’s biography Buffett: The Making of an American Capitalist was the first book that I consciously used to help me “model” Warren Buffett. Other seminal works on Buffett include Alice Schroeder’s The Snowball: Warren Buffett and the Business of Life and Tap Dancing to Work: Warren Buffett on Practically Everything, 1966–2013 by his friend Carol Loomis, a renowned writer who worked at Fortune for 60 years.

The Behavioral Investor by Daniel Crosby

affirmative action, Asian financial crisis, asset allocation, availability heuristic, backtesting, bank run, behavioural economics, Black Monday: stock market crash in 1987, Black Swan, book value, buy and hold, cognitive dissonance, colonial rule, compound rate of return, correlation coefficient, correlation does not imply causation, Daniel Kahneman / Amos Tversky, disinformation, diversification, diversified portfolio, Donald Trump, Dunning–Kruger effect, endowment effect, equity risk premium, fake news, feminist movement, Flash crash, haute cuisine, hedonic treadmill, housing crisis, IKEA effect, impact investing, impulse control, index fund, Isaac Newton, Japanese asset price bubble, job automation, longitudinal study, loss aversion, market bubble, market fundamentalism, mental accounting, meta-analysis, Milgram experiment, moral panic, Murray Gell-Mann, Nate Silver, neurotypical, Nick Bostrom, passive investing, pattern recognition, Pepsi Challenge, Ponzi scheme, prediction markets, random walk, Reminiscences of a Stock Operator, Richard Feynman, Richard Thaler, risk tolerance, Robert Shiller, science of happiness, Shai Danziger, short selling, South Sea Bubble, Stanford prison experiment, Stephen Hawking, Steve Jobs, stocks for the long run, sunk-cost fallacy, systems thinking, TED Talk, Thales of Miletus, The Signal and the Noise by Nate Silver, Tragedy of the Commons, trolley problem, tulip mania, Vanguard fund, When a measure becomes a target

‘Well,’ said the duelist, ‘I can snap the stem of a wineglass at twenty paces,’ and he looked modest. ‘That’s all very well,’ said the unimpressed second. ‘But can you snap the stem of the wineglass while the wineglass is pointing a loaded pistol straight at your heart?’ ” — Edwin Lefèvre, Reminiscences of a Stock Operator It can now be said that you are among the best-educated people in the world with respect to the ins and outs of behavioral investing. But the most important part of being a well-educated behavioral investor is understanding just how little education matters. The world is full of well-educated people who have made stupid choices, a phenomenon referred to by scientists as “dysrationalia.”

Fed Up!: Success, Excess and Crisis Through the Eyes of a Hedge Fund Macro Trader by Colin Lancaster

"World Economic Forum" Davos, Adam Neumann (WeWork), Airbnb, Alan Greenspan, always be closing, asset-backed security, beat the dealer, Ben Bernanke: helicopter money, Bernie Sanders, Big Tech, Black Monday: stock market crash in 1987, bond market vigilante , Bonfire of the Vanities, Boris Johnson, Bretton Woods, business cycle, buy the rumour, sell the news, Carmen Reinhart, Chuck Templeton: OpenTable:, collateralized debt obligation, coronavirus, COVID-19, creative destruction, credit crunch, currency manipulation / currency intervention, deal flow, Donald Trump, Edward Thorp, family office, fear index, fiat currency, fixed income, Flash crash, George Floyd, global macro, global pandemic, global supply chain, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, Growth in a Time of Debt, housing crisis, index arbitrage, inverted yield curve, Jeff Bezos, Jim Simons, junk bonds, Kenneth Rogoff, liquidity trap, lockdown, Long Term Capital Management, low interest rates, low skilled workers, margin call, market bubble, Masayoshi Son, Michael Milken, Mikhail Gorbachev, Minsky moment, Modern Monetary Theory, moral hazard, National Debt Clock, Nixon triggered the end of the Bretton Woods system, Northern Rock, oil shock, pets.com, Ponzi scheme, price stability, proprietary trading, quantitative easing, Reminiscences of a Stock Operator, reserve currency, Ronald Reagan, Ronald Reagan: Tear down this wall, Sharpe ratio, short selling, short squeeze, social distancing, SoftBank, statistical arbitrage, stock buybacks, The Great Moderation, TikTok, too big to fail, trickle-down economics, two and twenty, value at risk, Vision Fund, WeWork, yield curve, zero-sum game

Just as with subprime, people saw it, but if they weren’t careful; they got carried out before the bubble burst. US house prices peaked in 2005. Everyone knew that fucking NINJA loans were an accident waiting to happen, but they still had to wait three years for the market to discount reality. One of the first books on markets that I read was Reminiscences of a Stock Operator. In that book, Edwin Lefevre chronicles how Jesse Livermore, one of the first great short sellers, struggled in the late innings of a bubble. This was in the early 1900s. He nearly went broke after multiple failed attempts. Livermore said, “I simply had to be sure, the next time I tried … The public with their eyes fixed on the stock market, saw little that week.

How to Own the World: A Plain English Guide to Thinking Globally and Investing Wisely by Andrew Craig

Airbnb, Alan Greenspan, Albert Einstein, asset allocation, Berlin Wall, bitcoin, Black Swan, bonus culture, book value, BRICs, business cycle, collaborative consumption, diversification, endowment effect, eurozone crisis, failed state, Fall of the Berlin Wall, financial deregulation, financial innovation, Future Shock, index fund, information asymmetry, joint-stock company, Joseph Schumpeter, Long Term Capital Management, low cost airline, low interest rates, Market Wizards by Jack D. Schwager, mortgage debt, negative equity, Northern Rock, offshore financial centre, oil shale / tar sands, oil shock, passive income, pensions crisis, quantitative easing, Reminiscences of a Stock Operator, road to serfdom, Robert Shiller, Russell Brand, Silicon Valley, smart cities, stocks for the long run, the new new thing, The Wealth of Nations by Adam Smith, Yogi Berra, Zipcar

New York: Atlantic Monthly, 2005. Lanchester, John. Whoops!: Why Everyone Owes Everyone and No One Can Pay. London: Allen Lane, 2010. Lee, John. How to Make a Million Slowly: My Guiding Principles from a Lifetime of Successful Investing. FT Publishing International, 2013. Lefèvre, Edwin. Reminiscences of a Stock Operator. Hoboken: John Wiley & Sons, 2006. Levitt, Steven D., and Stephen J. Dubner. Freakonomics: A Rogue Economist Explores the Hidden Side of Everything. New York: William Morrow & Company, 2006. ———. Superfreakonomics. HarperCollins Canada, 2009. Lewis, Michael. The Big Short: Inside the Doomsday Machine.

The New Trading for a Living: Psychology, Discipline, Trading Tools and Systems, Risk Control, Trade Management by Alexander Elder

additive manufacturing, Atul Gawande, backtesting, behavioural economics, Benoit Mandelbrot, buy and hold, buy low sell high, Checklist Manifesto, computerized trading, deliberate practice, diversification, Elliott wave, endowment effect, fear index, loss aversion, mandelbrot fractal, margin call, offshore financial centre, paper trading, Ponzi scheme, price stability, psychological pricing, quantitative easing, random walk, Reminiscences of a Stock Operator, risk tolerance, short selling, South Sea Bubble, systematic trading, systems thinking, The Wisdom of Crowds, transaction costs, transfer pricing, traveling salesman, tulip mania, zero-sum game

Kaufman, Josh, The First 20 Hours: How to Learn Anything … Fast! (New York: Portfolio/Penguin, 2013). Kaufman, Perry, Trading Systems and Methods (Hoboken, NJ: John Wiley & Sons, 2013) Larsen, Max, SpikeTrade Reunion presentation, 2007. LeBon, Gustave, The Crowd (1897) (Atlanta, GA: Cherokee Publishing, 1982). Lefevre, Edwin, Reminiscences of a Stock Operator (1923) (Greenville, SC: Traders Press, 1985). Mackay, Charles, Extraordinary Popular Delusions and the Madness of Crowds (1841) (New York: Crown Publishers, 1980). McMillan, Lawrence G., Options as a Strategic Investment (Englewood Cliffs, NJ: Prentice Hall, 2012). Mellon, Andrew J., Unstuff  Your Life (New York: Avery/Penguin, 2010).

Nerds on Wall Street: Math, Machines and Wired Markets by David J. Leinweber

"World Economic Forum" Davos, AI winter, Alan Greenspan, algorithmic trading, AOL-Time Warner, Apollo 11, asset allocation, banking crisis, barriers to entry, Bear Stearns, Big bang: deregulation of the City of London, Bob Litterman, book value, business cycle, butter production in bangladesh, butterfly effect, buttonwood tree, buy and hold, buy low sell high, capital asset pricing model, Charles Babbage, citizen journalism, collateralized debt obligation, Cornelius Vanderbilt, corporate governance, Craig Reynolds: boids flock, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Danny Hillis, demand response, disintermediation, distributed generation, diversification, diversified portfolio, electricity market, Emanuel Derman, en.wikipedia.org, experimental economics, fake news, financial engineering, financial innovation, fixed income, Ford Model T, Gordon Gekko, Hans Moravec, Herman Kahn, implied volatility, index arbitrage, index fund, information retrieval, intangible asset, Internet Archive, Ivan Sutherland, Jim Simons, John Bogle, John Nash: game theory, Kenneth Arrow, load shedding, Long Term Capital Management, machine readable, machine translation, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, market fragmentation, market microstructure, Mars Rover, Metcalfe’s law, military-industrial complex, moral hazard, mutually assured destruction, Myron Scholes, natural language processing, negative equity, Network effects, optical character recognition, paper trading, passive investing, pez dispenser, phenotype, prediction markets, proprietary trading, quantitative hedge fund, quantitative trading / quantitative finance, QWERTY keyboard, RAND corporation, random walk, Ray Kurzweil, Reminiscences of a Stock Operator, Renaissance Technologies, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Metcalfe, Ronald Reagan, Rubik’s Cube, Savings and loan crisis, semantic web, Sharpe ratio, short selling, short squeeze, Silicon Valley, Small Order Execution System, smart grid, smart meter, social web, South Sea Bubble, statistical arbitrage, statistical model, Steve Jobs, Steven Levy, stock buybacks, Tacoma Narrows Bridge, the scientific method, The Wisdom of Crowds, time value of money, tontine, too big to fail, transaction costs, Turing machine, two and twenty, Upton Sinclair, value at risk, value engineering, Vernor Vinge, Wayback Machine, yield curve, Yogi Berra, your tax dollars at work

The basic manipulations were largely unchanged from de la Vega’s time. The coffeehouse of seventeenth-century Amsterdam was replaced with Harry’s Bar or the Fraunces Tavern on Wall Street. Once again, to have an effect, the manipulator had to go from bar to bar repeating the rumors, as described in Edwin Lef èvre’s classic Reminiscences of a Stock Operator concerning the trading of Jesse Livermore in the early twentieth century. Newspapers, telephones, telegraphy, and television all allowed gullible players to be reached faster, and in greater numbers. There are 260 Nerds on Wall Str eet numerous examples. For instance, the classic boiler room of Wall Street used the telephone to cold-call thousands of investors, much as the broker of de la Vega’s time spread rumors in coffeehouses.

Trading and Exchanges: Market Microstructure for Practitioners by Larry Harris

active measures, Andrei Shleifer, AOL-Time Warner, asset allocation, automated trading system, barriers to entry, Bernie Madoff, Bob Litterman, book value, business cycle, buttonwood tree, buy and hold, compound rate of return, computerized trading, corporate governance, correlation coefficient, data acquisition, diversified portfolio, equity risk premium, fault tolerance, financial engineering, financial innovation, financial intermediation, fixed income, floating exchange rates, High speed trading, index arbitrage, index fund, information asymmetry, information retrieval, information security, interest rate swap, invention of the telegraph, job automation, junk bonds, law of one price, London Interbank Offered Rate, Long Term Capital Management, margin call, market bubble, market clearing, market design, market fragmentation, market friction, market microstructure, money market fund, Myron Scholes, National best bid and offer, Nick Leeson, open economy, passive investing, pattern recognition, payment for order flow, Ponzi scheme, post-materialism, price discovery process, price discrimination, principal–agent problem, profit motive, proprietary trading, race to the bottom, random walk, Reminiscences of a Stock Operator, rent-seeking, risk free rate, risk tolerance, risk-adjusted returns, search costs, selection bias, shareholder value, short selling, short squeeze, Small Order Execution System, speech recognition, statistical arbitrage, statistical model, survivorship bias, the market place, transaction costs, two-sided market, vertical integration, winner-take-all economy, yield curve, zero-coupon bond, zero-sum game

If both attempt to do so, however, their efforts probably will cancel out, and both will lose. * * * ▶ Jesse Livermore’s Manipulation of Some Bucketeers Jesse Livermore was a famous turn-of-the-century speculator. He collaborated with Edwin Lefèvre to write an autobiography titled Reminiscences of a Stock Operator. The book is a classic about trading. The book describes a number of manipulations in which Livermore participated, as either victim or perpetrator. One such manipulation occurred while he was trading in some illegal bucketeering shops. A bucketeer is essentially a bookie who allows his customers to bet on stocks.

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See speculative margins regulators, 60–66 and block trading, 333 by country, 62 competition among, 63 definition of, 59–60 and extreme volatility, 572–78 international, 62, 66 miscellaneous private, 65 politics of intervention, 578–81 power allotted to, 540 self-regulatory organizations, 63–65 and specialists, 510–11 U.S. agencies, 60–63 REITS. See real estate investment trusts relative performance evaluations, 445 relative return, 447–48 relative spread, 312 relative value trades, 348 Reminiscences of a Stock Operator (Livermore and Lefevre), 136 repayment, 178 replication, 188, 253, 316, 563 required rate of return, 208 reserve orders. See undisclosed orders residual risk, 349 resiliency, 400 responsive traders, 323–24 retail trading, 11–15, 517–18, 520, 522 retirement, 179 return smoothing, 469–70 Reuters, 59 REV.

Efficiently Inefficient: How Smart Money Invests and Market Prices Are Determined by Lasse Heje Pedersen

activist fund / activist shareholder / activist investor, Alan Greenspan, algorithmic trading, Andrei Shleifer, asset allocation, backtesting, bank run, banking crisis, barriers to entry, Bear Stearns, behavioural economics, Black-Scholes formula, book value, Brownian motion, business cycle, buy and hold, buy low sell high, buy the rumour, sell the news, capital asset pricing model, commodity trading advisor, conceptual framework, corporate governance, credit crunch, Credit Default Swap, currency peg, currency risk, David Ricardo: comparative advantage, declining real wages, discounted cash flows, diversification, diversified portfolio, Emanuel Derman, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, financial engineering, fixed income, Flash crash, floating exchange rates, frictionless, frictionless market, global macro, Gordon Gekko, implied volatility, index arbitrage, index fund, interest rate swap, junk bonds, late capitalism, law of one price, Long Term Capital Management, low interest rates, managed futures, margin call, market clearing, market design, market friction, Market Wizards by Jack D. Schwager, merger arbitrage, money market fund, mortgage debt, Myron Scholes, New Journalism, paper trading, passive investing, Phillips curve, price discovery process, price stability, proprietary trading, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, random walk, Reminiscences of a Stock Operator, Renaissance Technologies, Richard Thaler, risk free rate, risk-adjusted returns, risk/return, Robert Shiller, selection bias, shareholder value, Sharpe ratio, short selling, short squeeze, SoftBank, sovereign wealth fund, statistical arbitrage, statistical model, stocks for the long run, stocks for the long term, survivorship bias, systematic trading, tail risk, technology bubble, time dilation, time value of money, total factor productivity, transaction costs, two and twenty, value at risk, Vanguard fund, yield curve, zero-coupon bond

Lamont, Owen (2012), “Go Down Fighting: Short Sellers vs. Firms,” Review of Asset Pricing Studies 2, 1–30. Lamont, Owen, and Richard H. Thaler (2003), “Can the Stock Market Add and Subtract? Mispricing in Tech Stock Carve-Outs,” Journal of Political Economy 111(2), 227–268. Lefèvre, E. (1923), Reminiscences of a Stock Operator, John Wiley & Sons, New York. Lin, Hai, Junbo Wang, and Chunchi Wu (2011), “Liquidity Risk and Expected Corporate Bond Returns,” Journal of Financial Economics 99, 628–650. Liu, H. (2004), “Optimal Consumption and Investment with Transaction Costs and Multiple Assets,” Journal of Finance 59, 289–338.

How I Became a Quant: Insights From 25 of Wall Street's Elite by Richard R. Lindsey, Barry Schachter

Albert Einstein, algorithmic trading, Andrew Wiles, Antoine Gombaud: Chevalier de Méré, asset allocation, asset-backed security, backtesting, bank run, banking crisis, Bear Stearns, Black-Scholes formula, Bob Litterman, Bonfire of the Vanities, book value, Bretton Woods, Brownian motion, business cycle, business process, butter production in bangladesh, buy and hold, buy low sell high, capital asset pricing model, centre right, collateralized debt obligation, commoditize, computerized markets, corporate governance, correlation coefficient, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency risk, discounted cash flows, disintermediation, diversification, Donald Knuth, Edward Thorp, Emanuel Derman, en.wikipedia.org, Eugene Fama: efficient market hypothesis, financial engineering, financial innovation, fixed income, full employment, George Akerlof, global macro, Gordon Gekko, hiring and firing, implied volatility, index fund, interest rate derivative, interest rate swap, Ivan Sutherland, John Bogle, John von Neumann, junk bonds, linear programming, Loma Prieta earthquake, Long Term Capital Management, machine readable, margin call, market friction, market microstructure, martingale, merger arbitrage, Michael Milken, Myron Scholes, Nick Leeson, P = NP, pattern recognition, Paul Samuelson, pensions crisis, performance metric, prediction markets, profit maximization, proprietary trading, purchasing power parity, quantitative trading / quantitative finance, QWERTY keyboard, RAND corporation, random walk, Ray Kurzweil, Reminiscences of a Stock Operator, Richard Feynman, Richard Stallman, risk free rate, risk-adjusted returns, risk/return, seminal paper, shareholder value, Sharpe ratio, short selling, Silicon Valley, six sigma, sorting algorithm, statistical arbitrage, statistical model, stem cell, Steven Levy, stochastic process, subscription business, systematic trading, technology bubble, The Great Moderation, the scientific method, too big to fail, trade route, transaction costs, transfer pricing, value at risk, volatility smile, Wiener process, yield curve, young professional

His lessons I think of everyday, and have taught them myself to at least a hundred others. Gary was an avid reader and market historian and he got us all reading these neat old books published by early-twentieth-century market JWPR007-Lindsey April 30, 2007 16:14 Andrew J. Sterge 321 operators. Reminiscences of a Stock Operator by Edwin Lefèvre was a given. But we also got into more unusual works like Philip Carret’s The Art of Speculation, Tape Reading and Market Tactics by Humphrey B. Neill, and several by Richard D. Wyckoff, such as Wall Street Ventures and Adventures Through Forty Years.3 Many years later, running Cooper Neff, I imitated Gary’s approach with my employees.

The Man Who Knew: The Life and Times of Alan Greenspan by Sebastian Mallaby

airline deregulation, airport security, Alan Greenspan, Alvin Toffler, Andrei Shleifer, anti-communist, Asian financial crisis, balance sheet recession, bank run, barriers to entry, Bear Stearns, behavioural economics, Benoit Mandelbrot, Black Monday: stock market crash in 1987, bond market vigilante , book value, Bretton Woods, business cycle, central bank independence, centralized clearinghouse, classic study, collateralized debt obligation, conceptual framework, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency peg, Dr. Strangelove, energy security, equity premium, fiat currency, financial deregulation, financial engineering, financial innovation, fixed income, Flash crash, forward guidance, full employment, Future Shock, Glass-Steagall Act, Greenspan put, Hyman Minsky, inflation targeting, information asymmetry, interest rate swap, inventory management, invisible hand, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", junk bonds, Kenneth Rogoff, Kickstarter, Kitchen Debate, laissez-faire capitalism, Lewis Mumford, Long Term Capital Management, low interest rates, low skilled workers, market bubble, market clearing, Martin Wolf, Money creation, money market fund, moral hazard, mortgage debt, Myron Scholes, Neil Armstrong, new economy, Nixon shock, Nixon triggered the end of the Bretton Woods system, Northern Rock, paper trading, paradox of thrift, Paul Samuelson, Phillips curve, plutocrats, popular capitalism, price stability, RAND corporation, Reminiscences of a Stock Operator, rent-seeking, Robert Shiller, Robert Solow, rolodex, Ronald Reagan, Saturday Night Live, Savings and loan crisis, savings glut, secular stagnation, short selling, stock buybacks, subprime mortgage crisis, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, Tipper Gore, too big to fail, trade liberalization, unorthodox policies, upwardly mobile, We are all Keynesians now, WikiLeaks, women in the workforce, Y2K, yield curve, zero-sum game

The other band members would sneak upstairs to the Walgreens drugstore during offstage interludes and smoke dope in the phone booths; Greenspan, for his part, would study books about finance. In the unlikely setting of the Childs’ restaurant, Greenspan began his education about banking and markets. He learned about the life of John Pierpont Morgan, the financier who had shaped America’s corporate behemoths before World War I. He devoured Reminiscences of a Stock Operator, the classic account of the speculator Jesse Livermore, who bet successfully against the market on the eve of the 1929 crash. And he resolved that once he tired of music, his next move would be to Wall Street. In a strange kind of way, the hands of both Greenspan’s parents lay behind his abrupt change of direction.

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(Greenspan, Herbert), 18 Reed, John S., 360, 522–25, 530, 560 Reed, Thomas, 242 Regan, Donald, 222, 256, 263, 271, 275, 283, 286, 289, 297, 299–300, 307–10, 375 regression analysis, 37 Regulation Q caps, 129–30, 134–36, 138, 148–51, 427, 544, 616 Reich, Robert, 547 Reis, Ricardo, 646–47 Reminiscences of a Stock Operator (Livermore), 24, 54 Republican Party, 3, 93–95, 102, 110, 114, 120–25, 155, 167, 170, 181, 204, 224–26, 235–37, 359 and 1988 election, 330, 338, 365–67, 371–74 and congressional elections, 273, 297 conventions of, 243–48, 274, 373, 389–90 Dream Ticket of, 242–51 and the Fed, 314–15 and Fed chairmanship, 286, 291, 309–10 and Greenspan, 248, 255, 274, 286, 338, 377, 415–16, 424, 478, 486, 500, 562–63, 567 and Mexico bailout, 475–76 and midterm elections, 459–60, 608 presidential campaigns of, 241–59 and Social Security reform, 273, 275–81 and taxes, 215–17, 257, 390 Reserve Primary Fund, 661–62 Resolution Trust Corporation (RTC), 405 Reuters, 494, 504 Review of Financial Studies, 363 Richmond Federal Reserve, 540, 636 Riegle, Don, 350, 402 riots, 109–10, 114–16, 118–19, 123–24, 185–86.

Chaos Monkeys: Obscene Fortune and Random Failure in Silicon Valley by Antonio Garcia Martinez

Airbnb, airport security, always be closing, Amazon Web Services, Big Tech, Burning Man, business logic, Celtic Tiger, centralized clearinghouse, cognitive dissonance, collective bargaining, content marketing, corporate governance, Credit Default Swap, crowdsourcing, data science, deal flow, death of newspapers, disruptive innovation, Dr. Strangelove, drone strike, drop ship, El Camino Real, Elon Musk, Emanuel Derman, Fairchild Semiconductor, fake it until you make it, financial engineering, financial independence, Gary Kildall, global supply chain, Goldman Sachs: Vampire Squid, Hacker News, hive mind, How many piano tuners are there in Chicago?, income inequality, industrial research laboratory, information asymmetry, information security, interest rate swap, intermodal, Jeff Bezos, Kickstarter, Malcom McLean invented shipping containers, Marc Andreessen, Mark Zuckerberg, Maui Hawaii, means of production, Menlo Park, messenger bag, minimum viable product, MITM: man-in-the-middle, move fast and break things, Neal Stephenson, Network effects, orbital mechanics / astrodynamics, Paul Graham, performance metric, Peter Thiel, Ponzi scheme, pre–internet, public intellectual, Ralph Waldo Emerson, random walk, Reminiscences of a Stock Operator, Ruby on Rails, Salesforce, Sam Altman, Sand Hill Road, Scientific racism, second-price auction, self-driving car, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, Skype, Snapchat, social graph, Social Justice Warrior, social web, Socratic dialogue, source of truth, Steve Jobs, tech worker, telemarketer, the long tail, undersea cable, urban renewal, Y Combinator, zero-sum game, éminence grise

Somehow, brewing in a spirit of good fellowship, and the hilarity of drenching the CEO’s desk, had produced a better product than the strained group celebration of the IPO. Initial Public Offering: A Reevaluation Prices, like everything else, move along the line of least resistance. They will do whatever comes easiest. —Edwin Lefèvre, Reminiscences of a Stock Operator MAY 18, 2012 The news coverage surrounding the IPO, even from the supposedly savvy tech and financial press, was a reminder of that harsh lesson of life: there are those who write headlines about money for a living, and then there are those who make money. “Facebook IPO Blunder” announced Fortune; “Mark Zuckerberg’s Big Facebook Mistake,” thundered Forbes; “Facebook Disappoints on Its Opening Day” intoned VentureBeat, a Valley insider rag that should have known better.

New Market Wizards: Conversations With America's Top Traders by Jack D. Schwager

backtesting, beat the dealer, Benoit Mandelbrot, Berlin Wall, Black-Scholes formula, book value, butterfly effect, buy and hold, commodity trading advisor, computerized trading, currency risk, Edward Thorp, Elliott wave, fixed income, full employment, implied volatility, interest rate swap, Louis Bachelier, margin call, market clearing, market fundamentalism, Market Wizards by Jack D. Schwager, money market fund, paper trading, pattern recognition, placebo effect, prediction markets, proprietary trading, Ralph Nelson Elliott, random walk, Reminiscences of a Stock Operator, risk tolerance, risk/return, Saturday Night Live, Sharpe ratio, the map is not the territory, transaction costs, uptick rule, War on Poverty

As Linda Raschke said, “If you ever find yourself tempted to seek out someone else’s opinion on a trade, that’s usually a sure sign that you should get out of your position.” 18. THE VIRTUE OF PATIENCE Waiting for the right opportunity increases the probability of success. You don’t always have to be in the market. As Edwin Lefevre put it in Market Wiz(ar)dom / 469 his classic Reminiscences of a Stock Operator, “There is the plain fool who does the wrong thing at all times anywhere, but there is the Wall Street fool who thinks he must trade all the time.” One of the more colorful descriptions of patience in trading was offered by Jim Rogers in Market Wizards: “1 just wait until there is money lying in the corner, and all I have to do is go over there and pick it up.”