Want to learn...

[MarkD]

Ok, I know virtually nothing about the stock market or investments in general but I want to learn. For all intensive purposes you can assume that I know nothing at all (very close to the truth).

With that in mind I was wondering if anyone has some websites that they would recommend that has basic information that I would need. I'm going to stay away from books until I get a better feel about what information I need to know cause I want to start right at the basics. I'm asking for your help because I could search and find a site but I wouldn't know if I was reading something that was completely wrong, but I assume some of you might know of some good starter sites I could read.

Thanks in advance for any help you might offer.

[MtSmalls]

ALthough this may be a little counter-intuitive, you are probably better off starting with books, and getting the basics from there. Most websites include a lot of posting from members, and like anything else, that all has to be taken with a huge grain of salt.

The only beginners book I can really recommend, and its very basic is "The Mathematics of Investing" by Thomas Clarett. It goes over all the calculations you see in common books and websites. Its as good a place as any to start.

Next, go to your favorite, non-mall bookstore (Barnes and Noble is fine) and check out the investing section. Ignore the Dummies books or any book promising that you can make a fortune in today's markets. Look for the names Buffet, William Sharpe, Gabelli or Lynch and start there.

OR if you have a question or topic that you would like to discuss, let me know. NathanBehan@netscape.net

[PokerBabe(aka)]

I suggest that you listen to CNBC in addition to reading and doing research. The CNBC website is also excellent. Art Cashin (UBS Warburg's Director of Floor Ops) is one of the smartest people I have ever met (next to Dynasty and Mason, of course /forums/images/icons/wink.gif /forums/images/icons/grin.gif ). Art's commentary is brillant and almost always spot on. It is an IDEAL time to begin your investing career as we are now in the worst bear market of all time.! LGPG and Buy Low. /forums/images/icons/smirk.gif Babe /forums/images/icons/heart.gif

[MarkD]

LOL, ok what do LGPG and bear market mean?

And just finishing University and getting a job while broke it's a long term goal for me to start investing (6 months+ likely).

[GeorgeF]

1) Read the wall street journal.
2) Read the books "a random walk down wall street" by Malkiel and
"The Intelligent investor" by Graham
3) Go to a good business/research library (university or municipal) and ask a librarian.
5) read the letters to shareholders www.berkshirehathaway.com (http://www.berkshirehathaway.com)
6) read Buffett's articles in fortune.com
7) If you have some money realmoney.com and fallstreet.com

[Wildbill]

The Journal is worthless for someone starting out. Its so fluffy these days. My goodness on Friday I was talking about this with my coworker. I was asking him how in the world did they decide for appropriate front page material was an article about how women are deciding their hair looks better if they only wash it a few times a week??? Simply put the Journal is nice if you want some interesting news reads or invest in something specialized, but it rarely even attempts to teach you investing. Investors Business Daily is far better at that and much more useful to boot. Before you get started with it, read Bill O'Neill's two books to get an understanding of the paper's viewpoint and objective and then go at it.

[PokerBabe(aka)]

Sorry, LGPG is the PokerBabe's motto: Look good, Play Good. Bear market is when the market is trending down vs. up. Bull maket is when the market is trending up. As for your timeframe, the long term perspective is perfect. You are young (I assume since you are just graduating) so you have many years to build your investment bankroll. Start small with even 50.00 a week or 100 a month and put this into an S&P 500 fund (Standard and Poor's 500 index fund). Vanguard has a fine one you can use for this purpose. This way you can participate in ownership of some of the finest large corporations without trying to pick an individual stock or two. I agree with Wildbill about reading Bill O'Neils book "How to make money in stocks" - it's a solid formula, but of course, just as in poker, no one book can make you an expert. Also, listen to CNBC as I suggested. This will give you a feel for the "lingo" of the street. LGPG and Buy low. Babe /forums/images/icons/heart.gif

[MarkD]

Are you sure this is the book I should start at? Erroneous advice would really suck. Also, I have taken a finance class as part of my engineering degree. Derived a bunch of interest forumulas and learned to calculate mortgages and such. Is this just going to be the same text book I had in school with a different author or is it more applicable to true investing?

Amazon.com review of this book:

</font><blockquote><font class="small">In reply to:</font><hr />
This book is a farce, full of errors and miscomceptions, February 10, 1999
Reviewer: donluz@aol.com from USA
This book has many errors, misconceptions, and shows a lack of understanding of the time value of money principles. Thomsett uses the erroneous sinking fund formula for annuity due problems. He thinks the internal rate of return (IRR)is a method that is inexact and requires many assumptions when in fact it is a staple of the financial community that is precise, there are no assumptions, and it is a valuable tool. He simply does not understand the internal rate of return method.

His method of calculating the rate of return of mutual funds is a erroneous cook book method, and his example of how to calculating the rate of return of a mutual fund is a factor of 10 in error.

Anyone reading this book will not learn the subject, and should be totally confused by the erroneous approach and examples provided by the book. It is amazing that any publisher would publish this book.



[/ QUOTE ]

[MtSmalls]

Wow. I have never read that review, or seen anything like it. I got the book as a giveaway part of a subscription and haven't used it THAT closely. My Bad. I was trying to start with something basic, since that's what you wanted. I have a bunch of good textbooks that I use more often, but they tend to be pretty advanced and thus avoided those.

[Yerma]

MarkD, Sorry to offer contrarian advice but you should look into books before the websites. There exist a very few good books and zero good websites on the subject.

[Yerma]

Grr... if you have anything to do with CNBC, the website or the tv station then you will go broke *fast*!!!

[MarkD]

offer some good books then?

[Yerma]

There are a few classes of books I would go and read:

1. Stock picking:

I would find the two Robert Hagstrom books. They're almost always readily available in your local Chapters. A common criticism of the White book is that the method he uses to evaluate stocks is not sound. That is true, but the rest of the book is both an easy read and useful. But it's true his second book is better.

Actually, after having read both books and the method Hagstrom uses in his White book you should be able to correct his method on your own and you will be well on your way.

Also good is "Buffettology" by Mary Buffett and David ??? (sorry). It's a little redundant with the Hagstrom books but does go into more detail with cash flows and the balance sheet. There's also a Buffettology workbook sold separately but I think that's for sure taking it too far.

People will tell you to pick up the Lynch books. Well, if you're looking for an 'entertaining' $10 read then go ahead. Don't buy both books since the two say the damned same thing and almost the exact same way. I don't know how he got away with publishing two full books like this.

People will tell you to get the 'A Random Walk down Wall Street' by Malkiel. You can read it and I would take it all with a grain of salt. The markets are 'efficient' in the same way that you 'can't beat the rake'. And he believes the markets are too efficient to beat. Also, if you pick it up you'll find the man has no gambling soul. This is an incorrect attitude for a young man in his 20's.

Most of these books are available in soft cover since they were gobbled up by the masses in the late 90's. It may still be that the 2nd Hagstrom book is in hardcover but it's still not that expensive. So even if you go wrong and pick up a few extraneous books that don't help you in the end--you can't go that wrong. So long as you can filter out the bad and useless material.


2. Corporate policies:

Find a book on corporate financial statements. These are typically very thin books but contain a brutal amount of info.

A little outdated but still good is Graham and Meredith "The Interpretation of Financial Statements". If you pick up the Graham and Meredith book you will know more about your favorite railroad's balance sheet than any of your friends! I also have "Analyzing Financial Statements" by Eric Press and that is more modern. But there's probably tons of others that are pretty good. Just look for 'financial statements' in the title.

The one 'website' worth looking into is at www.berkshirehathaway.com (http://www.berkshirehathaway.com) and look for the letters to the shareholders. I haven't read them all and I don't even know if they're all up on the website. The letters are published for the shareholders annually and the only copy I've read I had mailed to me because I was a shareholder at the time. I understand that a few of the more recent letters are certainly on the website, however. You might try writing their corporate headquarters and getting a copy of all their old letters to shareholders for free. I'm sure you can find their address on their website.

Most people who read the two Hagstrom books will go on to recommend that you pick up "Security Analysis" by Graham and Dodd. It's probably not too outdated since there is like a 5th edition or something updated by currently living authors. I think it's too much info and what's more too boring to read (so I only read half and that was like 300 pages of boring) and what's more only in hardcover and so &gt;$100 to pick up and what's more a little hard to find. If you'd ever read this book, you would understand why I put it into a 'corporate policies' section rather than a 'stock picking' section.

3. Mechanics

You'll want to know a little about the mechanics of the exchanges. Most people will tell you this is unimportant. They don't know heads-from-tails. Your best bet is to walk into your local university library one day and read one of these books. Even if the best you find is something from the 1960's, go ahead and read up. You'll understand even from that why daytrading can never work and an overview of what actually happens with your limit orders (although times-are-a-changing) and so on. You will find this information surprisingly valuable.

Most books of this sort are very general and they will also explain the differences between fundamental and technical investing and various other topics while devoting only a couple of chapters to the 'what actually happens on the exchange floor'. That's why you can go into your university library and read up in one day since a lot of the material is skim-worthy (although usually not skip-worthy).

4. Disclaimer

By the way, everything I've said above is at odds with the current academic views of "efficient market theory." I personally think that the current academic views are stupid and will one day be totally invalidated. In case I am wrong, look up Fama in your local university library (Eugene Fama?). He has some massive book on his efficient market theories. Actually the very first part of Fama's book reads a lot like the "Theory of Gambling and Statistical Logic" by Richard Epstein because they both cover preference curves and the utility of money near the outset. Fama's a smart guy but he is just wrong, is all.

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So, basically I recommend that before you buy your first share you at least: pick up the two Hagstrom books and correct his invalid method for yourself; pick up a financial statements book and work through a few examples with the help of the investor.msn.com website; spend at least a little time in your local library understanding the mechanics of the exchanges; and finally consider it at least remotely possible that everything you've read might be wrong (because it is at odds with academia who recommend that you're better off just piling money into an S&amp;P 500 index fund)

[MarkD]

Thanks a lot! This thread has been very helpful in terms of trying to figure out where I need to start.

BTW, I haven't gone back to the small stakes forum lately but really like the way you suggest me playing the AJ after giving it further thought.

[monte_chr]

If you are going to make claims about Farma being just plain wrong you may want to at leats give some factual data about why you think so? I have read many of the books, papers, and articles he has written and he provides very detailed data for his positions. He has done research going back for 75 years of stock market investing to come to the conclusions. I doubt most people have done 5% of the research he has done, yet they are quick to claim he is wrong. How they came to that conclusion is often hard for me to logically follow. Please explain further as I feel like Farma was 100% accurate in everything that we wrote. I also feel like the content in 'A Random Walk down Wall Street' by Malkiel is very accurate and honest as well. The fact that the author doesn't have a lot of gambling spirit in him is probably quite appropriate for a book on investing and finance. Investing is not suppose to be about gambling but about getting the appropriate return for the appropriate risk.

[adios]

I'm a student that learns something everyday and I have a lot more to learn. The markets humble all. With that said my advice is fairly simple, study some basic economics and accounting. Analyzing financial statements is a tedious and time consumming process where a knowledge of accounting is tremendously helpful. Connecting with knowledgable people is also very helpful at least to me.