Wise Words from Edwin LefevrePrashant Vaishampayan
Edwin Lefevre is most well-known for his classic book “Reminiscences of Stock Operator”. His talent was turning Wall Street stories and anecdotes he collected over the years into lessons on human nature. He pointed out the errors that plagued investors throughout the market cycle. He covered market history, uncertainty, probability, and he even dabbled in a little value investing. It turns out, Lefevre had a way with words. Below is a collection of his wit and wisdom.
1. All booms are alike. The stage setting varies, but fundamentally they are as drops of water. Customs, like costumes, change from the force of environment and economic conditions, but human nature remains the same.
2. The stock ticker knows more than everybody. It deals with results. It satisfies your cravings for action. It makes life worth living. And when it says that you are an ass, it convinces even you of it.
3. A man who has bought a stock against the advice of a conservative broker, and has doubled his money in a fortnight, finds his suspicions turned into convictions by that impartial judge, the stock ticker.
4. Knowledge, indeed, is the enemy of a speculator during a boom.
5. It is one of the maximums of speculation that stocks never go up, but must be put up.
6. After many years of studying Wall Street’s victors and victims, I must conclude that the American public still insists on losing its savings every time the old hook is baited with the immortal easy-money worm. After every smash, the blame is laid on the hook and not the hunger. In reality, the fault is seldom with the machinery of speculation and is usually with the psychology of speculators.
7. The higher the price goes, the less desirable the investment becomes as an investment.
8. Buying stocks of prosperous concerns may be good business — but only at a certain price. But if you will make sure you know what you are getting for your money, you will be doing what nobody does in a bull market.
9. You know that nine out of ten people who talk about the market talk about their profits. They crave applause for their cleverness.
10. From hardship to comfort, the gap is a million miles wide. From comfort to luxury, the step is only four inches long. Ask any man who has made easy money.
11. It is not the certainty of disaster ahead but the uncertainty of better days to come that keeps the investor from buying.
12. It is only fair to admit that the commonest and most expensive blunder that all exceptionally brilliant businessmen make is being right too soon.
13. Within obvious bounds, the average investor’s most valuable adviser is fear; not the panic variety but the kind you call caution or conservatism, for, after all, prudence is a wise and desirable fear if it smothers greed.
14. Consider investments of every period in history and you will find that a great adverse factor has always been the change, which is something nobody can prevent.
15. “Easy money” means only one thing when it means money that has come easy: It means the money goes even more easily than it came.