Another book question
 

Whats a good book, that would help me read charts like cash flow, assets, all those good things like you would see on yahoo finance. Recently I've been helping my uncle with investment decisions, relating to index funds and how much should be in different types of indexs and assets. However i'm just looking to get more familiar with individual stocks, he's asked me a couple questions on those and coudln't give him great answers with confidence, just info on PE and net income things like that, but would love to really dig deeper into things regarding individual stocks.

Re: Another book question
 

anyone?

Re: Another book question
 

I don't know if this is relevant to your question but I learned what I know about corporate finances and financial statements by just reading various 10-Q's and then studying up on issues I didn't understand. I would start with a first year college course in Financial Accounting or equivalent because it's faster than the way I went about things. You need some basic accounting knowledge to have some sort of clue on understanding corporate financial statements IMO.

Re: Another book question
 

"Random walk down wall street" possibly at your library explains the jargon and why it is mostly BS.

BTW there is no precise definition of PE. Earnings are calculated in many arbitrary and deceptive ways.

Re: Another book question
 

random walk is probably pretty bad for fundamental analysis/technical analysis stuff, as it doesn't go into depth and bashes it pretty hard. Investopedia.com has some good stuff.

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This is the bible of fundamental business valuation. I have the 2nd edition and can vouch for the value of this book's content. It is comprehensive and complete. It's THE book for valuing a business you are considering for purchase. It's great for determining a equity's fair value.

Valuation: Measuring and Managing the Value of Companies, Fourth Edition (Hardcover)

Re: Another book question
 

I've read "A Random Walk Down Wall Street" and I agree with a previous poster, its not good for the kind of stuff I'm looking for. I'm not a huge fan of day traning or picking individual stocks, but I would like to know what all the stats on the company really means.

Re: Another book question
 

allright might have to add this to my must read books, the list is piling up because during school I dont have much time to read. However this thing is $50 and is 700+ pages lol Kinda scary, anything else out there?

Re: Another book question
 

Ben Graham's "The Intelligent Investor" has a new edition, with commentary added by Jason Zweig and it's only $10.85 on Amazon. This book is one of the best introductions on how to invest in stocks, and Jason's commentary really updates it well.

More detailed information on how to analyse individual stocks and bonds can be found in Graham & Dodd's "Security Analysis", which is the bible for fundamental analysis of a company's true worth. This book is much more expensive, lengthy, difficult to read, etc, but well worth it once you are ready.

Re: Another book question
 

Read anything by Swedroe or Ferri on why actively picking stocks for long term investing is a losers game.

You can't and won't win. (winning as defined by beating index).

See academic papers by Fama and French.

Basically, the sell-side of Wall Street is a scam.

"Lets take your money and my experience and turn it into my money and your experience" is their mission statement.

Most diehard indexers recommend value and small cap tilt and a big chunk of (half of equities) split in NON-US - i.e. equal weightings of VPL,VGK,EEM/VWO,EFV and VINEX.

Good luck

Re: Another book question
 

[ QUOTE ]
Read anything by Swedroe or Ferri on why actively picking stocks for long term investing is a losers game.

You can't and won't win. (winning as defined by beating index).

See academic papers by Fama and French.


[/ QUOTE ]

Out of curiosity, how do these academics explain Warren Buffett's track record?

Re: Another book question
 

I have yet to read this book, but baught it a month ago, and definatly want to read it soon, loads of work in college it's hard to find time to read for pleasure, when I allready have to read 50-100 pages of stuff a night.

Re: Another book question
 

[ QUOTE ]
I have yet to read this book, but baught it a month ago, and definatly want to read it soon, loads of work in college it's hard to find time to read for pleasure, when I allready have to read 50-100 pages of stuff a night.

[/ QUOTE ]

Well I didn't recommend it for a "pleasure" read:) Graham can be a little dry, but like I said, Zweig helps update the concepts and relate them to things that happened in the bubble, which really freshens things up.

Also, if you ever decide to graduate to "Security Analysis" I just realized you can get the original Graham versions on Amazon. I've actually only read the most recent edition (updated by a guy named Cottle) and a few things in it strike me as rather ungraham-like. I've ordered his 1951 edition and should be reading it soon. I'll post a review if I get a chance.

Re: Another book question
 

"You can't and won't win. (winning as defined by beating index)."

If you are intelligent you can and will. How can that be possibly denied when so many have already done it. Do you honestly think a good business with a good product and good advertisement can't make more money than a bad business with a lousy product and bad advertising? This is bizzare.

Re: Another book question
 

[ QUOTE ]
"You can't and won't win. (winning as defined by beating index)."

If you are intelligent you can and will. How can that be possibly denied when so many have already done it. Do you honestly think a good business with a good product and good advertisement can't make more money than a bad business with a lousy product and bad advertising? This is bizzare.

[/ QUOTE ]

Active stock picking for long term investing is a losers game for an individual, end of discussion.

Google Fama and French, Modern Portfolio Theory, books by bernstein, swenson, swedroe and ferri.

The individual investor will lose, end of discussion.

It's the greatest lie ever perpetrated on humanity and I am surprised so many here believe it.

Note I am not talking about active day trading, which many have shown a propensity for success that must be more than luck. See thekirkreport.com for someone like this.

Otherwise read a Random Walk Down Wall Street.

Sell-side wall street has you brainwashed.

Good luck.

Re: Another book question
 

[ QUOTE ]
[ QUOTE ]
Read anything by Swedroe or Ferri on why actively picking stocks for long term investing is a losers game.

You can't and won't win. (winning as defined by beating index).

See academic papers by Fama and French.


[/ QUOTE ]

Out of curiosity, how do these academics explain Warren Buffett's track record?

[/ QUOTE ]

Sell side Wall street loves buffet because they can point to him and everyone shakes their head up and down, with mouth wide open, believes they can do it.

Well you can't.

He is a business owner and investor that takes an active management role in the his companies.

Buying 10,000 shares of IBM does not make you a business owner.

Check out Effecient Frontier, Random Walk Down Wall Street and The Only Investment Guide you'll ever need if you want irrefutable evidence that active stock picking is a losers game.

Living the lie is more fun than indexing and asset allocation, I agree.

But its still a lie.

Re: Another book question
 

[ QUOTE ]
Active stock picking for long term investing is a losers game for an individual, end of discussion.


[/ QUOTE ]

There rewards of the market are available to those willing to invest the time! Don't belive everything you read, there are successful long term investors picking individual stocks.

[ QUOTE ]
Sell-side wall street has you brainwashed.


[/ QUOTE ]

Sounds like someones brainwashed you!!!

Re: Another book question
 

[ QUOTE ]
Ben Graham's "The Intelligent Investor" has a new edition, with commentary added by Jason Zweig and it's only $10.85 on Amazon. This book is one of the best introductions on how to invest in stocks, and Jason's commentary really updates it well.

More detailed information on how to analyse individual stocks and bonds can be found in Graham & Dodd's "Security Analysis", which is the bible for fundamental analysis of a company's true worth. This book is much more expensive, lengthy, difficult to read, etc, but well worth it once you are ready.

[/ QUOTE ]

Didn't Graham, later in life, admit that his securities analysis techniques no longer worked -- Too many eyeballs processing the same information.

To outperform, you need either inside information or access to the trading desks at the big brokerage houses.

I prefer to believe this guy who isn't trying to sell me anything and isn't trying to generate a sales commission

Fama and French have a bunch of Nobel prize winning economists they run around with who say the same thing,

Good luck, sounds like you are gonna need it.

Re: Another book question
 

[ QUOTE ]
[ QUOTE ]
Active stock picking for long term investing is a losers game for an individual, end of discussion.


[/ QUOTE ]

There rewards of the market are available to those willing to invest the time! Don't belive everything you read, there are successful long term investors picking individual stocks.

[ QUOTE ]
Sell-side wall street has you brainwashed.


[/ QUOTE ]

Sounds like someones brainwashed you!!!

[/ QUOTE ]

Sniper you are one of my favorite posters - I try to read everything you write.

You are wrong about this. I'm sure there are those that do well day to day exploiting behavioral finance type ineffeciencies in the market - you may be one of them.

We are talking about long term investing and asset allocation.

Its a losers game.

Sure its fun in our ownership society, but there are volumes of work done by guys a lot smarter than me that convincingly argue asset allocation and indexing over individual stock picking and active management.

Take the time to check out The Effecient Frontier or Swensen's latest book (he run's Yale's endowment fund). A book by Swedroe called The Only Investment Guide You'll Ever Need makes one of the strongest cases against active picking I've read.

The evidence is overwhelming. The first 1/3rd of his book is filled with examples, academic studies, etc on why active stock picking is -EV.

Active stock picking is -EV unless you have superior information no one else has. I think the only exception is short term traders that take advantage of short-term behavioral idiocy by lame active stock pickers like we are discussing here.

Re: Another book question
 

[ QUOTE ]
This is the bible of fundamental business valuation. I have the 2nd edition and can vouch for the value of this book's content. It is comprehensive and complete. It's THE book for valuing a business you are considering for purchase. It's great for determining a equity's fair value.

Valuation: Measuring and Managing the Value of Companies, Fourth Edition (Hardcover)

[/ QUOTE ]

Its a great book that everyone else has read, making its contents and practical application irrelevant.

Think, people!!

Re: Another book question
 

[ QUOTE ]
random walk is probably pretty bad for fundamental analysis/technical analysis stuff, as it doesn't go into depth and bashes it pretty hard. Investopedia.com has some good stuff.

[/ QUOTE ]

The point is that analysis is a waste of time and this is a good book to convince one of that.

Its like asking for some books that are good at teaching one to build a divining rod or to read tea leaves.

I'd rather point the poster to a work that debunks such nonsense.

Re: Another book question
 

[ QUOTE ]
anyone?

[/ QUOTE ]

Recommended Reading of academic papers

the radical guide to investing

Vanguard diehard's forums

Must read books

The best advice you can get is to check your premise and ask yourself "Does security analysis really work".

Re: Another book question
 

[ QUOTE ]
To outperform, you need either inside information or access to the trading desks at the big brokerage houses.


[/ QUOTE ]

Why do you think that access to trading desks is going to help you with long term investments?? Specifically, what information do you think those traders possess that gives them an edge in long term investing? (I will note that knowledge of order flow does give them an advantage in short term trading)

[ QUOTE ]
Fama and French have a bunch of Nobel prize winning economists they run around with who say the same thing,

[/ QUOTE ]

Fama is also the director of research of Dimensional Fund Advisors, Inc., an investment advising firm with $69 billion under management Obviously, they have convinced a few people that they can beat the indexes [img]/images/graemlins/wink.gif[/img]

Re: Another book question
 

[ QUOTE ]
Sniper you are one of my favorite posters - I try to read everything you write.

[/ QUOTE ]

Thanks rock, I appreciate it!

[ QUOTE ]
I'm sure there are those that do well day to day exploiting behavioral finance type ineffeciencies in the market - you may be one of them. We are talking about long term investing and asset allocation.

[/ QUOTE ]

As you know by reading what I write, my personal efforts focus on short term trading, and taking advantage of short term inefficiencies in the system is certainly a part of that.

However, that doesn't mean that I don't also have knowledge of long term investing issues.

[ QUOTE ]
Its a losers game.

[/ QUOTE ]

Then how do you explain the success of William O'neill's CAN SLIM system or Value Lines 1 raked stocks, both with long term records of beating the indexes.

[ QUOTE ]
Sure its fun in our ownership society, but there are volumes of work done by guys a lot smarter than me that convincingly argue asset allocation and indexing over individual stock picking and active management.


[/ QUOTE ]

If you only read some of the books, you can get a skewed perspective. Here are some of the things that have been written about...

<ul type="square">[*]Invest in Mutual Funds, because the experts there know more than you do.
[*]Invest in Indexes, because most mutual funds can't outpeform the indexes.
[*]Invest on your own, because you can make choices the mutual fund managers and indexes can't.[/list]I could go on, but all these theories on Personal management vs Actively managed funds vs Indexing, all get cyclical in their reasoning. The reason for this is simple, They are all right.

Re: Another book question
 

[ QUOTE ]
Its a great book that everyone else has read, making its contents and practical application irrelevant.

Think, people!!

[/ QUOTE ]

First, many people are clueless and haven't read very much of anything. Even, of those who have done some reading, a very small percentage have read that particular book.

Second, even if everyone knew how to do the same thing the same way, there would still be options for taking advantage of the "crowd psychology" that would therefore occur!

Re: Another book question
 

Read anything by Swedroe or Ferri on why actively picking stocks for long term investing is a losers game.

You can't and won't win. (winning as defined by beating index).

See academic papers by Fama and French.

Basically, the sell-side of Wall Street is a scam.

"Lets take your money and my experience and turn it into my money and your experience" is their mission statement.

Most diehard indexers recommend value and small cap tilt and a big chunk of (half of equities) split in NON-US - i.e. equal weightings of VPL,VGK,EEM/VWO,EFV and VINEX.

Good luck


These opinions are from the 90s. According to my old empirical finance prof very few academics believe in the Efficient Market Hypothesis by now.

Re: Another book question
 

[ QUOTE ]
[ QUOTE ]
Its a great book that everyone else has read, making its contents and practical application irrelevant.

Think, people!!

[/ QUOTE ]

First, many people are clueless and haven't read very much of anything. Even, of those who have done some reading, a very small percentage have read that particular book.

Second, even if everyone knew how to do the same thing the same way, there would still be options for taking advantage of the "crowd psychology" that would therefore occur!

[/ QUOTE ]

There are huge value funds run by people that have read this book. Dodge and Cox, the myriad vanguard value funds, fidelity, t rowe, americamn, oakmark, blah blah blah.

The information in the book is useless for the individual investor because too many people with too much money know are familiar with the techniques.

The average investor is competing with literally hunderds of billions of dollars seeking seeking to buy value stocks (and all other kinds of stocks as well).

How delusional and arrogant to think could do better. Buy IJJ and IJS, 2 value indexes instead.

Re: Another book question
 

[ QUOTE ]

Read anything by Swedroe or Ferri on why actively picking stocks for long term investing is a losers game.

You can't and won't win. (winning as defined by beating index).

See academic papers by Fama and French.

Basically, the sell-side of Wall Street is a scam.

"Lets take your money and my experience and turn it into my money and your experience" is their mission statement.

Most diehard indexers recommend value and small cap tilt and a big chunk of (half of equities) split in NON-US - i.e. equal weightings of VPL,VGK,EEM/VWO,EFV and VINEX.

Good luck

These opinions are from the 90s. According to my old empirical finance prof very few academics believe in the Efficient Market Hypothesis by now.

[/ QUOTE ]

Actually several of those books are recent, as is some of the research cited.

Your professor is right about one thing - its worse now than ever before for the individual investor.

The big brokerage houses have "black boxes" generating amazing trading profits (see Goldman blowout quarter for example).

Hedge funds generating huge commissions get analyst downgrades/upgrades and other info FIRST from the trading desks of the big brokerage houses.

The individual investor has zero shot. EMH may not be a reality for the black boxes, proprietery trading desks, inside traders (see rebock insider trading scandal) or active investors like Icahn and Buffett but it is for the average man on the street.

To say otherwise flies in the face of mountains of evidence.

Even the great Warren Buffet said "our stay-put behavior reflects our view that the stock market serves as a relocation center at which money is moved from the active to the passive"

Re: Another book question
 

This whole "index only" philosophy can be defied by some simple common sense. The index is an indication of average performance of a group of companies. We have decades of records of different indexes. List the companies that were the best performers on a year to year basis within their index. List the companies that were the poorest performers in the same index. Find what is common amongst successful companies. Find what is common in the least successful companies. Seek out companies that exhibit the good qualities and avoid companies that exhibit the bad qualities. Invest.

Making profits over the long term is not a fluke.

Re: Another book question
 

[ QUOTE ]

Sell side Wall street loves buffet because they can point to him and everyone shakes their head up and down, with mouth wide open, believes they can do it.


[/ QUOTE ]

Wall street hates Buffett, because he rarely generates investment banking fees for them.

[ QUOTE ]

He is a business owner and investor that takes an active management role in the his companies.



[/ QUOTE ]

He had a twenty year record of crushing the indexes before he bought his first company.

He takes no active role in his wholly owned businesses, the vast majority send him a check on a monthly or quarterly basis. You'd understand how silly this myth is (created I believe by a leading EMT academic), if you knew how few people work at Berkshire Hathaway HQ, and how many subsidaries they have.

[ QUOTE ]

Buying 10,000 shares of IBM does not make you a business owner.


[/ QUOTE ]

According to Warren Buffett, it does.

[ QUOTE ]

Check out Effecient Frontier, Random Walk Down Wall Street and The Only Investment Guide you'll ever need if you want irrefutable evidence that active stock picking is a losers game.


[/ QUOTE ]

EMT has been effectively been gutted by Buffett himself, in his famous speech "Superinvestors of Graham-and-Doddsvile". You should read this since you are well out of date in your understanding of the acceptance of EMT.

[ QUOTE ]


Living the lie is more fun than indexing and asset allocation, I agree.

But its still a lie.


[/ QUOTE ]

The real lie is to rely on thirty year old "theories" that have suffered with time.

There is a great deal of truth in the EMT. Beating the market isn't easy, the market is frequently efficient.

But to say the market is alwasy efficient and can't be beat by stock picking is to ignore the records of dozens of value investors who've done it for decades on end.

The evidence that EMT proponents used was biased and incomplete. Mutual funds don't beat indexes as a group, but mutual funds suffer from extraordinary structural limitations. To beat the market in this structure requires extroardinary skill.

And your central advice is useful. Most investors are better off with index funds, but not because successful stock picking is impossible, but because it's hard.

But you need to stop closing yourself off to new information, and realize there are great long term investors who beat the market, and almost all of them do it the same way Buffett has.

Re: Another book question
 

[ QUOTE ]
[ QUOTE ]
To outperform, you need either inside information or access to the trading desks at the big brokerage houses.


[/ QUOTE ]

Why do you think that access to trading desks is going to help you with long term investments?? Specifically, what information do you think those traders possess that gives them an edge in long term investing? (I will note that knowledge of order flow does give them an advantage in short term trading)

[ QUOTE ]
Fama and French have a bunch of Nobel prize winning economists they run around with who say the same thing,

[/ QUOTE ]

Fama is also the director of research of Dimensional Fund Advisors, Inc., an investment advising firm with $69 billion under management Obviously, they have convinced a few people that they can beat the indexes [img]/images/graemlins/wink.gif[/img]

[/ QUOTE ]

Straw man!!

DFA website plainly states "Market efficiency is at the core of Dimensional's investment philosophy."

These funds are only available through a network of financial advisors (a discussion for another day) but the funds are all PASSIVELY MANAGED and widely regarded to be the finest mutual funds in the world. Some investors will pay an advisor just to have access to the funds (although its against DFA practices and they will withdraw fund access from advisor if they find out).

Vanguard and some of the ETFs offer similar advantages but DFA are the obligatory shiznit.

More info on what makes them so great here

Re: Another book question
 

[ QUOTE ]
More info on what makes them so great here

[/ QUOTE ]

Merton and Scholes are on the board? After their involvment with the Long Term Capital Management disaster, who would let these academics advise anyone on investing?

Re: Another book question
 

[ QUOTE ]

There are huge value funds run by people that have read this book. Dodge and Cox, the myriad vanguard value funds, fidelity, t rowe, americamn, oakmark, blah blah blah.

The information in the book is useless for the individual investor because too many people with too much money know are familiar with the techniques.


[/ QUOTE ]

Value techniques have been well known since the 1930's. It hasn't stopped talented value investors from beating the market.

This is because technique is only a portion of what you need. You also need patience, and judgement. That's what separates the best from the laggards.

Re: Another book question
 

[ QUOTE ]
[ QUOTE ]
More info on what makes them so great here

[/ QUOTE ]

Merton and Scholes are on the board? After their involvment with the Long Term Capital Management disaster, who would let these academics advise anyone on investing?

[/ QUOTE ]

This is one of the most (if not the most) highly respected mutual fund companies (along with vanguard).

There were a lot of people involved with LTCM and their demise. I hardly think the blame lies at their feet.

Re: Another book question
 

HIJACK

Re: Another book question
 

[ QUOTE ]

There were a lot of people involved with LTCM and their demise. I hardly think the blame lies at their feet.

[/ QUOTE ]

Yes, it does. Merton and Scholes were founding partners of LTCM (along with John Meriwether) and actively planned LTCM's strategies. They actively solicited investors for LTCM. They don't deserve all the blame, just a huge portion of it.

If they were trying to prove that academics can't beat the market without taking excess risk, they were a huge success. Of course, Buffett knows how, which is why he declined to invest in LTCM.

And after reading my other replies, I guess you realized your Efficient Market mantra was out of date and just plain wrong, which is why you don't have any real response.

Re: Another book question
 

[ QUOTE ]
The average investor is competing with literally hunderds of billions of dollars seeking seeking to buy value stocks (and all other kinds of stocks as well).


[/ QUOTE ]

Individual investors are far more nimble than large funds can ever hope to be. Individual investors can take risks that funds can't.

Don't forget, the guys running these funds also don't have crystal balls, they are just individual investors with alot more money to work with and a larger support system, which gives them the disadvantage of higher costs to do what you can do rather cheaply, with only an investment of your time.

If you can identify the same opportunites as these funds do, before or slightly after they identify them, you will be very rich very quickly by riding their buying [img]/images/graemlins/wink.gif[/img]

[ QUOTE ]
How delusional and arrogant to think could do better.

[/ QUOTE ]

It is not arrogant, or delusional to think that an individual investor willing to put in the time, can and will outperform mutual fund managers... in fact, it is fairly close to a sure thing.

I personally know many long term investors that outperform the indexes, and I actively trade with many short term traders that are absolutely killing the markets!

My knowledge is based in reality, not some theoretical argument by someone who wrote a book [img]/images/graemlins/wink.gif[/img]

Re: Another book question
 

[ QUOTE ]
The big brokerage houses have "black boxes" generating amazing trading profits (see Goldman blowout quarter for example).

[/ QUOTE ]

I thought your arguing about long term investment methodologies... now you refer to GS Quarterly trading results generated by short term trading???

Re: Another book question
 

[ QUOTE ]
HIJACK

[/ QUOTE ]

Sorry Fish, but I hope you can see value in the discussion.

Certainly seeing DesertCat and myself clearly on the same side of this has to be worth it [img]/images/graemlins/wink.gif[/img]

As we've both said, investing or trading is not so easy that everyone can do it successfully; but, if you devote the right amount of time, energy and skill to whatever methodology you choose, you can be successful!

Re: Another book question
 

No it fine, I like a good discussion as much as anyone else. You guys allready gave me the advice I asked for, I just messing around with the hijack post.