Multi-Disciplinary Reading – Book Reviews

Speculation as a Fine Art, Dickson G. Watts, 1880 – This books precedes even Jesse Livermore and probably even inspired him. Speculation is as old as the hills and nothing much has changed in centuries since Cardano although what we speculate on and how we do it has changed over the years. This is a very tiny book – like finish in an hour or two sort of short, even for an extremely slow reader like me. In terms of content though, its filled with several gems.

My notes –

• Speculation and gambling – former presupposes intellectual effort, some calculation, some reason while the latter is blind chance, but also involving some reason and some calculation – like wit and humour, its a spectrum

• Those who make for themselves an infallible plan are deluding themselves and others

• Essential qualities of a speculator – self-reliance, judgement, courage, prudence, pliability

• A man cannot have another man’s ideas any more than he can have another man’s soul or body (self-reliance)

• Prudence – Measuring danger with a certain alertness and watchfulness

• Prudence and courage must be balanced. Prudence in contemplation, courage in execution – promptness should connect the two – the mind convinced, the act should follow (I think of this as being patient yet nimble – two contrary, yet complementing characteristics in speculation)

• Pliability – the ability to revise or change an opinion. He who observes, and observes again, is always formidable (Emerson)

• The 5 qualities should be balanced – any deficiency or surplus of one quality can destroy the effectiveness of all. Hence, many fail and very few succeed

• To take an interest larger than the capital justifies is to invite disaster (don’t overtrade)

• Never completely reverse a position on a whim (Long to short or vice-versa). Judgements should be made moderately, cautiously, clearly

• Run quickly, or not at all (If you are going to panic, panic early as Taleb says)

• When doubtful of position size being large, sell down to a sleeping point

• It is better to average up than down as a speculator. To average down, do it in small amounts over long periods and be determined to hold over a long period (investing)

• Stop losses and let profits run. Not to have courage to accept a loss, and to be too eager to take a profit is fatal

• Too much company is as dangerous as going against the market

• Quiet, weak markets are good markets to sell. They develop into declining markets. When decline becomes panic, its time to buy. Sell into excitement with great confidence

• It is better to act on general than special information

• When in doubt, do nothing. Don’t enter on half convictions

• Act so as to keep the mind clear, its judgement trustworthy (avoid greed and fear)

• A fault recognized is half-conquered

• Fools try to prove they are right. Wise men try to find when they are wrong

• Who says least, suggests the most

• All see, few observe

• Common sense is sense men have in common (interesting take – so its relative & not absolute / rational?)

• Look before you leap, but not when you leap

• The greatest tolerance is to tolerate the intolerant

• Respect your limitation and your limitations will respect you

• Put on the brakes in middle life, or the momentum of youth will destroy you

• The man who knows it all, has much to learn

• Genius consists of seeing instantly the vital point

• The more points of view, the better the point of view

• Morals & money – alone a great power, together omnipotent

• At 30, most men are in a condition of arrested development (few grow till the grave)

• In youth, a man forges the chains that bind him in old age (i had chains and things by bb king playing in my head)

• Acquire a habit and a habit has acquired you

• A man who does not change his mind has little mind to change

• Many a slip between the cup and the lip, but only one between the cup and the floor (ruin?)

• Never explain. Let your life be the explanation

• Wisdom consists of seeing many things and concentrating on one thing

• Teach by suggestion, rather than instruction

• Two kinds of vision – to see things as we see them. to see things as others see them

• Argument is an effort of each man to force his idea onto another. discussion, an effort to gain knowledge

• Man begins in simplicity, advances to complexity, returns to simplicity. Society follows the same course (he felt it complex in 1880, it has only gotten more so since)

• Bragging is an expensive luxury to indulge in

• Man must reduce his physical wants to a minimum and spiritual powers to the maximum

• Opportunities are always there, but the opportunist is lacking

• Stubborn men dont live for long financially

• Your impulses are often a higher reason (thinking from the gut)

• Man who thinks quick and right, has the world on a sling

• The more hindsight, the better foresight

• Money adds nothing to an extraordinary man but is a saving grace to the ordinary

• The little man demands to be understood, the great man is content to be misunderstood

• The hobgoblin of society – “what people will say” (Incidentally read “what do you care what other people think” by Feynman right before this book)

• Man seeks society because he can’t endure his own companionship

The book covers not just speculation but has thoughts on life and business as well which are very insightful. Some of the terminology in the book is still used unchanged – like averaging down, stop loss, letting profits run etc. and were so ahead of its time. This is like a little book of aphorisms, or as I was thinking of it, tweets of a very wise man from 1880. 9/10