The Traders Journal

Gerald Loeb's Battle Plan for Investment Survival

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Sometimes the things that need to be said can’t be said any better than they were said in the past.  I’m a big fan of Gerald Loeb (1899-1974), the man Forbes called the most quoted man on Wall Street.  I’ve written about this extraordinary investor before.

http://stockcharts.com/articles/journal/2013/05/gerald-loebs-timeless-wisdom-1899-1974.html?

These are the six elements of what Loeb described as his ‘Battle Plan’ for investment survival.  I believe we still have a lot to learn from G. M. Loeb.


1.    LIFE IS CHANGE:  The markets are never the same a minute from now as they were a minute ago.  Change is part of the investment world.

2.    RECOGNIZE CHANGE:  As an investor, your role is to recognize change, understand how you can profit from change, and embrace the change so you are able to act upon it.

3.    WRITE THINGS DOWN:  Regardless of how much emphasis I place on the importance and the effectiveness of simply writing down your observations, your successes, your failures and anything else which might contribute to improving your skills as an investor, it shocks me how very few aspiring investors have the drive or the inclination to do so. 

4.    KEEP A CHECKLIST:  To reproduce your successful trades and minimize your mistakes, the maintenance of different checklists is the best vehicle to improve your investing results.  Be they stalking checklists, buying checklists, monitoring checklists, selling checklists or whatever – they will help you achieve your goals.

5.    HAVE A SINGLE RULING REASON:  When you write down your thoughts about buying an equity, there will invariably be a single ‘ruling reason’ that will stand out above all the others.  It may be a technical reason, an earnings reason, a promising new product or management reason.  But almost certainly, one reason will stand out.  Know what this ‘ruling reason’ is!

6.    CLOSING OUT A COMMITMENT:  If you have a loss, the solution is automatic provided that you decided what to do at the time you bought your equity.  This is no time for indecision or delays.  Taking action requires boldness, and there’s a certain genius in that.

Trade well; trade with discipline!
-- Gatis Roze

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Gatis Roze
About the author: , MBA, CMT, is a veteran full-time stock market investor who has traded his own account since 1989 unburdened by the distraction of clients. He holds an MBA from the Stanford Graduate School of Business, is a past president of the Technical Securities Analysts Association (TSAA), and is a Chartered Market Technician (CMT). After several successful entrepreneurial business ventures, Gatis retired in his early 40s to focus on investing in the financial markets. With consistent success as a stock market trader, he began teaching investments at the post-college level in 2000 and continues to do so today. Learn More
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