Learning About stock market

[POKhER]

Hi guys,

How would you recommend a "CLUELESS" 18 year old would go about learning about stocks so he could potentially get a job in the future or atleast invest himself?

It looks interesting, but it seems i'd have to do a degree to get any chance of a job in it. I just wanted to learn the basics so i could see if i have an interest for it.

Thanks in advanced,
PH.

[r3vbr]

motleyfool.com for basics

after that read books:
"the intelligent investor" and "security analysis" by benjamin graham

[squiffy]

You might also start doing some general reading -- Wall St. Journal, the economist, or take a basic class in economics in college. Just so you start to understand generally how the economy works.

[squiffy]

I also like
Stocks for the Long Run
The Warren Buffet Way
The Warren Buffet Portfolio
Any of the three books put out by Peter Lynch
There are about 10-20 others. But that's a decent start.
Also possibly Dorsey Five Rules of Successful Investing

[DesertCat]

Warren Buffett's Letters (http://www.berkshirehathaway.com/letters/letters.html)

The above letters are free, and a decent place to start. Warren is probably the most successful investor in history, with a 50 year record. His letters are suprisingly readable and do a good job of explaining the philosophy he follows.

From his 1988 letter, one of my favorites.

"In past reports we have told you that our insurance
subsidiaries sometimes engage in arbitrage as an alternative to
holding short-term cash equivalents. We prefer, of course, to
make major long-term commitments, but we often have more cash
than good ideas. At such times, arbitrage sometimes promises
much greater returns than Treasury Bills and, equally important,
cools any temptation we may have to relax our standards for long-
term investments. (Charlie’s sign off after we’ve talked about
an arbitrage commitment is usually: “Okay, at least it will keep
you out of bars.”)

During 1988 we made unusually large profits from arbitrage,
measured both by absolute dollars and rate of return. Our pre-
tax gain was about $78 million on average invested funds of about
$147 million.

This level of activity makes some detailed discussion of
arbitrage and our approach to it appropriate. Once, the word
applied only to the simultaneous purchase and sale of securities
or foreign exchange in two different markets. The goal was to
exploit tiny price differentials that might exist between, say,
Royal Dutch stock trading in guilders in Amsterdam, pounds in
London, and dollars in New York. Some people might call this
scalping; it won’t surprise you that practitioners opted for the
French term, arbitrage.

Since World War I the definition of arbitrage - or “risk
arbitrage,” as it is now sometimes called - has expanded to
include the pursuit of profits from an announced corporate event
such as sale of the company, merger, recapitalization,
reorganization, liquidation, self-tender, etc. In most cases the
arbitrageur expects to profit regardless of the behavior of the
stock market. The major risk he usually faces instead is that
the announced event won’t happen.

Some offbeat opportunities occasionally arise in the
arbitrage field. I participated in one of these when I was 24
and working in New York for Graham-Newman Corp. Rockwood & Co.,
a Brooklyn based chocolate products company of limited
profitability, had adopted LIFO inventory valuation in 1941
when cocoa was selling for 50 cents per pound. In 1954 a
temporary shortage of cocoa caused the price to soar to over
60 cents. Consequently Rockwood wished to unload its valuable
inventory - quickly, before the price dropped. But if the cocoa
had simply been sold off, the company would have owed close to
a 50% tax on the proceeds.

The 1954 Tax Code came to the rescue. It contained an
arcane provision that eliminated the tax otherwise due on LIFO
profits if inventory was distributed to shareholders as part of a
plan reducing the scope of a corporation’s business. Rockwood
decided to terminate one of its businesses, the sale of cocoa
butter, and said 13 million pounds of its cocoa bean inventory
was attributable to that activity. Accordingly, the company
offered to repurchase its stock in exchange for the cocoa beans
it no longer needed, paying 80 pounds of beans for each share.

For several weeks I busily bought shares, sold beans, and
made periodic stops at Schroeder Trust to exchange stock
certificates for warehouse receipts. The profits were good and
my only expense was subway tokens."

[squiffy]

Yes, that's great post by Cat. Very useful info.

Well I am a professional trader that works from home. I would recommend first taking a few classes in accounting and finance, so when you read a pr you know what the co is talking about. Second some books on technical analysis. If you want to do intraday trading such as myself, I would highly recommending downloading a free screen recorder so you can review the action on a stock whenever you want to. After that you pretty much gotta choose yourself what type of investing/trading you want to do. .

[Sniper]

[ QUOTE ]
I would highly recommending downloading a free screen recorder so you can review the action on a stock whenever you want to.

[/ QUOTE ]

OK, I'll bite, what exactly are you recording and reviewing later? You don't have to record the chart, as you can review that at any time... are you recording the level 2 action?

Well really don't need L2 action if your trading bigboard but just 1 min chart and ticker so you get to know if a move is real or just a whipsaw.

[GeorgeF]

I suggest your read the wall street journal. Got to you local library and read the business books their, especially histories. Also note that the financial markets may not be the money machines they were in the past. Financial power is being transfered to China and India. If they don't screw it up they will be the money centers and the US will have to go back to making usefull things.

You also need to consider if a job with a govenrment pension is not the way to go. Right now the only class of worker that has as a group done well are civil service.

[Sniper]

[ QUOTE ]
Well really don't need L2 action if your trading bigboard but just 1 min chart and ticker so you get to know if a move is real or just a whipsaw.

[/ QUOTE ]

Still not sure how you are using the recording in a way that pulling up a 1 min chart at eod wouldn't also do. Can you elaborate?

[Moonsugar]

[ QUOTE ]
motleyfool.com for basics

after that read books:
"the intelligent investor" and "security analysis" by benjamin graham

[/ QUOTE ]

Extremely good books. These 2 books got me hooked on stocks at 18. I would rec. the 1940 edition of Security Analysis as the later editions lost alot IMO.

Portfolio Selection by Harry Markowitz is another great.

But, if anyone I was talking to could only read one book on investing it would be

The Intelligent Asset Allocator by William Bernstein (http://www.amazon.com/exec/obidos/tg/detail/-/0071362363/qid=1124771679/sr=8-1/ref=pd_bbs_1/104-9067089-8166349?v=glance&s=books&n=507846)

[Moonsugar]

[ QUOTE ]
Right now the only class of worker that has as a group done well are civil service.

[/ QUOTE ]

That is a really bold statement. LOL.

Believe me its a big difference seeing it live and understanding movement while its happening, looking at eod is looking in hindsight and stuff looks more obvious, i would equate it to watching poker on tv and seeing someone bluffed out of a pot that the person had a lock on