📖Jesse Livermore
Deep Understanding Required
Develop deep expertise, not surface knowledge.
Surface-level knowledge is dangerous in investing. Develop deep expertise in your areas of focus. True understanding means knowing what could go wrong.
🏠 Everyday Analogy
📖 Core Interpretation
Jesse Livermore advocates a repeatable process: define criteria, execute consistently, and review decisions against evidence. Process quality drives outcome consistency.
💎 Key Insight：True understanding includes knowing what can go wrong.
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❓ Why It Matters
Without process, there is no reliable feedback loop. Structured execution and review improve decision quality over time.
🎯 How to Practice
Run a decision loop of research, thesis, execution, and post-mortem; document assumptions and update playbooks with evidence, not hindsight bias.
⚠️ Common Pitfalls
Having opinions without execution criteria
Reviewing outcomes but not decisions
Abandoning rules during volatility spikes
📚 Case Studies
1
Long-Term Capital Management (1998)
LTCM kept averaging down on converging bond trades that moved against them after Russia’s default, increasing leverage as prices fell.
✨ Outcome：Positions collapsed further, margin calls mounted, and the fund required a Fed-brokered bailout, illustrating the danger of averaging down.
2
Union Pacific Breakout (1907)
Livermore bought Union Pacific as it broke through resistance, confirming a pivotal point during the 1907 panic rally.
✨ Outcome：Rode the sharp advance, captured large profits by selling into strength as momentum slowed.
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