📖Jesse Livermore
Core Investment Philosophy
A clear philosophy anchors you in turbulent times.
A clear investment philosophy provides an anchor in turbulent times. Know what you believe, why you believe it, and stick to it when tested.
🏠 Everyday Analogy
📖 Core Interpretation
Jesse Livermore sees markets as cyclical rather than linear. Understanding cycle position improves risk-taking decisions more than trying to call exact tops and bottoms.
💎 Key Insight：Conviction based on logic survives market storms.
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❓ Why It Matters
Ignoring cycles repeats the same mistakes: excessive optimism at peaks and excessive pessimism near troughs. Context matters for position sizing.
🎯 How to Practice
Monitor credit, valuation, earnings, and sentiment signals; reduce aggressiveness in euphoric phases and preserve flexibility in fearful phases.
⚠️ Common Pitfalls
Treating short rebounds as full cycle turns
Extrapolating peak conditions indefinitely
Becoming maximally defensive near valuation troughs
📚 Case Studies
1
Piggly Wiggly Short Squeeze (1924)
Livermore shorted Piggly Wiggly as it was cornered. Price was squeezed sharply higher, but he stuck to the trade as the corner unraveled.
✨ Outcome：By letting the profitable short run after the squeeze failed, he captured a large gain as the stock collapsed.
2
1907 Panic Short Positions (1907)
Sensing market weakness, Livermore built substantial short positions before the 1907 Panic. As forced liquidation accelerated, prices plunged far beyond typical corrections.
✨ Outcome：He let his winning shorts run during the panic, exiting only after a climactic selloff, earning millions and cementing his reputation.
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