📖Jesse Livermore
Buy Below Intrinsic Value
Buy only at prices well below intrinsic value.
The cardinal rule of investing: buy only when the price is significantly below your conservative estimate of intrinsic value. This builds in protection against error.
🏠 Everyday Analogy
📖 Core Interpretation
In Buy Below Intrinsic Value, Jesse Livermore focuses on the gap between price and value. Returns come from paying less than what a business is worth, not from guessing short-term market moves.
💎 Key Insight：Buying below value builds in protection against error.
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❓ Why It Matters
Ignoring valuation turns even good companies into poor investments. Overpaying compresses future returns and leaves little margin when assumptions are wrong.
🎯 How to Practice
Estimate intrinsic value with conservative assumptions, set clear buy ranges, and act only when price offers a meaningful discount with acceptable downside.
⚠️ Common Pitfalls
Confusing a low price with true cheapness
Using one metric without business context
Overly optimistic assumptions that erase margin of safety
📚 Case Studies
1
Great Crash Short Campaign (1929)
Livermore built massive short positions in leading stocks as speculative excess peaked before the October 1929 crash.
✨ Outcome：Profited enormously from the collapse, though later lost much of the fortune through subsequent trading mistakes and overconfidence.
2
Bethlehem Steel Bull Run (1915)
Livermore built an initial stake, then pyramided only as the stock advanced and confirmed strength, adding smaller tranches at higher levels to control risk.
✨ Outcome：Captured a large portion of a powerful wartime advance while limiting exposure if the uptrend failed.
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