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Echoes of a Stock Operator: Quotes and Commentary Part 7

Chapters XIV-XVI

“And there is another thing to remember, and that is that a market does not culminate in one grand blaze of glory. Neither does it end with a sudden reversal of form. A market can and does often cease to be a bull market long before prices generally begin to break… I noticed that stocks which had been the leaders of the wonderful advance had ceased to advance. They dropped six or seven points and stayed there. At the same time the rest of the market kept on advancing under new standard bearers.”

Livingston captures the nuanced dynamics of market cycles here, illustrating that the zenith of a bull market often precedes a subtle yet definitive shift in momentum. This phenomenon resonates well with my experience in the cryptocurrency sector. I’ve observed firsthand how Bitcoin, analogous to the “leaders of the wonderful advance” mentioned, often reaches a plateau or even recedes slightly in value while the broader market, fueled by alt tokens, continues to surge. This divergence is emblematic of a redistribution of market enthusiasm and capital from established frontrunners to emerging contenders, underscoring a pivotal transition phase. The key difficulty is understanding when the rotation is a true reversal in the primary market rather than a secondary reshuffling of leaders and laggards.


“When I lose money by reason of some development which nobody could foresee I think no more vindictively of it than I do of an inconveniently timed storm. Life itself from the cradle to the grave is a gamble and what happens to me because I do not possess the gift of second sight I can bear undisturbed.”

This passage is another example of personal philosophy making its way into Livingston’s operations. It embodies the essence of Stoicism and the core message of the Serenity Prayer, both of which emphasize acceptance, resilience, and the distinction between what we can and cannot control. This philosophy serves as a grounding force in my work life as I’ve integrating stoic teachings more and more over the years. It teaches me to approach setbacks not with frustration or regret over unforeseen developments, but with a calm acceptance and a focus on adapting my responses and strategies within the scope of my influence.


“A I have said a thousand times, no manipulation can put stocks down and keep them down. There is nothing mysterious about this. The reason is plain to everybody who will take the trouble to think about it half a minute. Suppose an operator raided a stock – that is, put the price down to a level below its real value – what would inevitably happen? Why, the raider would at once be up against the best kind of inside buying. The people who know what a stock is worth will always buy it when it is selling at bargain prices. If the insiders are not able to buy, it will be because general conditions are against their free command of their own resources, and such conditions are not bull conditions.”

“The theory that most of the sudden declines or particular sharp breaks are the results of some plunger’s operations probably was invented as an easy way of supplying reasons to those speculators who, being nothing but blind gamblers, will believe anything that is told them rather than do a little thinking. The raid excuse for losses that unfortunate speculators so often receive from brokers and financial gossipers is really an inverted tip. The difference lies in this: A bear tip is distinct, positive advice to sell short. But the inverted tip – that is, the explanation that does not explain – serves merely to keep you from wisely selling short.”

Livingston debunks the myth that market manipulation can sustainably depress stock values below their intrinsic worth, emphasizing that knowledgeable insiders will capitalize on such discrepancies and restore price. My experience suggests that true manipulation is contained to short moves meant to catch traders offsides. This is why after a break of an important price zone I wait for liquidations to play out before seeing if sustained buying or selling emerges. Acting hastily by not waiting for additional evidence of a genuine move can lead to buying the top or selling the bottom. Of course, there are articles that will be published on downward moves specifically, suggesting that “whales” are trying to shake out weak hands. As Livingston suggests, the naïve trader surviving on whatever crosses his newswire will see this as a reason to stay committed despite the obvious turn in the market. 


“Investors are a different breed of cats. Most of them go in strong for inventories and statistics of earnings and all sorts of mathematical data, as though that meant facts and certainties.”
Truthfully data collection has improved tremendously since the 1920s when Reminiscences was published, but it doesn’t change the fact that price moves well before data releases. I’m not saying the fundamental macro and micro data is useless from an investing standpoint, but for market timers it is. Data simply confirms what price has already done.

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