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Gerald Loeb’s Timeless Wisdom (1899-1974)

  
  Education
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I’m sure you’ve heard the expression, “the more things change, the more they stay the same.”  Gerald Loeb used this phrase frequently.  I’ve always had great respect for Mr. Loeb.  True, he was an extraordinary investor and a best-selling author.  But what I most respected him for was his business acumen.  As one of the founding partners of E.F. Hutton, he was often quoted preaching to investors about the need to approach investing as a business and with a business mind.

Early on, I took his advice to heart.  From the very beginning, I always made certain that I organized my investing activities in a manner that yielded timely investment reports and minimized taxes.  I also sought out the best professional accounting, legal, tax and estate planning advice because this is what Gerald Loeb advocated. 

Personally, his advice has been validated over the decades.  Having known a large number of traders, I’ve observed that the most profitable ones have seldom been the smartest or boldest.  They are usually organized individuals who are willing to focus on the small details.  They are those people who are comfortable with routines and have the discipline to follow them.  I’ve often noticed that they’re unpretentious as well – even humble at times.  (more…)

15 Fundamentals To Win Stock Market Battle

  
  Education
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Gerald Loeb was a founding partner of E.F. Hutton, a renowned and successful Wall Street trader, and the author of the books The Battle For Investment Survival and The Battle For Stock Market Profits.

Mr. Loeb promoted a contrarian view of the market as too risky to hold stocks for the long term in direct contrast to many of his generation. At the time, many considered Loeb’s comments heresy to the buy and hold doctrine so common among many in the industry. While Loeb never had the opportunity to trade in an environment now ruled by quants, algorithmic trading and massive government intervention, his wisdom and insight is still applicable in today’s environment. After all, the more things change, the more they always stay the same!

Based on his two books, here are 15 fundamentals Loeb argues that you need to understand to win the battle not only against yourself, but also against the market:

  1. What everyone else knows is not worth knowing.
  2. Stocks are always way overvalued in a bull market and way undervalued in a bear market.
  3. The best stocks will always seem overpriced to the majority of investors.
  4. Expectation, not the news itself, is what moves the market.
  5. Three basis elements should be considered when evaluating a stock – 1) quality (fundamentals, liquidity, management), 2) price, and 3) trend (the most important).
  6. Stocks act like human beings and go through the same stages and phases as people do, including infancy, growth, maturity, and decline. The key in trading is to be able to recognize which stage the stock is in and to take advantage of that opportunity.
  7. Pyramid your buys – start with an initial position and then add to it only if the trade moves in your favor.
  8. The more experienced and successful you become, the less you should diversify.
  9. Traders must always resist the urge and temptation to change their strategies for each and every different market cycle.
  10. To succeed in trading you must 1) aim high, 2) control the risks, 3) be unafraid to keep uninvested reserves and 4) be patient.
  11. Successful traders are intelligent, they understand human psychology, they practice pure objectivity, and they have natural quickness.
  12. You must always trade with the actions of the market and not simply by how you might think the market should trade.
  13. Knowledge through experience is one trait that separates successful stock market speculators from everyone else.
  14. The stock market is more an art than a science and far more complex than most people understand.
  15. Always sell when you start patting yourself on the back for being smarter than the market. (more…)
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