📖Jesse Livermore
Understand Before Investing
Only invest in what you can explain simply.
Never invest in a business you cannot explain in simple terms. If you can't describe why a company is valuable, you don't understand it well enough to own it.
🏠 Everyday Analogy
📖 Core Interpretation
Jesse Livermore emphasizes durable business quality over short-term noise. A strong model, real competitive edge, and disciplined capital allocation matter more than quarterly excitement.
💎 Key Insight：Simplicity of explanation tests depth of understanding.
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❓ Why It Matters
Without business-quality filters, investors drift toward stories rather than economics. Durable cash generation is what supports long-term valuation.
🎯 How to Practice
Use a checklist covering moat, management, unit economics, and capital allocation; track long-term cash generation instead of quarter-to-quarter noise.
⚠️ Common Pitfalls
Buying narratives instead of cash-generating economics
Overreacting to short-term operating noise
Ignoring management quality and capital allocation
📚 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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