"The Speculator Kid" - Sensi Livemer

As the giant silver bird headed west toward Fort Lauderdale in Lorida, flashing colorful silhouettes stood out from the air between the Gulf of Mexico and the Atlantic Ocean. As the plane was about to land, I leaned back in my seat and reflected on the main reason I had taken a fishing trip to Florida over the Christmas holidays. I had a strong interest in a man known as J.L., and I came here because he used to come here.

I can describe him in his heyday in the 1920s: tall, well-dressed, serious-looking, sitting by the window of the New York-Florida high-speed train, looking forward to fishing, making friends, relaxing nerves, meditating, and more importantly, looking forward to a short, albeit brief, break from battling in the arenas of Wall Street and Chicago.

His name was Jesse Lauriston Levermer.

It is true that a number of brilliant or fortunate market operators of this century have, in their heyday, relied on good intuition to close their holdings in a timely manner and made millions of dollars in profits. I myself have been lucky enough to be included in this exclusive group on many occasions. But Livemer is in his own right. He has never been surpassed by anyone in the scale and importance of his influential operations, in the precisely calculated and disciplined manner in which he buys and sells, and in the detached means of trading that he often uses.

Born on July 26, 1877, in Schutzbury, Massachusetts, the only son of a poor farmer, he left home at the age of 14 to work as a market room operator at a Boston brokerage, earning $3 a week.

From that mundane job to a few more years as an apprentice, trading small stock positions at several different brokerage firms along the East Coast, the taciturn and dedicated young man became one of the most awe-inspiring and admired market gurus of the early century. Other Wall Street gurus had nicknamed him "The Speculator Boy."

Livemer's world is all about price fluctuations (stock and commodity prices) and his obsessive ideas, precise analysis, and predictions of those prices. As Edward J. Deyes, one of the most famous financial commentators of our time, put it: "Suppose Livemer is deprived of a penny, given only a little brokerage loan, locked in a room with a phone and a ticker, and comes out again with a new fortune."

He was my hero from my earliest days on Wall Street in 1959. He became my coach and spiritual mentor as I developed my expertise in price analysis and trading. Like many other investors, I was deeply influenced by his tactics, strategies and market philosophy.

"There is only one aspect of the market, and that aspect is neither bull nor bear," he wrote. "That aspect is the right aspect." This basic theory has stuck in my mind and lingers. I think of it every time I read empty and tedious market analysis and strategy that places too much emphasis on theory and not on the actual market.

Like most traders, I am often faced with deciding which positions to hold and which to close. On this issue, Livemer provides us with excellent and clear advice, commenting on his mistakes:

"I did make a mistake. The cotton trade showed that I would suffer a loss, but I kept it. The wheat trade showed that I was profitable, but I sold it. Of all the speculative mistakes, there is hardly a greater mistake than trying to hedge losses evenly. Always remember to close positions that show losses and keep positions that show profits."

However, the most significant asset that Levomo has shown many investors is the overall strategy of investment goals. This wealth is all the more important in an era when traders increasingly rely on powerful personal computers and advanced software. Even relatively inexperienced traders can make sizable purchases and sales with the help of immediate short-term chart displays. Note this snippet of Levomo's wisdom:

After working on Wall Street for many years and making and losing millions of dollars, I want to tell you that it was not my insights that made me a lot of money. I was able to stand my ground. It doesn't take any skill or means to work properly in the market. You always find many long opportunities in a bull market, and the same is true in a bear market. Many people I know have made the right judgment of the market at the right time, and they can buy or sell at the price where the maximum profit can be made. And their experience is often enough to rival mine. That is, they didn't actually make money from it. People who can make the right judgment about the market and stand by their opinions are not average. I find this to be one of the hardest things in the world to learn. But only if the market operator has a firm grasp of this skill can he make a lot of money. There is a saying that it is easier for a trader who knows how to trade to make a million dollars than a trader who knows nothing about how to trade to make a few hundred dollars.

Here's what Levomer had to say about the loss:

Suffering a loss is the least significant difficulty I have ever encountered. I have never had to worry about it since I suffered a loss. What really upsets me is not the loss, but the fact that I have done something wrong.

Unfortunately, my fishing trip in Florida was too short, and about a week later I was back in New York, still in the dead of winter. As I waited for the big fish to take the bait, I thought a lot about Livemer and his Florida fishing trip, his trading strategy, and his considerable ingenuity in market operations. Although his fishing results at that time were far more abundant than my pitiful little bucket of sea fish, I enjoyed an advantage that he could never have enjoyed: I could study his books and enjoy them.

I had these ideas a few years ago, but as I write them down today, they are just as relevant as ever. In fact, they have been important in the past 50 years or even 100 years, just as they will be important in the next 50 years or even 100 years.

In 1849, Carl Alvers said: "The more things change in the outside world, the more they will remain what they are." This certainly applies to Livemer's investment strategies and strategies.

Jesse Livemer may have been, and will remain, the most dynamic and successful independent speculator and investment decision maker of this century. Though he died in 1941, his influence on generations of stock and commodity traders who followed him was immense. I have read, and even reread, his work countless times: I count myself as one of his students. When I arrived in Asia, I was amazed to find so many stock and commodity speculators on the other side of the world who felt the same way about this investment legend.

About a decade ago, I had the idea of writing a book about Mr. Livemer, drawing on the memories of people who knew him when he worked with him on Wall Street in the 1920s and 1930s. I advertised in financial newspapers and magazines for people with first-hand information about Mr. Livemer and his work, but unfortunately I did so too late. I couldn't find anyone with first-hand information at all. It was disappointing, but I had an active and busy Wall Street career myself, so the project soon ran aground and I moved on to more constructive work.

But I never gave up on the Livemer project entirely, and in the years that followed, I continued to study his work whenever I could, and used Livemer's wisdom and experience to develop my own investment strategies. Gradually, I came to the idea that if I couldn't write a meaningful new book "about" Livemer, why couldn't I "collaborate" with Livemer on a book? If I couldn't "collaborate" on a book with someone who had taken a permanent break more than 50 years ago? A colleague advised me that "trench warfare", which had been abused for more than 30 years, might be too stressful for me, unless of course I had new theoretical insights into the failure rate issue. I don't really have an innovative theory of failure rates, but I do realize that while the best of Livemer's tactics and strategies have been developed and interpreted for financial marekts, they will inevitably become outdated over the years. Perhaps these strategies can be adapted to the new trading environment, and can be re-annotated for a new generation of equity, commodity, and options investors around the world. These new generation of investors grew up rapidly with the development of fast personal computers, powerful software systems, and real-time data display systems - which can be transmitted by satellite to the farthest corners of the world at the speed of light. These new things are new things that Livemer could not have dreamed of.

Traders in the 1990s and into the 21st century analyzed markets and ordered orders in many languages, whereas Livemer spoke only English, most likely none of which he had heard. For maximum effect, I was going to reinterpret and modernize Livemer's teachings for dynamic traders who had never heard Livemer's 19th-century New England accent, while also incorporating my own strategies.

In fact, I am now sitting at a trading desk in Hong Kong, 12,000 miles from Wall Street. It is here that I continue to work hard in my chosen profession, analyzing markets and trading, just like so many other financial operators who speak different languages (other than English) and dialects. This may seem strange to some, but thanks to modern satellite communication technology, the moment I use to place an order here is as fast as a similar order at a trading desk in New York. But unfortunately, even with modern technology, there is an inconvenience that is difficult to overcome. Being on the other side of the world, that means it's 12 hours ahead of New York time, so in order to trade in the New York and Chicago markets, I have to start work at 8:00 pm and finish work in the early hours of the next morning. Of course, the inconvenience of "working the night shift" can be easily overcome as long as those Americans living in Asia are compensated.