The Ultimate Advice in Market Speculation

If my children ever take to stock market speculation, there is only one book I would recommend they read – ‘Reminiscences of a Stock Operator’ by Edwin lefevre. There is one quote from this book I would like them to etch in their memory.

“The speculator’s chief enemies are always boring from within. It is inseperable from human nature to hope and to fear. In speculation when the market goes against you you hope that every day will be the last day – and you lose more money that you should had you not listened to hope – to the same ally that is so potent a success-bringer to empire builders and pioneers, big and little. And when the market goes your way you become fearful that the next day will take away your profit, and you get out – too soon. Fear keeps you from making as much money as you ought to. The successful trader has to fight these two deep-seated instincts. He has to reverse what you might call his natural impulses. Instead of hoping he must fear; instead of fearing he must hope. He must fear that his loss will develop into a much bigger loss, and hope that his profit may become a big profit. It is absolutely wrong to gamble in stock the way the average man does”.