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Knowing history is one of the many benefits of having spent three decades working on Wall Street and investing.
Today, we are familiar with many great investors like Warren Buffett, Bill Ackman, Ken Griffin, etc., but there is an entire generation of investors from the 20th century.
Last week, we profiled one of these great traders – Jesse Livermore.
In today’s HX Daily, we profile another great investor – Gerald Loeb.
Knowing history is one of the many benefits of having spent three decades working on Wall Street and investing.
Today, we are familiar with many great investors like Warren Buffett, Bill Ackman, Ken Griffin, etc., but there is an entire generation of investors from the 20th century.
Last week, we profiled one of these great traders – Jesse Livermore.
In today’s HX Daily, we profile another great investor – Gerald Loeb.
Loeb was the founding partner of E.F. Hutton & Co., the most famous brokerage firm of its day. Imagine a combination of Merrill Lynch, Fidelity, and Robinhood all rolled up into one.
Their trademark motto – “When E.F. Hutton talks, people listen!” – still rings in the ears of older investors. Here is that commercial…
While the brokerage was named after San Francisco stockbroker Edward Francis Hutton in 1904, it was in 1924, when Loeb joined, that it became prominent.
Loeb was one of the most prominent personalities on Wall Street and was famous for two books – The Battle for Investment Survival (1935) and his follow-up, The Battle for Stock Market Profits (1971).
Here are some quotes sharing some of his insight…
“Human nature being what it is, a person buying a stock at the wrong time is very apt to double his error and sell it at the wrong time.”
As our readers know, we spend much time discussing human psychology and its impact on our TRADING and INVESTING.
One of the hardest aspects of TRADING is putting yourself in a position to be in the proper mindset to WIN.
When we start with a mistake, we often put ourselves in a position where we will make even more mistakes.
“If you don’t feel confident enough to invest a sum that is important to you, better look for something else.”
We spend much time talking about the importance of selectivity in your positions.
Loeb says this another way – if the idea isn't good enough to risk an amount that would hurt, don't even bother doing it.
Small positions that are low confidence can be a distraction and hurt your portfolio as a whole. Again, put yourself in a position to win.
“But remember, life is a succession of cycles. Day and night. Hot and cold. Good times and bad. High prices and low. Dividends increased, and dividends cut. So don't expect your investments to be the exception to the rule.”
This one is some good life advice also…
We often think of our investment (and life) as a destination and are obsessed with the result. The result is important, but the path is a journey and often a volatile one.
Learning to manage that volatility is key to maintaining your process and conviction to succeed.
“ ‘Buy low, sell high’ is one of those wonderful ideas which may work out well for those who can learn the ropes. It can be a rather expensive idea if it is just applied as a generalization.”
You will hear some of the most famous and successful investors out there (like one of our favorites, William O'Neil) criticize this famous Wall Street axiom.
We think that is unfair as they seldom get into the details of why it can be dangerous.
Loeb at least points out that using it as a hard and fast rule without an additional process can be bad for your portfolio.
Like any TRADING or INVESTING rule – it works, but the key is the application.
“It is true that, strictly speaking, short-term trading is speculative. But so is all intelligent investing.”
We love this quote!
The “smart” money often looks down on TRADING as somehow not as valid as INVESTING. It dismisses it as being unsound or unsafe.
We have seen long-term investors do MUCH MORE damage to their net worth than we have traders.
With both – it is all about your method and process.
Plan the Trade. Trade the Plan.
Which of these Loeb quotes is your favorite? Let us know in the comments section online or at [email protected].
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