Bernard Baruch was a successful trader and investor in the first half of the 20th century. Although not as widely quoted as his contemporary, Jesse Livermore, he did leave behind a wealth of wisdom regarding the markets. Here are some points I gathered reading about him (Bernard Baruch: The Adventures of a Wall Street Legend and his own book Baruch: My Own Story) that I believe are worth remembering: – You will lose money following recommendations from others. The challenge for the successful speculator is how to disentangle the cold hard facts from the rather warm feelings of the people dealing with the facts. Self-reliance and “doing one’s own thinking” is a must. – Cutting losses short is crucial. If a speculator is right half of the time, he’s hitting a good average. Even being right three or four times out of ten should yield a person a fortune if he has the sense to cut his losses quickly on the ventures when he is wrong. – No one can catch bottoms and tops with any consistency. Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars. – Acting fast in the markets is important. A successful speculator is a man who observes the future and acts before it occurs. – Baruch found it best to trade alone and keep silent about his trades and positions. – It’s important to be flexible and not to favour the long side over the short side. – It’s best when traders focus on one thing at a time, as no one can be an expert at too many things. This is why it makes more sense to have a few stocks and watch them carefully than to diversify. – It’s important to examine past trades to see why you lost or made money. – What matters is what the market is currently doing, not what one might think the market should do. – If you’re awake at night worrying about your stocks, then you should sell them down to the “sleeping point.” – To be truly successful in trading and investing takes time and dedication. But most people view the market as the place where the miracle of great and quick riches can be performed with little effort. – Speculator comes from Latin “speculari” which means to spy out and observe. To be a successful speculator, three things are necessary: to get the facts, to form a judgement as to what those facts portend and then to act in time before it’s too late.
LOL! The guy is so famous there is a college named after him in NYC. One of the more famous speculators of all time!
Baruch is credited with the famous quote... "Americans will spend everything they make plus their credit capacity". (Rather prescient considering there were no credit cards in his time.) That was what, 100 years ago? Any different now?
Autobiography: http://www.amazon.com/Baruch-My-Own...qid=1424998571&sr=8-2&keywords=Bernard+Baruch There are 2 more books about him, by Grant and Alef.....
I found to my horror that somehow the link I copied did not appear properly in the quoted article. I re-attach the link here http://forexmagnates.com/meet-legendary-speculator-youve-never-heard/ from where I quoted this blog, which is actually posted by www.jltrader.com. There the same article was titled "What Can Traders Learn from Bernard Baruch?" This is, I think, the more appropriate title since I also know this investor/speculator. The article summarizes quite well the key points, so I quoted it anyway. Thank you all for contributing comments!
BB: Adventures of a Wall Street Legend bio by James Grant is actually readable online using Amazon's Look inside the book feature. There are only a couple of pages that aren't displayed, I would say 98% of the book is available: http://www.amazon.com/Bernard-Baruch-Adventures-Street-Legend/dp/1604190663/ref=pd_bxgy_b_img_y ---------------------------- Here is another similar book, Gerald Loeb: The Battle for Investment Survival One reviewer wrote an incredibly long summary of the short term investment advices from the book: http://www.amazon.com/review/R2P6AB10EWLZQ0/ref=cm_cr_pr_cmt?ie=UTF8&ASIN=1436716950#wasThisHelpful