Jesse Livermore
Sitting tight
Being right was never the hard part
Reminiscences of a Stock Operator, chapter 5
A speculator famous for speed put the credit somewhere unexpected. The chapter explains why sitting is harder than being right.
What actually happened?
His own summary is not what anyone expects from him. It never was his thinking that made the big money, he says; it was his sitting. He had watched the alternative all his life: men who saw the move coming and made nothing from it, shaken out by every pullback or cashing a small gain early. Men who can both be right and sit tight are uncommon, he concludes, and that is the whole difficulty. The hard part is not the analysis. It is that every day of sitting is a day of refusing to act.
The money lives in the back half of the hold
A large move does not pay out evenly. The early stretch is the choppiest and the most testing; the compounding happens later. Getting off partway takes the uncomfortable section and hands over the valuable one, which is how people are right about direction and collect almost nothing.
Eight months into the direction you chose, nothing has moved, so you switch. It works in month fourteen and your successor collects the degree you paid for.
Not moving is an action that needs defending
Sitting is not the easy option; it is continuous resistance. The news, the swings and every friend's better idea all argue for a change. So it needs fortification: write the original thesis and the conditions that would falsify it, and permit movement only when one of those trips.
Set a hard rule for the long position: look once a quarter, and only against the three reasons you wrote at the start. Red or green is not a reason.
Sitting only protects a judgement that is right
The sentence says right and sitting tight, and the two conditions are joined by an and. Using it to keep a broken position alive is the expensive misreading. Patience and stubbornness look identical from outside; the only test is whether the written thesis still stands.
Two of the three reasons you bought have already failed and you are still holding on. That is not sitting tight. That is refusing to be wrong.
How do I use it today?
Where you are: the direction looks right and the wobbles are making your hands itch.
Ask first: has the thesis I wrote at the start actually broken? If not, is this urge coming from evidence or from discomfort?
Where it goes wrong: applying it to a position already falsified, or never writing a falsifier at all, so holding on becomes not looking.
Lines to keep
It never was my thinking that made the big money for me.
It always was my sitting. Got that? My sitting tight!
Same situation, other people are asking
Everything's fine. What should I be getting ready for?To make this quarter I would squeeze the people carrying me.It is working. Should I go loud about it now?This is the highest I have ever been. Do I push for more?Things are going well and it scares me · all 11 questions →If this one named what you are going through,
send it to someone who needs it, or keep it somewhere you will find it again.