Charles Kirk published a recent post that caught my attention (The Kirk Report)
Excerpts (modified) below. To see all 15 principles and more of Charles’ comments, refer to the link above.
Gerald Loeb was a founding partner of E F Hutton and author of the books The Battle For Investment Survival and The Battle For Stock Market Profits.
Based on his books, here are 15 [MDW: I’ve chosen 8] fundamentals Loeb argues that you must understand to win the battle – not only against yourself – but also against the market:
- What everyone else knows is not worth knowing.
- The best stocks will always seem overpriced to the majority of investors.
- Expectation, not the news itself, is what moves the market.
- Traders must always resist the urge and temptation to change strategies for each different market cycle.
- To succeed in trading you must 1) aim high, 2) control risk, 3) be unafraid to keep cash reserves and 4) be patient.
- You must always trade with the actions of the market and not by how you think the market should trade.
- Knowledge through experience is one trait that separates successful stock market speculators from everyone else.
- Always sell when you start patting yourself on the back for being smarter than the market.
Many times the paths to new ways of thinking will be in direct contrast to your own preconceived notions…in my experience those traders who have an open mind at all times, who are always focused on learning new things – especially when those things directly challenge their own beliefs and strategies – often find the most success.
I’ve listed EIGHT of the 15 principles. The list is controversial and some would argue against at least one item on the list. The point of reproducing Kirk’s post is to encourage readers to look at these ideas and decide if you can benefit by rethinking areas in which you disagree. There is nothing wrong with going your own way. But be open to alternative ideas.
I know that I’ve developed some ideas that represent minority thinking. As long as I have given them sufficient thought, I’m satisfied being in the minority. Don’t misunderstand, I’m not claiming to be another Gerald Loeb. Just trying to emphasize the point that you do not have to belong to the majority. Going against the crowd – selectively, and not just to be stubborn – may work well for you. But please be alert to the fact that when the majority of successful traders disagree with your stance, you must have a good defense explaining why you believe that you are correct. Then defend your ground.