Schloss: Factors Needed To Make Money In The Stock Market

[Guest ajc]

 

A memo from 1994 on common stocks - http://www.safalniveshak.com/wp-content/uploads/2012/09/schloss_factors.pdf

 

 

[Liberty]

Thanks!

[investor-man]

I love that it's typed on a typewriter :)

[Guest 50centdollars]

Awesome. Thanks for posting.

[SpecOps]

Very interesting that he uses historical prices when judging buying. Not very Buffett like but something I'm sure most do - when a stock has traded lower in the last 12 months it means you could have a better opportunity in the future.

[Charlie]

Very good checklist!

 

Thank you  :)

[ni-co]

Thanks! This is some great advice.

[Kraven]

Very interesting that he uses historical prices when judging buying. Not very Buffett like but something I'm sure most do - when a stock has traded lower in the last 12 months it means you could have a better opportunity in the future.

 

He did consider historical prices as part of his consideration.  He generally liked things near the lows of at least 3+ years.  It was viewed more as a qualitative factor in the sense that psychologically other investors would be more willing to bid something up to a level it had been before.  I do not believe it was a controlling factor for him.  Interestingly, both Graham and Cundill also reference prior prices as well as one factor in their analysis.

[Guest hellsten]

Very interesting that he uses historical prices when judging buying. Not very Buffett like but something I'm sure most do - when a stock has traded lower in the last 12 months it means you could have a better opportunity in the future.

 

He did consider historical prices as part of his consideration.  He generally liked things near the lows of at least 3+ years.  It was viewed more as a qualitative factor in the sense that psychologically other investors would be more willing to bid something up to a level it had been before.  I do not believe it was a controlling factor for him.  Interestingly, both Graham and Cundill also reference prior prices as well as one factor in their analysis.

 

I think it was Cundill and/or Schloss that got me started with chart reading and tasseography. I haven't learnt more than identifying the 10-year, 5-year and 52-week lows. Soon I'll start learning about candlestick charts and Ichimoku kinko hyo. I also admit that I like to look at charts from 2009 to see what absolute fear can do to a stock.

[frommi]

I think it was Cundill and/or Schloss that got me started with chart reading and tasseography. I haven't learnt more than identifying the 10-year, 5-year and 52-week lows. Soon I'll start learning about candlestick charts and Ichimoku kinko hyo. I also admit that I like to look at charts from 2009 to see what absolute fear can do to a stock.

 

When you are really interested in technical analysis to detect stock bottoms you should learn about Elliott Wave Analysis, Fibonacci and Support/Resistance. Candlesticks work best for trendfollowing. Theres a trading technique a lot of successful daytraders use, which is called Ross trading/1-2-3 setups. This works in stocks to detect momentum turnarounds, too. But i guess that for the 99.9% members of this forum this is unnessecary hokus-pokus. :D (and it is, when you can replace it with experience.)

[jschembs]

I've had that list printed out for a few years, a great thing to periodically revisit.

 

Much more useful than Buffett's "never lose money rules 1 and 2," which I've always found to be complete BS and unrealistic. Obviously as a value investor you want to be cautious and avoid losses, but most of my greatest investments had 5-10% losses (or more) initially before turning higher (or lower in the shorts' case). Given most of us have a counter-trend approach, it's highly likely you'll experience some paper losses as you build your position.

[vinod1]

Does any know what he means by "Buy on a scale and sell on a scale up"?

 

I am assuming it means buy incrementally as price goes down and sell incrementally as price goes up.

 

Thanks

 

Vinod

[Kraven]

Does any know what he means by "Buy on a scale and sell on a scale up"?

 

I am assuming it means buy incrementally as price goes down and sell incrementally as price goes up.

 

Thanks

 

Vinod

 

He is saying don't buy a full position to start since you will almost certainly have an opportunity to buy more if (when) the price falls.  So scale into a full position.  Likewise, on the way out start selling as something reaches fair value or close to it and leave some room (if warranted) for some additional upside and sell on a scale on the way out.

[vinod1]

Does any know what he means by "Buy on a scale and sell on a scale up"?

 

I am assuming it means buy incrementally as price goes down and sell incrementally as price goes up.

 

Thanks

 

Vinod

 

He is saying don't buy a full position to start since you will almost certainly have an opportunity to buy more if (when) the price falls.  So scale into a full position.  Likewise, on the way out start selling as something reaches fair value or close to it and leave some room (if warranted) for some additional upside and sell on a scale on the way out.

 

Thanks Kraven.

[ukvalueinvestment]

I've had that list printed out for a few years, a great thing to periodically revisit.

 

Much more useful than Buffett's "never lose money rules 1 and 2," which I've always found to be complete BS and unrealistic. Obviously as a value investor you want to be cautious and avoid losses, but most of my greatest investments had 5-10% losses (or more) initially before turning higher (or lower in the shorts' case). Given most of us have a counter-trend approach, it's highly likely you'll experience some paper losses as you build your position.

 

He means "don't lose money on a portfolio basis over 2-3 years"

[siddharth18]

Common-sense rules from a guy with an extraordinary track record. Can't go wrong there; thanks for posting!

[Guest JoelS]

Some good additional resources on Walter Schloss found here: http://www.uaic.co.nz/investor.php

 

[phil_Buffett]

Some good additional resources on Walter Schloss found here: http://www.uaic.co.nz/investor.php

 

 

thank you JoelS very very much. great site with a lot of new article´s for me. great!!!  :)