Gerald Loeb

Gerald Loeb

Postby millionairemind » Wed Jun 11, 2008 4:23 pm

Another astute investor/trader of the past. He wrote the book The Battle for Investment Survival which was released about the same time as Securities Analysis by Ben G.

Thursday, April 17, 2008
Trading Tactics

Gerald M. Loeb was a highly successful trader who wrote the classics "The Battle For Investment Survival" and "The Battle For Stock Market Profits." Although they've been around for as long as I've been alive, you may find them helpful in today's market.

Once in a while I take time to review old handwritten notes I've taken from the books I've read in the past including from Loeb. These notes often serve as inspiration to my own trading. Even though I've read them many times over the years, they always offer a good insight.

Loeb's Trading Tactics:
The market is a battlefield. Make sure you are on the winning side

You must trade with the actions of the market
and not simply by how you might think the market should trade

Knowledge through experience is one trait that separates successful stock market speculators from everyone else


To do well in short-term trading, it takes full-time attention and dedication

Exploit all new trends quickly and aggressively

The best traders are usually psychologists. The worst are usually accountants

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

Successful traders are intelligent, they understand human psychology, they practice pure objectivity, and they have natural quickness

To succeed in trading you must 1) aim high, 2) control the risks, and 3) be unafraid to keep uninvested reserves and be patient

The stock market is more an art than a science and far more complex than most people understand

It takes considerable amount of self-control to trade well

The more experienced and successful you become, the less you should diversify

Big money is always made in the market's leaders

The best stocks will always seem overpriced to the majority of investors MM comments:Think Google, Baidu, Mastercard, ICE

Resist the urge and temptation to change your strategy for each and every different market cycle

Traders should always close a trade when good reasons exist to do so

Tops in stocks usually occur when the advance in price stalls as volume or activity increases, or if the prices decline and the activity increases MM comments :Watch the leaders, they tell you the health of the market

A sell signal occurs when a stock rises sharply on big volume but ends the day at no gain or at a loss

Every new market cycle produces a new list of fresh leaders

Pyramid your buys - start with an initial position and then add to it only if the trade moves in your favor
Stocks are always way overvalued in a bull market and way undervalued in a bear market

Expectation, not the news itself, is what moves the market

What everyone else knows is not worth knowing

Three basis elements should be considered when evaluating a stock - 1) quality (fundamentals, liquidity, management), 2) price, and 3) trend (the most important)

Always sell when you start patting yourself on the back for being smarter than the market
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: Gerald Loeb

Postby iam802 » Wed Jun 11, 2008 4:43 pm

Thanks MM.

Your comments (and this article) is a good reminder.

After reading this article, it sets me thinking.... maybe, I really need to learn how to set some $$ aside and be patient.
1. Always wait for the setup. NO SETUP; NO TRADE

2. The trend will END but I don't know WHEN.

TA and Options stuffs on InvestIdeas:
The Ichimoku Thread | Option Strategies Thread | Japanese Candlesticks Thread
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Re: Gerald Loeb

Postby millionairemind » Mon Jun 30, 2008 12:17 pm

Quotes by Gerald M. Loeb - The Battle for Investment Survival

"Accepting losses is the most important single investment device to insure safety of capital."

"You can't believe everything you read."

"Detach yourself from the crowd."

"With the right issue, you should be able to double your money."

"There isn't a good investment that isn't at the same time a good speculation."

"Stocks were made to be sold."
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: Gerald Loeb

Postby millionairemind » Sun Jul 20, 2008 12:55 pm

I have probably read The Battle for Investment Survival at least 4x.. however, each time I read it, I learned something new... perhaps because of the experiences I had in the market in-between the reads.

Profits can be made safely only when the opportunity is available and not just because they happen to be desired or needed. ...Willingness and ability to hold funds uninvested while awaiting real opportunities is a key to success in the battle for investment survival.- Gerald Loeb

mm comments - this is similar to WB's "waiting for the perfect pitch"... However, too many layman investors have been brainwashed by the fund industry that you cannot beat the pros.. you must stay in the market all the time to make money.. if you missed the 10 biggest up days in the mkt, you would have lost ...%.. blah blah blah... if one is long side bias, wait for market to confirm its uptrend before putting your hard earned money to work and... CUT LOSSES quickly... cos' no matter how well versed we are in FA... the market knows better:P

As a practical matter, it will pay to look at the lists of "new highs" and "new lows". . .Check on stocks that make new highs and on quiet stocks that begin to develop plus signs and higher volume. This can help you find new and profitable shares to buy.
--Gerald M. Loeb

mm comments - The strongest stocks are the ones that continually make new price highs.. (for e.g. think Wilmar when it was $2.... ) this shows it has institutional support and is moving higher. Do not be afraid to buy stocks that break new highs.. but of course buy it at the perfect point when they jump off the base when the market is in a confirmed uptrend :D
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: Gerald Loeb

Postby LenaHuat » Tue Aug 19, 2008 9:56 am

I've gotten my copy from the NLB and think this paragraph from the book is apt at this moment of a STI bearish market.

Leob Chap 72 wrote:There is no rule abt anything in the stock market save perhaps one. That rule is that the key to market tops or bottoms or the key to market advances or declines will never work more than once. The lock, so to speak, is always changed. Therefore, a little horse sense is far more useful than a lot of theory.

However, in a broad general way the averages work in favor of those that assumes the trend in being will continue until proven changed. This applies both for the company in question, industrially speaking, and price trend of a stock, tape-wise.

"Never argue with the tape" is one saying worth thinking about.

In order for the trend in being to change direction there has to be a change in the influences that caused the trend in the first place. Those who can detect this change before it occurs and becomes generally evident are gifted with powers of analysis and foresight of the very highest order. For most of us detecting the change after it has occurred but before it has proceeded too far is still a very profitable and to many an attainable goal.

I think on average it is better for most of us to be late and sure than to be early and doubtful. Many, who thought that various levels on the way down after 1929 to 1932 were buying or turning points, lost the most. The late buyer who came in after 1933 and up quite a bit from the bottom, did quite all right.


And here comes the most important concluding point :
I believe in pyramiding, not averaging. That means I believe in following up on one's successes and minimizing one's failures. Or as the saying goes, "cut short your losses and let your profits take care of themselves.
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Re: Gerald Loeb

Postby kennynah » Tue Aug 19, 2008 2:16 pm

ah lena : great post...

pyramiding is terrific idea only if it is a mature and very up trending market.... otherwise, one who pyramids effectively increases position size and resulting in a higher averaged price. risk increases whenever size increases.
Last edited by kennynah on Tue Aug 19, 2008 5:52 pm, edited 1 time in total.
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Re: Gerald Loeb

Postby LenaHuat » Tue Aug 19, 2008 5:49 pm

Hi K :)
Concur with U that pyramiding is modus operandi for a uptrending market. Since STI is in bearish territory, my little horse sense tells me to revert to Rule 1:
However, in a broad general way the averages work in favor of those that assumes the trend in being will continue until proven changed.


And not the least, keep my eyes ON the vultures. How are they progressing with their meals??
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Re: Gerald Loeb

Postby millionairemind » Sat Sep 13, 2008 6:01 pm

Taken from The Battle for Investment Survival

Chapt 49 - How a Bull Market affects your investment Thoughts

"Congratulate ourselves for being astute investors. Think how foolish we were to be so conservative, how much better off we would be if we had taken greater risks.

Start stretching - reaching for quick profits under the guise of a "more aggressive" investment approach, which is nothing more than a risky, speculative approach"


mm comments - I remember last year many investors/traders were extremely aggressive and used alot of margin to built up huge profits. But when the market turns, they were still "thinking that the bull has to return" and even averaged down on margin. Heard from a friend that one guy averaged down using margin and had to sell away his condo to repay his debt :(
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: Gerald Loeb

Postby LenaHuat » Sat Sep 13, 2008 6:06 pm

Hi MM
Heard many are still nursing dreams abt S-shares. They can't bring themselves to realize that the good and easy money in China shares are OVER.
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Re: Gerald Loeb

Postby kennynah » Sat Sep 13, 2008 6:53 pm

plentiful cases of riches to rags are to be found whenever mkt turns bearish aggressively. The lesson to take away, is to know how to play the mkt in all directions n manage risks at all times
the irony is that buying stocks can only be profitable in 1 of 4 outcomes but the most faithfuls are the supposedly the longest time worshippers of the past gurus. They were indeed very good to hv succeeded against all odds. The nature of stats will unfortunately suggest that anyone of us subscribing to their stock-only approach, will hv a very slim chance becoming as legendary as they hv been
I dont quite subscribe to naked shorting stocks nor just buying 1 directional positions anymore. I m not as good as these Livermore, loeb, etc. Far from that.
Good luck folks!!!
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