This is another investing book written in the 1900. Super meaty and one of those that can be re-read every once in a while. This book was originally published in the 1930s with updates every 15-20 years.  I consider myself  a long term value investor but Gerald Loeb puts forward an excellent case why long term investing can be dangerous. This is not a trading book, rather it is book on conservative speculation, something that value investors would definitely appreciate and not turn their backs to.

Here goes:

  • Any earner who earns more than what he spends is automatically and investor.
  • Storing purchasing power for use in the future is investing, no matter what form it is put away in.
  • There is no such thing as a final answer to security values. Market values are fixed more by the hopes and fears of humanity, greed, ambition, invention,financial stress etc rather than the popular belief of determination according to the balance sheet.
  • Speculative attitude is essential. – munger video on being a gambler
  • People expect too much of investment. They think incorrectly that they must always keep their money working. Even money needs to take a break 🙂
  • To achieve success, one must set the investment goal very high. Not only that but the goal must also be a speculative one, for only there lies safety — as paradoxical as it may seem.
  • The program must be aimed at obtaining a sufficient profit to offset the average losses sustained in all investment, the invitabel personal errors of judgement, the effects of currency depreciation and taxation, and the unexpected necessity of having sometimes to close out an investment earlier than originally planned.
  • Any investment policy followed by all naturally defeats itself. Thus the first step for the individual really trying to secure or preserve capital is to detach himself from the crowd. –  why not to read the news
  • In the history of the world we find the record of savings really saved through buying gold, hoarding precious stones, and other forms of “hard wealth” have always privately secreted.
  • Every purchase/additional purchase must be considered almost solely on the basis of what it will return in income and appreciation added together and treated as one.
  • It is far far better to let cash lie idle than to buy just to “keep invested” or for “income”.
  • In many cases one will earn far more with the time applied to keeping what he has made or increasing it than by 100% devotion to his regular occupation.
  • Any aim to make less than 100% is doomed to failure.
  • Trying to invest for 6% is like trying to retire.
  • If you have a large sum of money, only speculate with that portion that you think you can at least double. It is better to leave the rest sterile than to risk it pointlessly.
  • While getting honest, unbiased information is naturally essential, it is useless without either personal interpretative ability or access to one who has this faculty.
  • When you look for professional advice, go armed with cash, not with an existing portfolio.
  • The factors that make an ideal investment are never all present at the same time. Nevertheless, a substantial majority of them must exists. In the first place the background should be favourable, which means that the popular sentiment should be bearish, and the securities market well liquidates. Business conditions should be poor, or the general expectation should be that they will become poor.
  • The objective is to always buy what the majority thinks is speculative and sell when the majority believes the quality has reached investment grade.
  • Only buy companies that have ownership-management resembling partnerships.
  • Actual cash income should be higher than reported earnings.
  • Stay away from products that are great necessities, as they become targets for political interference.(sugar/palm oil). Labor costs should be low and the ability to finance the expansion out of earnings should be present.
  • Willingness and ability to hold funds uninvested while awaiting real opportunities is the key to success in the battle for investment survival.
  • Very good business conditions will normally succeed very bad business conditions.
  • Stay in pursuit of profits, with peace of mind.
  • Cutting losses is the one and only rule of the markets that can be taught with the assurance that it is always the right thing to do.
  • Human likes and dislikes will wreck any investment program. Only logic, reason, information and experience can be listened to if failures are to be avoided.
  • Short term trading, properly done, is certainly the safest form of speculation that exists.
  • Once sold, there is no rule against buying back. Ignore the commissions when you do so.
  • It is rare enough to find those that made the fortunes. It is even rarer to find them with the ability to switch when their company has reached a zenith. The practical question is whether one would make more money switching around, or putting everything into long pull hopes ? The answer is switching.
  • Accepting losses is the most important single investment device to ensure the safety of capital.
  • It is a great mistake to think that what goes down must come back up.
  • Every time your stock goes down 10% from original purchase price. Sell it out and try again. You will notice that buying back later you will have quite a different kind of thinking, much more unbiased once you have sold out.
  • Cutting your losses short and taking profits when they start to diminish overshadows almost another investment principal i know.
  • Theoretical economists are anatomy professors who are still virgins.
  • Experience teaches how little you know even under the best circumstances.
  • They way to successful investing lies much more in learning how to utilise your best thoughts and minimise your worst than in being better at selection or better timing than the average.
  • There is only one intelligent approach to employment or protection of capital, and that is to use it for profit.
  • Everybody knows that General Motors is a good company, only few know when to buy and sell it.
  • Mistakes will be made and there is no cheaper insurance than accepting a loss quickly.
  • The Ever Liquid Account – Liquidity and mobility are the greatest allies of safety against change. Intelligent capital is like a rabbit darting here and there to cover. Fixed investments like real estate, anchored to the ground, are far too inflexible for protection against any hazard, be it tax, political, style or what have you.
  • Many mines generally outlive many corporations as one is very much more apt to extend an ore body than to fins new sources of profit to bolster a perishing industry.
  • The intelligent and safe way to handle capital is to concentrate. If things are not clear, do nothing. When something comes up, follow it to the limit. If it is not worth following to the limit, it is not worth following at all.
  • After but not before the stock price has significantly drawn away from your purchase price, only then should you consider your second investment.
  • No thinking person will buy more of something than the market will take if he wants to sell.
  • Never tie up all ones assets on ones home town or in a form that is not liquid and subject to easy shift.
  • One’s greatest assets are his mental competence to do something useful and his connections.
  • Ask your self how many widely separated places you could go and make a successful new start in life.
  • Travel for – a real vacation, a better knowledge of how to enjoy life and an advantage over one’s provincial competition at home.
  • Here more than anything else in the world is the land of illusion.
  • Borrowing should only be confined to business, investment or other profit making ventures if one ever hopes to have capital of their own. Personal borrowing comes only when one knows his status in life.Young people should look for profits and not immediate income. They should look forward to the day when in their later years income on their capital support them in style to which they have grown accustomed to without the necessity of selling their time.
  • There are three principal ways of making money.One is to sell your time.The second is to lend money. The third is to risk your money.



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