Jubilee Prosperity

What caught our attention about the 1906 San Francisco Earthquake was something we did not know until today.

Time lag or resonance.

Jesse Livermore’s short of Union Pacific stock the day before the earthquake actually lost money the day of the earthquake and for days thereafter.

The overall 1906 and 1907 market psychology tenors and tones were ebullient, although the market actually topped out in 1906.

It seems many people were buying on the dips.

It took time for UNP fundamentals after the earthquake to manifest in market prices as news of destroyed UNP properties came in.

If we look at the Dow chart since 1900, we see the 1906 earthquake accompanied the 1906 market peak, as did other Great Earthquakes of Magnitude 8 and higher that may have sent low frequency electromagnetic signals and energy around the world affecting the human psyche into panic at a subconscious level.

By patiently keeping the courage of his contrary intuitive opinion, Jesse Livermore eventually made today’s equivalent of over $5 million on this one earthquake trade.

http://www.zealllc.com/2004/jesse07.htm

Jesse, who started trading at 15 in bucket shops, said:

Without faith in his own judgment no man can go very far in this game.

That is about all I have learned – to study general conditions, to take a position and stick to it.

I can wait without a twinge of impatience.

After spending many years in Wall Street and after making and losing millions of dollars, I want to tell you this:

It never was my thinking that made the big money for me.

It always was my sitting.  Got that?  My sitting tight!

[We note JL meant sitting with a trade as long as losses were limited or profits growing in the right direction, in which case he would add to a profitable trade, always averaging up, never averaging down.]

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This entry was posted on Tuesday, March 9th, 2010 at 7:08 pm and is filed under Market Psychology. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.