Warren Buffett says:
"Read Ben Graham and Phil Fisher, read annual reports,
but don't do equations with Greek letters in them"
Apprentice yourself to several 'Stock Market Legends'. Select more than just one .
you are, or have been, in any trade such as a plumber or an
electrician, chances are you will have learned that trade from a skilled
master - as an apprentice.
It's exactly the same with Stock Trading.
We're non of us fortunate enough to be able to work directly with these guys - most of them are long gone. But we can learn from the legacies that they have left us.
All these guys made fortunes for themselves, and others that have followed their teachings.
These guys mastered not only the mechanics of how to trade, but also the psychology of the markets. They learned, through their own experiences of how to trade and, more importantly, when to trade.
These guys all amassed vast fortunes by trading within a set of rules. Rules that take out the emotion of any trade. Emotional trading, sadly, is the one single reason why most
amateurs fail in the markets.
Some of these gurus made fortunes and lost it all. And then made another fortune. Although commendable, you should ignore this type of guy as they are clearly speculators. Study, by all means, their analysing techniques but don't try to emulate their trading techniques. You will surely lose money.
You will be introduced to some of the best Stock Market operators ever - past and present.
Your goal, as a retirement investor, is to be an investor, not a speculator. You need to build your wealth over the long term.
Make that your mantra: to invest for the long-term.
When we were young, most of us started out as apprentices.
Everyone knows that to learn a trade you learn from those that are already skilled in a chosen profession.
And so it is with most things in life, including investing. If you want to learn how to invest successfully you need to learn from someone who has already done it and proven themselves to be successful.
There are numerous 'Stock Market Legends' to learn from – some still living, most no longer with us.
In another section to this website, we have detailed numerous 'Stock Market Books' from which you can learn from.
These are not just some theory written by academics.
These books were written by real people who made real fortunes for themselves, and anybody else that listened to their techniques.
Techniques that are still valid today.
These 'Stock Market Legends' are the true pioneers of Stock Market trading.
We’ll take a look at these 'Stock Market Legends' from the time of Charles H. Dow, around the end of the 19th. Century, right up to modern times, and that means the likes of Warren Buffett, Charlie Munger, and others.
You may recognise the name Dow.
Yes, it’s the same guy who had a hand in naming the Dow Jones Index (DJIA). But we don't have a clue who Jones was :(
Over the past 100 years or so there have been some outstanding traders of the Stock Market. All these investment gurus had one thing in common – they all set, and abided by, their own set of rules.
Look at the rules of each master trader and you’ll see a certain similarity.
Throughout this website you’ll continually hear about “the crowd.”
Well, that’s another thing all 'Stock Market Legends' had in common, they didn’t follow the crowd.
They followed their own judgement and stuck to their own rules.
None of them would have been tempted to follow "the crowd."
They did their own thing. And so should you.
Have the courage of your own convictions.
One of the surest ways to fail as a stock trader is to follow any strategy that you’re not comfortable with. To succeed, you need to be comfortable with the rules and strategies that you set.
Read about the 'Stock Market Legends' of the past, and formulate your own rules.
After all, you’ll come to the conclusion that they’re all common sense.
That said – common sense is not so common. Who was it that said that anyway?
There is a wide spectrum of investing gurus from Dow himself, right through to the modern day Warren Buffett. But even they had to learn from someone.
We don’t know who Charles Dow learned from, but Warren Buffett’s mentor was a certain Benjamin Graham – who was known as the grandfather of “Value Investing.”
Buffett also had a lot of respect for Philip Fisher.
Benjamin Graham may have been a great mentor, but Warren Buffett has turned out to be THE star pupil.
Warren Buffett has been quoted as saying that his strategies are 85% Graham and 15% Fisher. Umm! Food for thought!
The more we read about Warren Buffett, the more confident we feel about making decisions. His quotes are well worth listening to (or reading). Here’s one that’s quite relevant to this article:
“You want to learn from experience, but you want to learn from other peoples’ experience when you can”
Most of his quotes are witty and commonsensicle.
We particularly like this one:
“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful”
These 'Stock Market Legends' really knew their onions. They were all aware of how the Stock Market really worked. They didn’t follow the crowds, take tips, or even give any tips. They ignored all the noise going on around them and worked independently.
All successful Stock Traders had their own rules. But most of the rules were common to all. Just below, we have listed what we consider to be the most common rules used by the most successful traders that evern walked the planet.
It is strongly advised, that as part of your investment planning, that you formulate your own rules.
1. Divide your capital into 10 equal parts.
2. Trade with the trend.
3. Never Overtrade.
4. Trade only Bull Markets.
5. Believe in your charts and ignore all the noise.
6. Don't trade anything and everything. Be an expert in your chosen shares.
7. Don't listen to tips.
8. Don't give tips.
9. Research thoroughly the stocks you will invest in.
10. Patience is what makes big money in the markets.
Use the list above to give yourself a head start, but investigate each Trading Legend and his rules before you finalise your own list.
Below are the names of 'Stock Market Legends' that we’ve studied, some just a little, and others, like Richard Wyckoff, Benjamin Graham, Philip Fisher, and Warren Buffett, quite extensively. You will learn from each of them. Guaranteed!
Bet you can’t tell which is our favourite?
Here’s the list:
William Peter Hamilton
We're sure there are many others.
But you have to ask yourself: What kind of investor do you want to be?
For 'Retirement Investing', there is really only one answer to this question, and that is, in the main, you need to be a 'Value Investor'. Secondly, you need to understand 'Growth Investing'. And an understanding of 'Momentum Investing' is good to know.
And there's one guy in the list above who stands head and shoulders above all others.
Have you guessed who it is yet?
His name ...
... Warren Buffett.
We known that by consuming books about investing can't help but improve your success, so much so that we have created a whole section dedicated to investment books. See: 'Stock Market Books' for a complete list.
Meanwhile, here are some of the best. Most of them are classic works by true 'Stock Trading Legends' and have stood the test of time:
Truth of The Stock Tape by William Gann
This really is a classic. Written way back in 1923. This volume is actually two books in one.
Truth of the Stock Tape being one of them, and a sequel: 'Wall Street Stock Selector' which brings the first book up-to-date.
Gann was a master trader of his day but obsessed with his price and angles method. But who could argue, he was right 80-90% of the time.
See for yourself by making sure you add this volume to your bookshelf:
Reminiscenses of a Stock Operator by Edwin LeFerve
Regarded as a biography of Jesse Livermore, probably the greatest "plunger" Wall Street has ever seen.
This is the story of a man who started work as a young teenager in the 'bucket shops' and worked his way up to be the greatest short seller Wall Street ever knew.
This illustrated version is worth gracing any investor's bookshelf. And you can buy it right here:
The Intelligent Investor by Benjamin Graham
This is where Benjamin Graham revolutionised investing by 'discovering' his 'Value Investing' theory.
He had a star pupil in Warren Buffett who we know has gone on to become one of the world's richest people - all through Value Investing. Phenomenal!
Being honest, this is a 'heavy' read, but a useful one. Our copy serves as a great reference. You can obtain your copy right here:
Common Stocks and Uncommon Profits by Philip Fisher
Philip Fisher has been named 'The Father of Growth Investing' and is well-liked by Warren Buffett. Buffett has quoted that he is 85% Value Investing and 15% Growth Investing.
Well, that sounds like an uneven split but Buffett has a lot oftime for the writings of Philip Fisher.
'Common Stocks and Uncommon Profits' has stood the tst of time and is required reading for any up-ad-coming private investor. Get your copy right here:
The Tao of Warren Buffett by Mary Buffett and David Clark
There are not many books by the maestro himself, most books are about him and not by him.
Mary Buffett has written several books on 'the man' and we have chosen this particular one as being both informative and a good read. The quotesof Warren Buffett are good value just by themselves but his in-depth wisdom on the Stock Market is priceless.
Add this work to your collection and devour its contents - you'll be glad that you did.
Get it right here:
Beating The Street by Peter Lynch
Peter Lynch also authored 'One Up On Wall Street' but have chosen 'Beating The Street' as a better read. They are both classics.
In this book Peter Lynch describes step-by-step how he picks stocks that outperform professional investors.
You can get 'Beating The Street' right here:
How To Make Money in Stocks by William O'Neil
This book ha sold over 2 million copies so there must be something great about it.
William O'Neil has a 7 step system he calls his CAN SLIM (registered) method for minimising risk and maximising gains.
He also describes a method for avoiding 21 of the most common risks.
You need to be a part of that 2 million plus crowd that have already bought this book. Click on the link below to order your copy:
The Zulu Principle by Jim Slater
In this book Jim Slater outlines his method of valuing shares. He goes for growth in medium to small companies.
His system contains a technique he has called the PEG Ratio. Which is the Price Earnings Growth Ratio.
Slater was the one who came up with the idea and he shares it with this book.
The Zulu Principle is very well written and very understandable, you could say common sensical. Obtain Jim's book at the link below and you be the judge:
How I Trade and Invest in Stocks and Bonds by Richard Wyckoff
Any book by Richard Wyckoff deserves to be in this list. A former editor of the Magazine of Wall Street, which, at the time, was the largest financial publication in the world.
He always maintained that by being editor of such a prestigious publication for 15 years he could see everything that influenced the markets.
He spent a considerable time studying the effect of volume and price.
You can get his findings right here:
The New Key To Stock Market Profits by Joseph Granville
This book reveals Granville's theory of 'On Balance Volume' which he believed was the key to success in the stock market.
Granville tries to show that volume chages precede price changes and offers a new perspective to stock traders.
We think he might have gotten on well with Richard Wyckoff as they both thought that volume played a major part in price movement.
You should acquire this fascinating book, click the link below and it's yours:
Think of Master and Apprentice.
If you want to be good at something you will learn 100 times quicker if there is someone around to 'show you the ropes'.
Unfortunately, not many of the Stock Trading Legends are around today, but they did leave their legacies. Books.
Choose a Master Trader (or several), get their books, and devour them. Do this before you even commence trading. No point paying stupidity tax.
You will have noticed that not all Stock Market Legends follow what Warren Buffett does. And that's OK. They were successful using their own methods.
But it is our opinion that the principle of 'Value Investing' is the way to go.
For sure, do not aspire to be a specualtor. At least not within your Self Invested Pension Plan. It's too reckless.
Observe the rules of each of the masters and construct a list of your own - and stick to them.
Chris and Clem Meet Up - hopefully, the last time before lockdown easing
Chris and Clem Meet Up - at last! They can meet in the beer garden
Chris and Clem Meet Up and it is Chris' turn to do most of the talking. Chris' little windfall has allowed him to widen his portfolio. Chris vows of more.