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Market Rider

Reflections: How to choose wisely

/ 12:24 AM April 18, 2017

My short essay about Jesse Lauriston Livermore—on his wonderful rise to success, but with a sad ending—in my previous column titled “Road to Financial Freedom” stirred questions on success, fulfillment and, ultimately, happiness.

I did not make any attempt to deal on any of the issues anymore. I did not feel competent enough to talk about them. They are concerns better left to professional counselors to profound on.

However, a recollection during the Holy Week led me to go back to an old book on improving one’s decision-making, an ability one must have to successful stock investing.


Going through it the second time, I also found it to be a good source of insights on the meaning of success, fulfillment and happiness.

Livermore committed suicide at the age of 63 despite an estate of over $5 million, an amount ordinary persons can still live on comfortably in present day America. He had an exciting stock investing career that earned him assets worth over $100 million after the 1929 stock market crash (estimated to be about $1.39 billion based on 2016 statistics).

I postulated that he managed his career without a clear idea of what financial freedom really is. Due to his early indigent beginnings, too, his thinking of financial freedom had been nursed by the highly popular but wrong notion of “hitting it big.”

He blamed his misfortunes on not having followed religiously his tried and tested investing rules. But I said his “greater and more fatal fault” was that “he did not have an investing goal.”

Reading Livermore’s suicide note, one active investor said: “It is a wake-up call for all traders who are: 1) Ignoring family love at the cost of trading profits; 2) Getting more “greedier” by taking phenomenal risks; 3) Complicating life through thinking (unnecessary worrying); 4) Not satisfied with the current wealth they have; 5) Taking lots of stress, depression and anxiety medicines; 6) Ignoring healthy living primarily because of trading stress.”

Another reader gave a more scientific and kind assessment: “Actually there is a more simple explanation. It is pretty common knowledge that he was bipolar or what was then known as being manic-depressive. Without proper medication, bipolar disorder often leads to suicide. There is widespread mental illness in his family as evidenced through his three sons, all of whom committed suicide. It’s my guess as well that his trading probably exasperated his mood cycles and his mood cycles most likely exasperated his P&L. What is amazing to me to this day is how one could become as successful as he did in spite of his mental illness. That truly is amazing.”

Bottom line spin

The book had a better way of looking at hard questions and answering them with “wise decision-making.” The book prods you to recognize a situation that will need decision making. It also helps you to recognize irrationality, uncreative thoughts, information overload, and most importantly, bad decision logic.


The book also mentions that “the best place to start thinking about a decision problem is with values.”

Incorporating values into your thinking can help you determine the positive or negative. They can, as well, help you determine the “means” or the “end” (or the true goal), and thus, lead you to knowing what exactly is to be done or must be done for the right things to emerge.

Like what they say in the market, “when critical judgment weakens, and false hopes govern, one can go into risky gambles to avoid taking certain losses.”

The book is titled “The Three Secrets of Wise Decision Making” by Barry F. Anderson. It was published in the early part of 2000, but I still find it very relevant. It’s a very good reference on “how to choose wisely.” Happy Easter everyone!

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