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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: Threei who wrote (7271)	3/11/2000 4:21:00 PM
From: Jon Tara	Read Replies (4) \| Respond to of 18137

Sorry, yes it was Livermore. And while I thought that he was wiped-out (and subsequently made it back) both points are irrelevant to my main point: that while events in the markets may (roughly) repeat themselves, the major ones are truly "once in a lifetime" or nearly so. Sure, we're likely to have another great bull market like this one, but I am unlikely to be around to take advantage of it. If I am, my fingers are unlikely to be able to work the keys fast enough, anyway. :) As to my apocalyptic prediction - it's one possible scenario. We may get a crash, or the bull may just die with a wimper. What I am sure of, though, is that it WILL end, and that it's NOT "different this time". The decimalization problem is part of what I feel is the most likely crash scenario. There is ample evidence to suggest that, like 1987, we lack the necessary infrastructure for the market to trade in an orderly manner past a certain threshold. The crash of 1987 was as much about a failure of technology as it was about a culmination of events. On that day in 1987 the tape was running TWO HOURS LATE. Traders sold out of panic borne out of a lack of information, with those away from the floor putting in market orders without having any idea what price they might get. Decimalization, IMO, could push us right into another similar scenario. The infrastructure can barely handle current volume with fractional quotes. Decimal quotes are going to push the systems over the edge. (If you don't understand why decimalization will overload the infrastructure, think for a moment what your L2 display is going to look like...) Hopefully, though, it won't happen - not just now. NASDAQ is right, and the SEC is wrong on this. It most likely won't happen, because no matter what the SEC mandates, NASDAQ just CAN'T DO IT. What is the SEC going to do - shut down NASDAQ because they can't switch over the decimal quotes? :)

To: Threei who wrote (7271)	3/11/2000 4:25:00 PM
From: gaj	Read Replies (2) \| Respond to of 18137

there is a livermore book out there (jesse livermore: speculator king) written by a man named paul sarnoff, which isn't indepth, but appears to be the best non-"reminiscences" out there. i got the impression that livermore made - and lost - 3 HUGE times in his life. the final was before his suicide in the early 1940s... livermore was blamed on front pages of some stocks (or more likely, commodities) being down, because of his short selling. in some ways, just like the 'evil' MMs today... what did him in, in my estimation, was the same thing that helped him before; not being able to admit he was wrong...

To: Threei who wrote (7271)	3/12/2000 12:09:00 AM
From: ahhaha	Read Replies (2) \| Respond to of 18137

The $100 million claim was made by Richard Smitten in his recent book. The book has quite a few errors which came from Smitten's making direct contact with Livermore's descendents. Livermore's family painted a picture that doesn't square with other documented facts. Before the crash Livermore got short and anticipated a nasty down side. He made a lot of money. That quantity is unknown but something on the order of $50 million wouldn't be an extreme estimate. What the book doesn't divulge or what the author hadn't discovered was that Livermore went back in and tried to buy what he thought was the bottom. The bottom wasn't the bottom, but Livermore persisted in buying because it was his courage and judgement about value which had earned him so much over the previous decades. He was right. That wasn't good enough. Being right never is. Securities can fall below their intrinsic value. Way below. The farther down stocks went the more Livermore bought and the more he lost. By the Fall of 1932 Livermore was borrowing to speculate. It was around this time that he set up trusts for his family because he didn't trust what he might end up doing with his dwindling fortune. As the cash disappeared he borrowed from loan sharks possibly associated with organized crime and got into the hole with them to the tune of $2 million. Although he made several attempts to make comebacks during the remarkable bull market of '34 - '37, he never repaired his fortune. Livermore was well-known before the crash as a top operator. He had made $250,000 in 1906 by being short when the San Francisco earthquake hit. He was short only because the market had told him that certain stocks were weak. It was only providential that he happened to be short and not long. It was this event and not his fame as the "boy plunger" that launched his career as a stock market operator. Nonetheless, it was the public that learned about his short position gains and then assumed that whenever a stock plunged, it was due to a Livermore manipulation. The consequence of this unwanted visibility was that he, Willie Durant, and other operators were blamed for "pushing" the market down and causing the crash. The public never blames the true culprit: unbridled greed of the wild-eyed public. The result was the public shot itself in the foot by passing a large body of laws which had the intent of protecting the public from itself. Those laws were constructive, but they were also destructive so that recently in an attempt to undo the bad, the genie has been let out of the bottle. The problem isn't the MMs or anything else the public imagines, the problem is that the public believes trading has a positive expected return. This view has been reinforced to such an extent by recent stock market action that an astounding large percentage of the public is whirlin' 'em. Most of them are going to lose every cent. When the stock market has busted the public without any crash or other apocalyptic event, the public is going to shoot itself in the foot again. They will pass laws that will stymie individual trading. At that time you don't want to have visibility like Livermore did so that the public pillories you and makes you the whipping boy for the grievous sin of having taken their money away from them.