It is funny how the best traders of all times basically repeat the same things with different words.
Gerald Loeb is the author of ‘The Battle for Investment Survival’ and is one of the most quotable men on Wall Street. Here are five of the smartest things he has ever said about the stock market:
Financial markets are often forward-looking.
The market is better at predicting the news than the news is at predicting the market.
To make money in the stock market you either have to be ahead of the crowd or very sure they are going in the same direction for some time to come.
Patiently wait for your pitch
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.
The single most important factor in shaping security markets is public psychology.
In addition to many other contributing factors of inflation or deflation, a very great factor is the psychological. The fact that people think prices are going to advance or decline very much contributes to their movement and the very momentum of the trend itself tends to perpetuate itself.
How to recognize future leaders
One useful fact to remember is that the most important indications are made in the early stages of a broad market move. Nine times out of ten the leaders of an advance are the stocks that make new highs ahead of the averages.
It is not important how often you are right or wrong, but how much money you make when you are right and how much you lose when you are wrong.
The difference between the investor who year in and year out procures for himself a final net profit and the one who is usually in the red, is not entirely a question of superior selection of stocks or superior timing. Rather, it is also a case of knowing how to capitalize successes and curtail failures.
