LoebHere are some interesting quotes from The Battle of Investment Survival, by Gerald M Loeb, Simon and Schuster, 1957 (14th printing).

"There are some rules that hold, and my first is to buy only something that is quoted daily and can be bought and sold in an action market daily. The greater the volume of trading and the broader the market in a particular security, the closer to a fair price at a given moment that security is likely to be."

"In my opinion, the primary factor in securing market profits lies in sensing the general trend. Are we in a deflation or inflation period? If the former, I would hardly bother to analyze most equities."

"In short, in my opinion everything of an analytical nature covering specific securities should be persistently linked to past market appraisals and set up for use solely to determine future market possibilities."

"Any program which involves complete investment of all capital at all times is certain to fail unless the amount of it is extremely small."

"All this suggests the question - are we learning to trade for the quick turn or to invest for the long pull? We are investing for appreciation, and the length of time one holds a position has noting to do with it. I lean towards rather short turns for many reasons. To begin with, experience is gained much more rapidly that way. Short-term investing once mastered has very much more the elements of dependable business than the windfalls or calamities of the long pull."

"Obviously, our ideas will sound wrong to the most people. Any investment policy followed by all naturally defeats itself. Thus the first step for the individual trying to secure or preserve capital is to detach himself from the crowd."





Speak your mind

4 Comments so far

  1. Steve Leslie on March 8, 2009 9:01 am

    I remember one of my mentors in gambling told me that probably 95 percent of people who go to casinos never studied a book on gambling. I found that curious since many of them seem to throw their money around and practically give it away once they enter a casino. I believe the same applies to speculation. Few ever make it a lifelong study yet year after year they throw their hard earned money away through ignorance of the markets and exploitation by Financial companies, banks and brokerages.

    Do you know the difference between someone who can't read and someone who won't read? Nothing

    The one great lesson I took from Gerald Loeb's book is the technique of pyramiding an investment into a stock. That one method alone has made me plenty and saved me plenty over the years.

    This book is one of the top five or ten investment books that I always recommend for those seeking knowledge and wisdom. Others I would like to add are in no particular order:

    Peter Lynch One up on Wall Street
    Ralph Wanger A Zebra in Lion Country
    Vic Sperandeo Methods of a Wall Street Master
    William Oneil How to make money in stocks
    Edwards and Magee Technical Analysis of stock trends
    Hersh Shefrin Beyond Greed and Fear Understanding Behavioral Finance
    Michael O'Higgins Beating the Dow
    James O'Shaughnessey What Works on Wall Street
    Jack Schwager Market Wizards
    Peter Tanous Investment Gurus

    I would also like to recommend self-improvement books and authors

    Anthony Robbins Awaken the Giant Within
    Zig Ziglar See you at the Top
    Donald Trump How to get rich
    Larry Phillips Zen and the Art of Poker
    Joe Hyams Zen in the Martial arts
    Napolean Hill Think and Grow Rich
    Dale Carnegie How to win Friends and influence people

    To properly read these books and The Education of a Speculator would take six months to a year at least. This would be the initial read and a re-read of the highlighted parts. After that, I would think one would have a fantastic education with respect to investing speculation and life.

  2. Jim Davis on March 8, 2009 12:49 pm

    I value liquidity above all other investment characteristics.

    Not because this guarantees a 'fair price' but because it guarantees I can sell when I decide it's time. At my whim, not the markets.

    One of the most shocking episodes of this crisis was the Auction Rate market ceasing to function, literally overnight, and trapping everyone involved. So even liquidity may best be thought of as a moving target.

  3. manuel bravochico on March 8, 2009 1:09 pm

    Agree about short term vs long term investing or whatever one calls it. But don't forget, most guys got caught with pants down because pre2007, there wasn't enough VIX for "most" short term pnl strategies. {ah, except the ones who decided to alleviate the problem by levering up}

    What I'm curious about are the odds of a zombie VIX scenario after the forest has basically just burned down.

  4. Matt Johnson on March 10, 2009 12:55 am

    It’s an essential read.

    Some of my best teachers, have been dead 50 to 100+ years.


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