Top products from r/investing
We found 257 product mentions on r/investing. We ranked the 670 resulting products by number of redditors who mentioned them. Here are the top 20.
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1. The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition)
Sentiment score: 35
Number of reviews: 49
This classic text is annotated to update Graham's timeless wisdom for today's market conditions...The greatest investment advisor of the twentieth century, Benjamin Graham, taught and inspired people worldwide.Graham's philosophy of "value investing" -- which shields investors from substantial error...
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3. One Up On Wall Street: How To Use What You Already Know To Make Money In The Market
Sentiment score: 12
Number of reviews: 18
Simon & Schuster
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4. The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns
Sentiment score: 6
Number of reviews: 17
The Little Book of Common Sense Investing The Only Way to Guarantee Your Fair Share of Stock Market Returns
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5. Option Volatility & Pricing: Advanced Trading Strategies and Techniques
Sentiment score: 11
Number of reviews: 12
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6. The Bogleheads' Guide to Investing
Sentiment score: 5
Number of reviews: 11
The Bogleheads Guide to Investing
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7. A Random Walk down Wall Street: The Time-tested Strategy for Successful Investing
Sentiment score: 5
Number of reviews: 10
W W Norton Company
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8. The Little Book That Still Beats the Market
Sentiment score: 6
Number of reviews: 10
John Wiley Sons
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9. The Bogleheads' Guide to Investing
Sentiment score: 4
Number of reviews: 9
Investing, Bogleheads' Guide toASIN: 0471730335
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10. The Neatest Little Guide to Stock Market Investing: Fifth Edition
Sentiment score: 4
Number of reviews: 8
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11. Security Analysis: Sixth Edition, Foreword by Warren Buffett (Security Analysis Prior Editions)
Sentiment score: 5
Number of reviews: 8
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12. A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing (Tenth Edition)
Sentiment score: 5
Number of reviews: 7
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13. Valuation: Measuring and Managing the Value of Companies, 5th Edition
Sentiment score: 3
Number of reviews: 5
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14. Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets (Incerto)
Sentiment score: 1
Number of reviews: 5
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15. You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits
Sentiment score: 4
Number of reviews: 5
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16. Options, Futures, and Other Derivatives (10th Edition)
Sentiment score: 1
Number of reviews: 5
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17. Reminiscences of a Stock Operator
Sentiment score: 4
Number of reviews: 4
John Wiley Sons
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18. Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications (New York Institute of Finance)
Sentiment score: 2
Number of reviews: 4
Prentice Hall Press
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19. Dual Momentum Investing: An Innovative Strategy for Higher Returns with Lower Risk
Sentiment score: -1
Number of reviews: 4
This sort of thing is like getting hit by lightning.
Imagine this: if you were around in the early 1900's, which car company would you have invested in? There were hundreds of them. Most of them looked pretty good. Even as late as the 1950's Studebaker, Nash, and American Motors would have looked pretty great. You would have no way of knowing Ford, GM, and Chrysler would have been the survivors and good investments.
Moreover, you don't remember it, but in the late 90's Apple was totally on life support. I think it was either Microsoft or Bill Gates tossed them some help, it was so bad. Steve Jobs came back and turned the whole mess around. If your dad had invested in them in 1986, he'd have sold it within 10 years and been happy to have walked away with more than $0.
Moreover #2, the late 90's was the tech boom. Look up some info on Pets.com. Yahoo was the internet titan. AOL was everywhere and bought Time Warner. Dell Computers were huge. Compuserve. The 90's was the same thing as cars in the early 1900's. You had no way of knowing out of all the tech companies that Amazon and Google were going to be the survivors.
You know how Amazon basically used the internet to eat Sears' lunch? That means smart and connected people fully immersed in the retail industry running the biggest retail business in the world and able to afford all the consultants and research they could want couldn't even comprehend what technology was going to do within a decade or two or spot what was going to be their downfall and you think you could have managed to pick Amazon out of all the tech companies at the same time?
Moreover #3, the places where there are spectacular opportunities, they occur to people around the founder and early employees and people in the venture capital industry. You'd had to have known Mark Zuckerberg in college or his parents and been able to lend a nerd with a computer $50k, or been an early employee of a "shaky" at best company. That's the risk you run if you go to work for a startup. If you have claim to a percent or two, if the company takes off, that's huge. But way more likely the company probably flops or gets bought out for a modest amount. Are you friends with college tech nerds? Are they working on stuff that you think giving them $10k's wouldn't be throwing money away? Do your relatives know their relatives? Are you in an area where you'd come into contact with those people?
Additionally, I'm 32. Part of getting older is realizing you've made choices and decisions and they create opportunities and paths and take away other opportunities and paths, and learning how to cope with seeing that you should have done something differently. We're all doing the best we can at the time. If any of our parents had bought $10k or 20k worth of Apple or Microsoft in the 90's they'd be millionaires by now. If my parents had bought a different house on a lake in the same town for a slightly higher price 30 years ago, they'd be in significantly different financial position too. If only my grandfather had bought large amounts of land near where he lived Washington DC during the Great Depression! You made the best decisions at the time, don't live life looking in the rear view mirror and second guessing yourself.
Looking at my situation, I could buy a flashy car that I like and would enjoy a lot or I could take that few hundred per month and invest it. What happens when I'm 60 and have an account with a big number in it? Then I buy the car I'd enjoy having and go on a lot of vacations, except I'll be old. And I don't expect suddenly when I'm older, my feelings will switch around and I'd suddenly start to enjoy spending money and seeing the number go down rather than saving it. And I've talked to my coworkers, a decade ago there was a person in the office where I work now was mid-50's and came down with brain cancer and was rapidly gone. We have other coworkers who die right after retiring, or aren't healthy enough to get much enjoyment. Think about that--you or me could spend our whole working lives saving money for retirement and then die in our 50's or right after retiring and not being able to get any enjoyment from it. And it's not just dying, but coming down with an illness or having a lot of pain. That isn't a very enjoyable life.
And yet I'd rather save money and push that problem out of what to do with it. This is what I think about when I think about whether to get rid of my cheap, working, boring car and consider getting something fun.
I think autonomous vehicles will be a large source of growth in the coming decade. So which company do you think will do it first? Ford, GM, Chrysler, or Tesla? What if Apple or Google or Uber or Yahoo or some company you haven't heard of right now swoops in and does it first? Surprise! You chose wrong. You could redeem yourself if you invested in a car company the tech company chooses to partner with because they know how to tech but not to make cars. Which car company would they partner with? Is it the one you chose?
Healthcare is big. It's 17% of our economy. How do you invest in that for 10 years for now? What if the people start electing progressives and they completely rearrange the healthcare system and do something like eliminate the need for insurance companies or sharply reduce the profitability of pharmaceutical companies?
Don't dwell on hindsighting yourself. If you look at any graph of a stock or anything it is sooooo obvious to spot the times to buy or sell and pick an optimum path through different investments but when you have to do it live you never know what is going to happen. If you had $10k now, do you think you'd invest it right now or do you think we're on the cusp of a recession where if you hang on to that sum for part of a year or more, you can get a much larger return? What do you think, hmm? It'll be so easy to be able to see what you should have done when you're 32 in 2029 and pull up a graph of stocks and what they did in 2019-20.
I don't want to be rude but stop it with the crypto. You know how gambling works because it exploits people who have the inclination in them to say 'just one more for sure!' even with games where the odds are actually pretty low to ever come out ahead. The fear of missing out is what compels people to get involved with it. People who say "If I had put $100 into bitcoin in 2011, I'd have $10 billion now!" like, no. It's exploiting the people like you who want to look at the graph of Apple's stock price and say "if I had bought in '86...". Also last week the Fed announced it's working on developing a peer to peer live payment system--you know one that will use real actual money so actual real people will be able to use it. That is going to diminish the real world use crypto claims to have. Canada already has a system like this and I don't know if European countries do as well.
Read this book, pup.
Basically monthly I buy the S&P 500 index. It's a trade off between how much return I want and how much effort I want to put in. I doubt I'll beat skyscrapers of people with PhD's who are experts in this, know accounting, read boring reports and do all sorts of research, and actually talk directly to the people running companies so I buy the index and won't ever be worse than the market as a whole--which the skyscrapers of people can't consistently beat. I own some other company's stocks separately, like a railroad, an industrial conglomerate, and Google and all three of those have done great. In that book I linked to, a section talks about how you can approximate the market performance with like owning any 25-30 random companies' stocks--because he's from a time before there were actual market indexes you can hold. Lately I've been starting to think that you can probably beat the market if you avoid the obvious loser or stagnant companies that are big enough to be part of the S&P 500. Like just buying and holding blue chips like McDonald's or Coke or IBM or Disney for multiple years will probably beat the S&P 500. You won't get rich enough to be able to retire at 35 that way, something like what Apple did, but you'll come out pretty solid in the long run. At the same time, so like I own say $10k of Google. If the company doubles, now I have $20k. Big whoop. Now I can retire. If the company 10x, I'll have $100k. That's even better but I still can't retire from that. The big companies can't grow so much--how would Google or Apple double in size from where they are now? Apple would have to completely invent a whole new industry again (and it'd have to be like actual AI or something nutty like teleportation). And if any one knew what that was going to be, they'd have done it already. We have RFID tags now and have had them for over 10 years yet stores still would rather pay cashiers than have customers simply walk through an RFID detector.
The next stuff to come is going to be connected with faster internet and reducing labor. Drones and getting rid of human drivers? E-doctor video visits?
>I have a general theory that ~95% of the people recommending this book either did not read it or did not understand it when they did.
Ahh, but let us seperate the difference between a good theory and speculation.
A good theory is one which, upon thorough analysis promises a high probability of being proven true. Operations not meeting these requirements are speculation.
Does your theory rest on the merits, facts and content contained within the pages therein? Can your theory be falsified or is it speculation?
Let us analyze your conjecture and see if it holds any water.
Instead of speculating that no one has read the Intelligent Investor, let us borrow some principles from Ben Graham. It seems overwhelmingly based on all the available evidence and after sound and rational observation and analysis that the Intelligent Investor could be a good book! Now in order to justify reading this book, I would need a margin of safety that the book offered value beyond the cost of reading it and the time to complete it. Well at $10 for a paperback copy and an estimated 3-4 day read I have to say I think those criteria have been met! The intelligent investor is a buy!
I havent read "Candlestick Charting Explained", but as far as candlestick charting goes... Steve Nison's "Japanese Candlestick Charting Techniques" is considered the bible. Candlesticks is really a discussion on price action... I think candlesticks can get you into a lot of trouble.
I think that Edwards and Magee "Technical Analysis of Stock trends" is looked upon more more favorably than Murphy for an overview of TA and methods. Though, IMO they both leave a lot to be desired. Really the best way to learn technical analysis is to find someone who uses these methods to execute trades and can explain the reasoning and risk-reward metrics behind their trades. If this interests you, I recommend Peter Brandt https://www.peterlbrandt.com/ He has a track record and has even written a book.
If i were to recommend a couple books
For true beginners in investing and don't want to spend time doing the "work": I recommend "4 pillars of investing" it discusses asset allocation and investing in a broad sense 4 Pillars
For beginners that want an intro to stocks: Greenblatt's "Little Book that beats the market" is the best book that I know of for an intro to stock investing. And it can be read in one sitting. Little Book
If you want to be a more active trader/investor in the market then I recommend:
Oneil's [How to make money in stocks] (https://www.amazon.com/dp/B00916ARYS/ref=dp-kindle-redirect?_encoding=UTF8&amp;btkr=1)
Minervini's [Trade like a stock market wizard]
Lynch's [One Up On Wall Street]
Cramer's [Real Money]
Town's [Rule 1] (https://www.amazon.com/Rule-Strategy-Getting-Rich-Minutes-ebook/dp/B000GCFCQE/ref=sr_1_cc_1?s=aps&amp;ie=UTF8&amp;qid=1479913887&amp;sr=1-1-catcorr&amp;keywords=rule+no+1+investing)
These picks are all different styles and have something different to offer. A lot of the advice you are going to get is going to be bent towards value investing, diversification, and asset allocation... This is good advice, and will make you a smarter investor but not a richer one.
If you are interested in day trading or swing trading then you will probably need to find some personalized training and I wish you the best because there is a ton of crap out there... I dont think that many people are willing to put in the time and effort to be sucessful at this and so I don't recommend it.
I'm going to give you the pathway that I read that has me where I am today, its mostly going to steer you towards dollar cost averaging and passive management, but the easing of exposure to alternative strategies was invaluable and eventually brought me to value investing. Dollar cost averaging in low cost index funds is the training wheels of investing and should be the way every novice investor starts IMO.
At this point if you've taken a year or two or more to invest using what you learned in the above books you'll have a better idea of what you really want to start doing with you're money. Perhaps its value investing, and now it starts to get more technical.
By this point you'll no longer be an investment padawan and be well on your way to a master of the force. Do not be tempted by the dark side of day trading and penny stocks. Much fear there. There is no need for level 2 quotes with value investing because you're relying on your due dilligence from the previous years and quarters to take your portfolio higher, without worrying about the road bumps in the market today. You'll be able to happily live your life until the next quarter or two when its time to reevaluate and rebalance your portfolio.
Read. All the famous investors started reading at a young age and read ferociously (ok maybe not all but most).
Go to the library if you can, they generally will have all the quality investing tomes, without some of the "get rich quick manuals" which only benefit the authors.
Here is a few books to start with:
Most of this stuff is investment theory. To be a successful investor as an average American, without a job in the finance industry, you probably don't have to read all of those books. If you really want to get into investing, that's a good place to start.
Also, the Bogleheads book is a great one to start with because you can decide if you really are interested in investing. If not, that book is good personal financial advice regardless who you're getting paid. It will benefit the regular American.
OP I have a degree in finance and I'd like to provide the counterweight to this sub. Please take the time to read my comments, despite the inevitable unpopularity of my advice:
I'm sitting with about the same amount of capital as you will be starting with. I'm focusing more on option trading because I can get a lot more for my money. One option contract controls 100 shares of stock and is a hell of a lot cheaper. If you know what you're doing, it also allows you to make money no matter which way the market is moving (up, down, or sideways), since most of the time the market isn't going up. It does require you to learn a lot more before you get going though... greeks, strikes, spreads, a good understanding of volitility, your rights and/or obligations, etc, etc.
I use the Think or Swim platform. It has been rated #1 by Baron's for a while now. They have the platform on their site, an extremely rich desktop app (java based, but runs on Windows, Mac, or Linux), iPhone, iPad (the best iPad app I've seen for trading), Android, BlackBerry, Windows Mobile, and a generic mobile browser web app... So pretty much everywhere. They also have a paper money account you can use to practice trading and get your skill level up before you throw your actual money into the market, so you can start now and then start trading once you build up some cash in your account.
This is pretty much the book on volatility if you are going to trade options.
Most of my learning was done via Investools. The lower level classes are good if you ignore all hype of the sell, that goes away as you move up, but it isn't cheap. Think or Swim has some classes here and there as well as some videos and talks, market wrap ups you can listen to, etc.
As for stock tips, I mostly just stick to liquid ETFs with the options. You can just trade these like stocks if you want.. they are kind of like a mutual fund, but without the bull shit fees. SPY (S&P 500), QQQQ (NASDAQ), IWM (Russell 2000), XHB (Homebuilders), etc, etc. I like these because they have good fill prices and I generally don't have to worry about earnings reports. I'll do some stocks here and there as well. There are some good tools for finding and going through them in the ToS and the Investools site also has a rich search tool as well as simplified financial analysis of the company (although I don't use that much anymore). You don't need to look at 1000 stocks every day. Get a watchlist of some things you like and then wait until an opportunity presents itself. You can add and remove things from this list at will.
Don't get emotional about trading. Develop some rules, back-test them with whatever platform you use, paper trade with them, then follow them. Don't stay in a bad trade hoping the stock will come back... you don't have to make up a loss where you lost it.. ask yourself where your money will do the most for you. The answer is never leaving it in a failing trade while you piss your account away. Always know when you are going to get out before you enter the trade. Use sell stops to protect gains in stocks while still letting the winner run.
The answer, as usual is: it depends.
If you want to invest your money, then there's no better time than now. However, the implication is that when you invest that money you have to leave it sit long enough to do it's work.
At 19 and wanting to invest, you have time on your side. You need to be able to stomach volatility in the market and not get excited when your stocks rally for 30%, nor should you despair when the stocks plummet by 40%.
Traditionally speaking, the stock market averages between 6%~8% a year, which is much better than any savings account you're going to find. However, you shouldn't treat it as a savings account because volatility will almost certainly put you in a bad position to sell whenever you need the money most.
If you feel like you can stomach that volatility and turn a blind eye to both the rallies and collapses, then the stock market may certainly be for you. If you are NOT looking to place your money in good companies for a long period of time (10+ years), then it's my opinion that you are simply speculating... in which case you may as well go to the casino.
If at this point you have decided that you would like to invest in the stock market, you now need to figure out the degree of involvement you would like to dedicate.
If you're looking for a simple hands off investment, then you should just invest in an index fund such as VFINX, SWPPX, or QQQ.
Index funds closely track the performance of the market and charge minimal fees. They are pretty much totally hands off on your part, and are the Ronco of stock investing. Just set it and forget it, and enjoy your ride on the market.
A step above that are mutual funds. They actively try to beat indexes, but charge a fee to do so. There are mutual funds for any style of investing, and people tend to choose mutual funds that coincide with where they think success will lie. That means choosing foreign or domestic, stocks or bonds, and even individual sectors like technology, retail, energy, etc.
The world of mutual funds is vast, and provide an opportunity to beat the market, but it comes with a price. I'll leave the rest up to you to do your research.
Finally comes individual stock picking. Picking individual stocks is the highest risk, but also have the potential for the highest returns. Also, there are no fees except for the fee for purchasing your shares.
There is also a lot to this world, as I'm sure you know, but if this route interests you, then I would suggest you pick up a few books, beginning with The Intelligent Investor.
This book is, in my opinion, the best introduction out there to investing for long term wealth.
Finally, since you're so young and you seem to have an eye out for your personal finances, I absolutely recommend you read The Millionaire Next Door.
If you don't want to make a career out of trading, a helpful rule of thumb is a 90 / 10 principle popularized by Andrew Hallam in his text Millionaire Teacher: Stick 90% of your capital in tax sheltered, virtually passive forms of investment like index mutual funds or ETFs with an IRA wrapper and stick the other 10% in whatever investment vehicle you want to learn.
For example, I put 90% of my capital in a batch of index funds and ETFs predicated on John Bogle's suggestion of "your age in bonds, the rest in common stock" index funds and ETFs by way of an account with Vanguard for my IRA and my company's 403(b) program. Vanguard makes this really easy through their target retirement funds, which automatically adjust the ratio of stock / bonds over time. I'm really interested in value investing; so, I take long positions in individual stock that meets the criteria Benjamin Graham identified in Security Analysis and The Intelligent Investor with the other 10% of my capital via a brokerage account with TD Ameritrade--this isn't tax sheltered like my retirement accounts but it's basically an ongoing education in investing since TD Ameritrade offers a ton of instructional materials on topics like options, commodities, etc. and I want to see my money grow.
Let's take a look at what this could look like for your situation. Starting with $5k and doing something like what I'm doing, you would:
Any follow up questions?
Since you are from the UK I'm going to recommend /r/UKPersonalFinance's bible of Tim Hale's Smarter Investing. That basically explains passive investing, investing aims and timelines, portfolio strategies, etc and also inoculates you against trying to be too clever.
You can also read the more general The Intelligent Investor by Benjamin Graham but unless you are going to really dedicate a shed load of time to it Tim Hale's book is precisely what you need. Graham is basically the standard text on the matter but it goes into a lot of detail that isn't really relevant anymore whereas Smarter Investing is primed for modern investing and particularly deals with the UK environment more.
If you are going to invest you absolutely want to use the right platform for it. The UK has a good number of tax efficient platforms for investment. Specifically:
Basically it boils down to SIPP for retirement, LISA for buying a house (and to diversify against potential changes to the SIPP in law), S&S ISA for everything else. The one upside of an ISA over a SIPP is withdrawals from ISAs are never taxable. So using the £4k LISA limit each year makes sense once you are below the upper bands on income tax. As you'll effectively be able to withdraw from your LISA at will from 55.
//edit - List of platform providers and fees below.
A lot of this comes down to how actively you want to engage in the process, how much of an "enterprising investor" you want to be as opposed to a defensive investor.
For the more defensive position, a lot of /r/investing appreciates Graham's approach emphasizing value, even if a substantial quantity of capital is devoted to playing the market itself (something Graham called speculating). If that approach is interesting to you--which seems likely given your stated desire for low to medium risk with steady growth--then the main adjustments you'd need to make are as follows:
Edit corrected the years to nearly 70 from nearly 60. Did anyone else know it's 2016 and not 2006?
Here is a random article I found about stock simulators.
How do you like to learn things? There are tons of books, podcasts and blogs about investing. Here are some popular ones or ones that I have read and used
Warren Buffett famously/supposedly read every book in the financial section at the library by age 12--I think the important thing to take from that is you are still young and have tons of free time and aside from starting to invest as soon as you can (you can usually start as soon as you have earned income) you should be investing in yourself...getting good grades, figuring out what you want to do after high school, trying out businesses, learning marketable skills (e.g., coding, good writing skills, good interpersonal skills, good organizational skills, etc).
Well yes, I do promote the book because I everyone should read it, but if you do a google search there are pdf available for free. :) I like the first edition best since it's really easy to read.
If you want to use a screener, something that is free and available then that's ok too. I mean I believe stock investing is a personal journey; so you decide for yourself what you want. And accept all consequences because you chose it.
Timing the market mainly refers to buying something with the expectation it will change in price fairly soon and you'll be able to sell for profit. Timing the market is a short-term strategy, but as you know, as an investor you should focus on long-term strategy so switching over your 20% to a index now would be a good move. If your company just starting offering index funds and your portfolio already consists of 80% index, I'm assuming you are pretty early on in your investment lifespan so making the switch now is much better than waiting to do it down the road or just leaving the 20% in the managed funds until you retire. Managed funds almost never match the market year after year, which is the appeal of index funds. Also, the lower costs will mean more of your money remains yours and it leaves more available to compound over the years.
I'd recommend this book for you, it's fairly short, but contains a lot of great information for someone newer to investing. I learned a lot from it. A Random Walk Down Wall Street is another one I'd recommend.
A few months ago I didn't really know anything about investing, but after reading those two and The Boglehead's Guide to Investing, I've learned quite a bit and feel pretty comfortable with the investment knowledge I've gained from them.
I see that Intelligent Investor by Graham has already been posted but that's certainly a good one. However it can be a bit dry for most readers and if you would prefer something a bit fresher I would read Deep Value by Toby Carlisle. He discusses and critiques Graham's teachings along with the strategies of other notable value investors such as Buffet, Icahn, Greenblatt and many others all in a more modern tone. It's been the bible for my own value investing strategies.
Other books to look into are:
Based on your questions and lack of knowledge, keep your money in a savings account. Spend a couple of months learning about investing, how to read financial reports, how to decipher an 8k and 10k report. I don't mean this to be condescending, but if you start investing now or in six months, there will be almost no difference in your earnings, but there could be a huge difference in your losses unless you take some time to learn about the various investing methods, theories, and the actual hows and whys.
Start reading Peter Lynch's One Up on Wall Street, Beating the Street and Learn to Earn.
Each brings different things to the table. Again, please take no offense, but Learn to Earn is probably where you should start. It's aimed at teens/young adults learning about investing for the first time.
I'd recommend hitting up the library for these. When you get to the library, you'll find shelves of books on how to invest. Some are useless and others really good. Read a few chapters in each. If you have questions, run it by this board. There are plenty of people here who are more than happy to share their mainly educated opinions. And the good thing about reddit is that if one of us says something wrong, others are quick to correct or offer their two cents.
I'd also recommend The Millionaire Next Door, The Black Swan and the Richest Man in Babylon. while these last ones aren't how to invest, they are books about why and how we invest.
I'm a Taleb groupie and read everything by the man. I loved Black Swan, and also loved Antifragile: Things That Gain from Disorderso you may want to try that one when your reading pile dwindles.
Keep saving, but take your time investing. Learn the basics, stick your toe in and then take the plunge.
Look you may want to open a TD Ameritrade account. It has great tools and a lot of videos on education. I don't think there is a minimum but I could be wrong. They also have a great platform for novice and pro. Some on /r/investing may think eTrade is better. I've never used it.
A great book for you to buy is "The Intelligent Investor". Link. A lot of people will say time in the market is better than timing the market so if you would really like to get things on the role while you learn how to invest try looking at older companies with a great history, i.e. blue chip companies.
A great app for you to get is Robin Hood which does not have any commission fees, whereas TD Ameritrade will take $9.99 from you on any buy and sell and that adds up quick.
The quotes from the book:
> Someone who is desperate to buy a stock can easily end up having to bid 10 cents higher than the most recent share price before any sellers will be willing to part with it. That extra cost, called "market impact," never shows up on your brokerage statement, but it's real (p. 148).
What he is talking about is pricing impact. This is a real expense. Imagine you want to buy 100,000 shares of a stock that only trades 10,000 shares a day! If you need to get done today, you will have significant pricing impact. Large market cap tend to have more liquidity and therefore less pricing impact.
> Buying and selling a hot little stock can cost 2% to 4% (or 4% to 8% for a "round-trip" buy-and-sell transaction). If you put $1000 into a stock, your trading cots could eat up roughly $40 before you even get started. Sell the stock, and you could for over another 4% in trading expenses.
> ... Add it all up, and a stock trader needs to gain at last 10% just to break even on buying and selling a stock (p.149).
The author describes the costs including in actively trading. These costs include pricing impact, bid-ask spread, commissions, implementation shortfall, short-term capital gains tax, etc.
One significant goal of the SEC and FINRA over the last decade or so was to make changes to market structure to minimize transaction costs. Nowadays, move retail orders (which tend to be small, e.g. < 2000 shares), have very little pricing impact. In addition, the bid/ask spread has declined significantly since decimalization.
> Recently, finance professors Owen Lamont of University of Chicago and Paul Schultz of the University of Notre Dame have shown that corporations choose to offer new shares to the public when the market is near a peak. For technical discussion of these issues, see Lamont's "Evaluating Value Weighting: Corporate Events and Market Timing" and Schultz's "Pseudo Market Timing and the Long-Run Performance of IPOs" (p. 139).
I have not read these papers. It make sense that companies will do more IPOs when there is a high demand for equity issues so they may lower their cost of capital. I suppose one could argue market peaks near times when there is fervent demand for new issues.
Graham, B., Zweig J. (2006) The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) HarperCollins Publishers. NY, NY.
This is not really an investment question, but rather a personal finance question:
If you've made it to the 'savings / investment' box, I'd recommend putting it in a low cost index fund ($3000 is enough to start investing with Vanguard, for example). I would not recommend investing in individual companies (unless you have good reason to) because you subject yourself to unnecessary risk. I recommend reading this so that you can learn what you need to know to make good decisions:
By the way <3 years is not a long enough time frame to reasonably guarantee solid returns from any assets. Stocks are much more of a 'sure thing' on a timeframe of 10 or 20 years. If you're going to need the money within 3 years you're best off with a high interest savings account, CD, or i-bonds.
>How do the decisions on business plans actually affect the stock price?
Business plans provide a road map for the future of the company. Since the future of the company is what you're buying it can impact the company's current share price a lot.
>Are you saying the business plan or redevelopment of that plan actually changes revenue and hopefully profit, and that information is reflected in the 10k, which drives up the stock price?
What I'm saying is that the company's business plan will eventually result in revenues and hopefully profit. If the business plan is bad then you should expect bad profits. If the business plan is good then you should expect good profits (note: knowing a good business plan from a bad business plan can be very tough)
>Who is actually determining the stock price?
People/Institutions (like pension plans) determine the stock price via buying and selling. Supply and demand dictates the price,
Is it driven by more people investing or is it valued by appraisers and then set at that point and people can thereafter invest at that price?
Appraisers don't really exist in the market. You have people who are willing to sell at a certain price and people who are willing to buy at a certain price. Once someone is willing sell at $X AND someone is willing to buy at $X you have the "market price". The seller will give the stock to the buyer in return for $X in cash.
If you have a good article for me to read on the subject I would be happy to digest it.
REad this: https://www.amazon.com/Little-Book-Still-Beats-Market/dp/0470624159/ref=sr_1_1?ie=UTF8&amp;qid=1510610617&amp;sr=8-1&amp;keywords=the+little+book+that+beats+the+market
Have you opened accounts like a Roth IRA or 401k (through work) or similar? Because you can invest within those accounts in whatever you wish, and you'll get great tax benefits.
For example, any money you put into a Roth IRA you can take out at any time for any reason. And you can invest that money into stocks, and the growth is tax-free and dividends are tax-free. (The government makes all that tax free to try and encourage you to save it in there as long as possible for use when you are old and retired.)
As for what to invest in: read about diverse, passive index funds. If you've never heard of those, there's a good book you can check out from your local library, Bogleheads' Guide to Investing.
I'll give you some books to use as a starting point. You want to start out as generally as possible and then follow what interests you. Someone can give you a list of top books, but if they don't fascinate you enough to really dig in deep and reflect on them to sate your own curiosity, you'll just be scratching the surface. I don't care what it is, you can make money anywhere in the markets. So starting generally will help you find out what direction to go.
So, that said, these are the ones I'd recommend starting out with
Some less conventional ones I really liked
Chaos theory describes some properties that pop up again and again in markets. I really liked this one.
I also highly recommend finding a few good books on behavioral investing, just to get acquainted with the common mistakes investors make (how you can avoid them, and how you can exploit them). I don't have a lot here because the books I read are outdated and you can find better. So one example:
But in general reading about psychology will help you understand the world better, and that's always a good thing.
If you want to be an active investor in any way...
Beyond these, I would 100% say, get some practice buying stocks / funds. Open a Robinhood account with a very small amount of $. Buy some individual stocks and set rules about when you can or can't sell them. At the end of the sell or hold period, evaluate what went wrong or right. Learn to understand if there was an error in your process / analysis, or if it's just the nature of the market as a whole. These things will never be straightforward, but I know I personally learned a lot when I started as I tended to get caught investing in a lot of value traps. Alternative to Robinhood, you can use Investopedia, although it's probably better to learn when you actually have some skin in the game so you can understand aversion to loss.
If you don't care to be an active investor...
Just buy an index fund. You can read stuff like Boglehead's guide to investing, a Random Walk on Wall St, or any other index fund bibles, but the main conclusion to all of these books is that you are going to suck at beating the market, and you should just buy index funds. So if you don't care to try to beat the market, you can just skip most of the reading, find a passive portfolio (3 fund, all-weather, or just buying SPY since you're young) and just build up a base in a passive way and ignore returns until you're over 50 years old.
Now would be a very good time to read the Intelligent Investor by Benjamin Graham". This book is old maybe even some of it is out of date, but the general gist of it is sound. Benjamin Graham is a friend / mentor for Warren Buffet, one of the most successful investors of all time.
I would also recommend the "dummies" series of books, as they help a lot with the mechanics and fundamentals of investing in a way that is not all biassed and weird.
I say this because that's how I got started, and though I feel still like a total noob fool, I have managed to do amazingly well over the last 10-ish or so years by patiently looking for opportunities and following the advice of these books.
There are people that dedicate their lives to this question. But it basically boils down to understanding the business, analyzing financial statements, and coming up with projections of future performance. I encourage you to pick yourself up a copy of this book and use it as a reference to pick through the financial statements (10k's,10Q's) of whatever company it is you're trying to value. The bottom line is that if you really want to get an edge it's probably going to take more than just looking at some easily available statistic like PE. On the other hand, most big companies have hordes of analysts following them already whose sole job it is to estimate the value of the company, so the likelihood of you getting an edge for any large company is slim at best. There are probably more opportunities to be had with smaller companies that get less attention.
The amount of time you want to spend dealing with this is directly linked to what path you want to take. I love this stuff, so I like to be actively engrossed in it. If you just want it to grow so that you have a stable and comfortable retirement, Graham is a great start, but also pick up James Bogle's The Little Book of Common Sense Investing. It's a very hands off way to grow your funds and has lead to great success for Bogle (the founder of Vanguard) and his followers.
This book is the most comprehensive one that I've read in covering all the basics of the options market and conventional trading strategies. It's a big step up from a basic "options for dummies" type introduction, but it also doesn't go super deep into the math or the more abstract theory of derivatives markets. For that you have to mostly look in academia.
SSRN.com is a wonderful resource for academic papers on the more advanced concepts of option trading and price models that may appeal to a math person like yourself. Use the search feature to find articles on any specific questions you may have. Here's an article that I found extra interesting a few years ago and got me started down the path to my current options strategies.
Also CBOE.com is a good resource too. They have links to a surprising amount of quality information, research, and historical data.
I would recommend "One up on Wall Street" by Peter Lynch. It does have some formulas but it is otherwise a pretty easy ready and shows you how to value companies. Hope this helps! http://www.amazon.com/One-Up-Wall-Street-Already/dp/0743200403/ref=sr_1_1?ie=UTF8&amp;qid=1417723295&amp;sr=8-1&amp;keywords=one+up+on+wall+street
Since you are into equity research. Here are some suggestions.
Write cash protect puts on stocks that you have done the research on. For example if you think Disney is a buy at $105-110. Sell a put for disney with a 35-45% delta 30-45 days out (should be around 105-110 for an Oct monthly. This is imo the most efficient way to collect that sweet sweet theta premium.
Of you can write covered calls on stocks you own. Same idea, 30-45 days out, 35-45% delta.
There two strategies would imo be the safest ones.
There are so many options strategies you can use. You mentioned that stocks rarely move beyond 2SD anyways. But I believe the tail end risk is more than what a normal distribution might suggest, so you definitely don't want to write naked puts and get wiped out. But in a bull market, you can always write monthly put spreads just outside of the 1-2SD monthly expected move depends on your risk appetite.
My favorite strategy back in Feb/March was buying weekly SPX strangles at the 1SD weekly expected move. It was quite profitable when the VIX was high.
edit: another strategy if you want to take advantage vega. Sell an ATM straddle for a stock the week of the earnings, But protect yourself with another strangle a few weeks out when the vega impact is less.
But I would read natenberg first. There are just so many strategies out there, should learn the basics first.
Do you have access to free printing by any chance? perhaps you can get an electronic copy and just print it?
I'm guessing that you're young, based on your talk about allowance. I don't recommend Intelligent Investor, as there might be some prerequisites that you are missing. The book is pretty accounting heavy terms, and you should have at least a basic knowledge of corporate accounting before reading it. Save this one for when you can look at all 3 financial statements and know what ever item on those statements mean.
You might this one to be more of an easier read: "The Little Book That Beats The Market". This one tries to get you to think about companies as businesses instead of tickers with a fluctuating price. You won't need any knowledge of corporate accounting for this one.
If you want to learn some corporate accounting, I recommend this one as it an easy read and catered to beginners. Also, it's $4 on Amazon so your allowance can go a long way.
I don't recommend Random Walk On Wall Street for your level. EMF is basically something that says the average investor cannot do better than the average investor (duh), in the grand scheme.
Best way is to compare free cash flow to net income: FCF (OCF - CapEx) should the majority of the time (but not every single year) be greater than net income. If NI is routinely greater than FCF, than it's a pretty good indicator something is not right. There are other tricks, I recommend this and especially THIS if you want to read up more about "quality of earnings" detection.
Posting for postings sake really.
Early 20's small timer dipping my feet into the world of investing. My only experience is the 4 unit finance class I took in College last year and whatever snippets I've read from /r/PF (mostly ppl recommending you have an emergency fund setup, debts taken care of and vanguard retirement plan). I have A random Walk arriving this weekend but decided to get into it a tad earlier just to feel it out.
I purchased $100 of AMD stock over the last couple of months starting in Oct. through RH. Since my initial investment, I've gotten a return of 12% which I think is pretty good taking it for what it is. I see the stock doing much better in 1 years time and will hold out until then regardless of performance while continuing to dump my pre-budgeted spending money into it (usually $100/month).
Again, I know it's virtually nothing at the moment but I want to further chase these feel goods with initial investments into some other companies. SHOR, BBRY, TMUS, and FEYE are on my watch list and I plan on reading up on Utilities, Healthcare and Energy but one step at a time.
TLDR: Hi guys, Where do you recommend I look to learn about energy, health/pharm/utilities.
EDIT: what do any of you think about CPRX?
Judging from the broadness of your question, I'd suggest buying (or checking out from the library) a couple of books about investing. Start with the basics like: Charles Schwab, Peter Lynch, and Burton G. Malkiel. Right now, education is probably the best investment you can make (besides enjoying your life).
Ninja edit: It's good to be thinking and asking about investing, but, if you are serious about investing a serious chunk of money, learn the basics for yourself. You'll be better prepared to make the best decision for your money and your lifestyle.
The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Books. Big Profits) - Jack Bogle - Vanguard Founder. No gimmicks. Simple, low-cost, and passive indexing for buy and hold investors.
One Up On Wall Street: How To Use What You Already Know To Make Money In The Market Peter Lynch was a fund manager of one of the most successful actively managed funds. Active investing. Buy companies that are really successful at getting you to buy their product. Observe the world around you type of investing.
I really liked Beyond Paycheck to Paycheck for general personal finance and investing. It assumes absolutely no prior knowledge and really walks you through everything from budgeting to saving to investing to estate planning. I'd start here.
I also liked The Bogleheads' Guide to Investing, which is basically a summary of the low-stress, long-term investing style that the company Vanguard has tried to make possible.
As usual, the For Dummies series also has some very good information, and your library will almost certainly have pretty much any title you want from them.
Don't get me wrong, I absolutely understand you are young and need guidance. I was 17 when I started investing as well.
I can give stock recommendations all day but I can give you two really good pieces of advice right now.
1: Read. Read everything you can. The Intelligent Investor by Ben Graham is the bible of value investing. Warren Buffet himself said that this was the best book on value investing he's read. Read this book. Also, read Rich Dad Poor Dad This was the single most influential piece of literature I've ever read.
2: Be extremely careful who you take advice from. Just because people are older doesn't make them smarter. You want to find people who have exactly what you want for yourself. These people are worth taking advice from. The average person is an idiot, and they all think they know the right way, and yet they all are slaving away at jobs they hate that "don't pay them enough". This could even be your parents or friends. It may be hard to reject their advice. They may not even realize that they don't know what they are doing. Again, you want to learn from people who have exactly what you want.
Oh hells yeah I do! I give this book to everybody because it's shockingly simple, easy to understand, makes no assumptions about pre-existing subject knowledge, is written clearly and consicely, and its format follows a logical progression that makes it accessible and the best recommendation for a high schooler or a school superintendent with a Harvard PhD, two people I've gifted this book and who both loved it and changed the way they handled their finances.
It's called The Bogleheads' Guide to Investing
I provided an Amazon link, where you can get it for around $15. I can't speak highly enough about this book. If most of your financial knowledge comes from what you've been reading that stock blog you mentioned, this book will change your life. Without any hyperbole, it most definitely changed mine.
I'd read A Random Walk Down Wall Street first. Then Intelligent Investor before Security Analysis.
The first book I read when I was a n00b was The Neatest Little Guide to Stock Market Investing. It's pretty simple and basic and made for total beginner's.
Also, you may want to read Reminiscences of a Stock Operator at some point.
Also, check out Robert Shiller's Financial Markets course.
Stock Charts is a good online introduction to technical and fundamental analysis.
My answer is a bit of an idealized situation and a bit longer term plan then you might be expecting, but here's what I shoot for with my own investments. At the moment I'm still with T Rowe Price, as I don't have enough for $6000 spread across two funds. I have $3000 in PREIX, in a Roth. T Rowe Price has some similar 'low cost' index funds, but also has a lower minimum to invest. I'm a registered rep at an insurance firm, but I don't sell either T Rowe Price or Vanguard.
Here is 'The Plan', which comes from The Bogleheads Guide to Investing. Take your age in: VBMFX. That's the total bond market fund.
Put the rest in: VFINX
Practice 'The Skill'. At least each year on your birthday, re-balance the funds to reflect the new %. This makes you 1% more conservative each year. Additionally selling off the higher returns to purchase lower returns means that you are selling high, and buying low. It almost guarantees that you have to pay taxes (as you are always selling off winners) so put the funds in the retirement account to avoid some tax burden.
Practice the skill of re-balancing mechanically for at least 5 years. Why 5 years? Because it takes time to learn about the emotions of investing. How it feels when your investments drop 5%, 10%, 15%. Or what it feels like when they gain. Give yourself some time to practice going a bit nuts when the market swings... But DONT change your investments based on the swings. Change your investments based on 'The Plan'. Any loss you experience is worth the emotional knowledge you gain.
During that time read the books in the 'Recommended Reading' section of the sidebar. Start at the bottom and work your way up the list. The Intelligent Investor is a great book, but it's a hard read if you don't already have a background in Financial Accounting. For that matter take a Financial Accounting course when you can. Once you've read up on all that information (or after 5 years, which ever comes first) start considering another market to track. Utilities Fund? Gold ETF? Something that is neither stocks nor bonds. By the time all this practicing and reading happens it will be more clear to you what % you'll be comfortable with putting in those funds.
BTW, you certainly can re-balance more frequently, but frequent re-balancing works better in a retirement account. In a retail account you would get charged taxes each time you sell (if there is a gain). I believe exchanges might take care of that, but I have no idea about Vanguards Policy on exchanging a stock market fund for a bond market fund.
Edit I polish the crap out of my answers, they always evolve over time. Usually takes me an hour or two to get it 'perfect'. Included additional links, resources, elaborated on my ideas, altered grammar, corrected spelling, added emphasis.
I highly recommend The Bogleheads Guide to Investing and All About Asset Allocation to start with. They are both very understandable and you can read them in one weekend. It's your money and your life so it's worth it to spend a few bucks and an afternoon here and there to learn answers to questions you never even thought of asking before.
>at least half of American households have the majority of their networth in real estate.
Correct. Many/most Americans buy way too much house and are undiversified with a massive illiquid asset on their balance sheet. It costs them money and time to maintain while trapping them in one location and limits employment options. A healthy investment portfolio would have cash, bonds, stock, and some real estate.
Your original post asked specifically about real estate but I'm urging you to consider developing a long term workable plan beyond speculation and rental properties, which IMHO is shortsighted. You and your wife have a real shot at tremendous success because you are young DINKs with good income but you need to broaden your horizons a bit beyond the typical "let's buy real estate" idea.
If you are looking for forecasts, you will probably read a bunch of investing news sites. They all have forecasts for pretty much everything under the sun, and you will pretty much filter out anything that doesn't say what you want to hear. Don't put much stock into forecasts.
Do yourself a favor and read The Intelligent Investor. It sounds like you're looking to make some quick bucks on some money you don't really need, but that could lead to speculation, not investing, and you could wind up losing a lot more than you think possible.
The book will give you a good idea of how to split your capital between stocks and bonds, and why splitting is a good idea. It will tell you how to evaluate stocks and industries, so when you read about forecasts and what have you, you can actual evaluate what you're being told. It's a good place to start.
If you look to the side bar to the right, there is additional information on how to start out.
I'm not really the right person to ask as I'm a day & swing trader of futures (ES, CL, GC)...but I enjoyed "Reminiscences of a Stock Operator" (https://www.amazon.com/Reminiscences-Stock-Operator-Edwin-Lefèvre/dp/0471770884).
Also, you can learn a lot from Buffet's shareholder letters: http://www.berkshirehathaway.com/letters/letters.html
Lastly, when it comes to technical analysis I'm a huge fan of market profile. Here's a great free ebook about it: https://www.cmegroup.com/education/interactive/marketprofile/handbook.pdf
I worked at the CME in Chicago as a broker and the books the guys told me to get when I first started were Options Pricing and Volitility and Technical Analysis of the Financial Markets. Learn options is the best advice, you will get WAY more return for your buck plus learn to protect yourself in your various positions using various strategies.
Very dry reading but its worth it. Good luck!
If you want to just save/invest passively: https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/0470067365
For most people (who really don't spend the time to understand companies), I'm totally in support of what I call the Ronco Rotisserie method of investing: Set it and forget it! Buy some low MER ETFs and forget about them.
If you want to invest more actively, I like Peter Lynch's books, classics like The Intelligent Investor. For ideas, I'll look to Morning Star, Valuline, Credit Suisse, etc.
I don't trust sources that generate revenues off of views and/or clicks (CNBC, blogs, etc.). Most visibly, you see the militantly bear cases for Uber/Lyft here or militantly bull cases (at least until recently) for Tesla, which I think is impacted by sources that are looking to generate buzz. Then you go read something like Aswath's blog, Morning Star, or Credit Suisse which has a much more balanced view on the company when compared to MSM.
You are young, do yourself a big favor and learn to invest on your own. It's easier than you think. The earlier you learn it the sooner it will serve you for the rest of your life.
Here's a great starter (a random walk down wall street): http://www.amazon.com/Random-Walk-Down-Wall-Street/dp/0393340740/ref=sr_1_1?ie=UTF8&amp;qid=1373618108&amp;sr=8-1&amp;keywords=random+walk+down+wall+street
Best $15 you will ever spend.
Two excellent titles on the subject are Option Volatility and Pricing: Advanced Trading Strategies and Techniques, 2nd Edition by Natenberg and Options, Futures, and Other Derivatives (10th Edition) by Hull.
The former is lighter, more entertaining read that is easier on math and touches on applied trading. The latter is a more thorough, academic title.
A number of other helpful resources are available. The Ally Invest Options Playbook provides a handy reference for various option strategies. The Interactive Brokers Probability Lab (free version linked at the bottom of the page) provides a modeling tool to visually explore option strategies by modifying expectations of volatility and price. CBOE offers a complete course on the subject. Finally, Tastytrade offers a long running set of shows, tutorials and discussions covering many aspects of options and option trading.
I'm reading The Intelligent Investor. It's pretty easy to follow. I like that it's a good balance between the psychology and technical analysis of investing.
My advice to you is to learn how to really invest. It can be very rewarding and fun.
Read this book, read some Buffet, learn the psychology of investors. Good luck!
Firstly, you are right to be paranoid. DO NOT enlist the services of a financial advisor. Their performance almost never justifies their fees in the long run. Also beware of high expense ratio mutual funds. Below are two good options. One requires some study (but perhaps less than you may fear). The second is very easy and hands-off.
Option 1: Sit in cash and learn about investing, then invest intelligently. *see details below
Option 2: If you don't want to take a bit of time to learn how to invest, open a brokerage account (Fidelity and Vanguard are both good). Put 80&#37; of the money in a low expense-ratio S&P ETF (such as IVV or SPY) and 20&#37; in a low expense-ratio short-term bond ETF (BSV). The S&P ETF will simply perform as the overall US economy does over the long term. The bond ETF acts as a sort of 'ballast' for the equities (S&P / stock market) portion of your investment. As opposed to long-term bond funds/ETFs, short-term bonds are less interest-rate sensitive. This will do better than most mutual funds long term. https://www.youtube.com/watch?v=mOS4wAsBnvM
With either option, you should be contributing to an IRA to the maximum allowed amount every year. Whether you use the money yourself or give it away, you will pay less taxes.
*Resources for learning to invest wisely (the much better option!):
Read You too can be a stock market genius - Joel Greenblatt.
This book was written by a hedge fund manager as a primer on special investment situations (that hedge funds normally take advantage of) for individuals who do not work within the industry. It will help you because it will inform you of the context and purpose of most if not all terms unique to your industry. The added bonus is that you would also understand what those hedge funders are up to, and be able to converse with them about their strategies in an intelligent way.
Forget Shkreli. The usual sources (besides in-house proprietary models) are:
(1) Macabacus. (see http://macabacus.com/learn).
(2) Rosenbaum and Pearl, Investment Banking - book and excel models
A bit more academic, but more in-depth:
(3) Penman's Financial Statement Analysis and Security Valuation (excellent book and he has a running example that guides you to create your own valuation spreadsheet)
(4) Dan Gode and Jim Ohlson models These guys are genuine experts from the academic side.
(5) Damodaran, as others have mentioned.
(6) McKinsey, Valuation. Some people like this one.
(7) Fernandez, Company Valuation Methods and Common Errors. Something of an acquired taste, but might be worth the read since he provides a list of the most common valuation errors. Gives analysts an awareness of how they can f**k up which can be useful.
You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits By Joel Greenblatt There are a lot of great suggestions on this board. This book gives a lot of great common sense advice for special situations investing. Also, The Ivy Portfolio by Mebane Faber is a good read.
I suggest this book
There are over 9,000 mutual funds. Some are going to get lucky. View that luck with the benefit of hindsight and they look brilliant.
Glad you read intelligent investor first.
Next is Ben Graham's Security Analysis
This book is really excellent and gets a lot more technical with the numbers.
Look, just learn to do it yourself. You don't need an advisor. Pick up this book: http://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/0471730335 Spend a few hours reading it. It'll help you make a plan that is supremely boring, easy, safe and no one will be making money off of your back.
You can also try the Bogleheads wiki for free information. That's where I started because I was too cheap to buy the book for awhile, but I don't think it's organized that well for beginners and the book is an easier form to absorb all the information you need in a shorter amount of time.
My first read into investing was One Up On Wall Street by Peter Lynch. He did brilliantly with Fidelity's Magellan Fund and managed 29% annual return when he was the manager so I figured it'd be a good read. It's not too out there with technicalities and such so I think it's a great place to start.
Though this should be followed by another comment: one of thanks for this community.
I remember coming here a month ago and buying a handful of stocks because I liked the company's products. The first time someone asked me about a P/E ratio, I did a 'what-sit-whosit'?
Then I started reading. I read William O'Neil in a week:
Then I read Peter Lynch:
Now I am reading a phenomenal book, Spent:
(I almost don't want to recommend this book, because it's a nuclear weapon in investing; we are all essentially at war, after all)
I have also subscribed to Businessweek, Investor's Business Daily, subscribed to the MarketSmith service, and subscribed to TC2000.
With some of my profits from my latest trades, I am buying myself a subscription to the Wall Street Journal, and will be joining a few other groups around the internet.
If anyone has any suggestions for other tools or services I should use, please share.
A lot of members on this board contributed to my education, and have been essential in second-guessing some of my positions with factual evidence. To those members, I am deeply indebted. Thank you.
What is less helpful, and useless, is the blanket downvoting I receive, and the snarky comments that I seem to generate.
Aren't we here to make money together?
I am still new, but I am learning at an astronomical pace. Thanks for everyone's continuing advice and support.
For an easy way to get started, I suggest you begin with one or two mutual funds, preferably index funds.
Bogel's Little Book of Common Sense Investing is short read and a great introduction to investing with index funds.
Collins The Simple Path to Wealth is another great read for someone getting started in investing. It's based on the Stock Series posts from his blog.
This question has been a lot answered a lot — you should check the sidebar.
That said, the boring but generally good advice is to first save up an emergency fund large enough pay for three months of your life with no other income during that period before you start investing. A lot of people say 10k is a good round number for that fund, but it'll obviously vary from person to person.
Once you have that, you should check out Robinhood. It gets a lot of flak on reddit because it gives people who might have no idea what they are doing a lot of power to blow all their money on penny stocks and emotion. While most other brokerages will charge you $8 - $10 for every trade, Robinhood charges nothing. That saves you a lot, especially if you're starting out with a relatively low portfolio value, but it also means you have to hold your emotions in check on your own, since commission fees won't be there to do it for you.
Vanguard offers a great variety of ETFs, many of which are available on Robinhood. You should check out that list.
I'd also advise you read at least one book. I really like A Random Walk Down Wall Street. I'll spoil the ending for you: It's really hard to beat the market. But it's not so hard to match it.
The best two books anyone worth their salt would recommend are The Intelligent Investor and Security Analysis....in that order.
Both are amazing.
"Knowing what I do now, if at age 21 I'd had my choice of $2,000,000 or the wisdom to understand the concepts in this book, I'd choose wisdom. "
I'm halfway through A Random Walk Down Wall Street. It is fairly easy to read and seems to cover all the common investment strategies. If you're thinking about long term investing you should check it out.
The author contends that the best performing investment strategy over long periods (such as 30 years) is a widely diversified portfolio that covers the entire market (e.g. index fund). Frontline aired an episode last year that came to the same conclusion. Mutual funds have management fees that reduce your gains. Fund performance will vary over time as the market changes (and fund management changes).
Another thing to consider is tax; you will pay capitol gains tax in the year you sell (15% of sale $ - buy $). Purchasing another stock does not get you out of this.
Read through this:
If you make it to the investment bullet point then open a Roth IRA with Vanguard and buy this:
Learn by educating yourself, not by losing $1000. There are several excellent books that will give you a firm foundation in investing. Here are three that are excellent:
Implied Volatility (IV) comes from the price people are willing to pay for the option, and so is dependant on the amount of interest by market participants in trading it. This can become inflated if a news event is coming like an earnings release after which the stock may reprice higher or lower outside of regular trading hours, thus the higher IV and higher option prices.
If you would like to dig into the underlying option pricing using the greeks Option Volatility and Pricing is a dry read on the theory.
Here are the basics of the greeks:
And yes calls and puts can have a different IV, usually based on things like interest rates and cost to borrow stock.
Read One Up On Wall Street You'll see how these companies are pretty much the last thing you want to invest in if you want to make real money. Huge companies have slow growth and therefore little payoff.
It is a variation of the dogs of the dow strategy. Part of the value of your described strategy is dividends.
Jason Kelly discusses your described strategy in his book "The Neatest Little Guide to Stock Market Investing".
The strategy seems to have merit. Basically the argument is that any stock stable enough to be listed on the dow is a safe investment but since these stocks are at the bottom there is room for growth.
A Random Walk down Wall Street http://www.amazon.com/Random-Walk-Down-Wall-Street/dp/0393330338
Little Book of Common Sense Investing http://www.amazon.com/Little-Book-Common-Sense-Investing/dp/0470102101
are great reads.
But if you dont want to read those I can tell you what they all say.
tl:dr = Buy Index Funds, buy more index funds, hold forever. Be rich.
I read the following, in roughly this order:
Yeah, if you're not going to conduct in-depth research (and i mean going way beyond glancing at P/E ratios and price charts), then you're best off with a low cost index fund. That's how I allocate 90% of my money. It's fun to pick a few stocks, but don't over-expose yourself.
If you have the patience, read this book by John Bogle (founder of Vanguard). It literally changed my life.
Check out VTSAX.
Also, STAY AWAY FROM ROBINHOOD. They fuck over retail investors with hidden charges (e.g., $75 transfer fee if you want to close your account and selling order flow, something that Bernie Madoff came up with, and they don't allow you to name beneficiaries).
EDIT: Index investing isn't sexy or fun to boast about, so by all means, have a little "play money" but please, please, please do the smart thing with the majority of your investment portfolio.
Reading One Up on Wall St. back in the '90s when I was a broke grad student got me looking at the world in a different way. Part of it is identifying trends and making a judgement call based on corporate financials of whether they'll impact the company's bottom line significantly. For Apple in the early 2000s, the answer was "hell yes", and I did quite well.
A mediocre call was YUM with their expansion in China. This did well for a while but has been marred by tainted meat scandals. Haven't gained much value there.
Buying GEO a couple years ago (before they reincorporated into a REIT) was a sweet move. Haven't tried that position to cash in, so haven't actually made money, but I've been reinvesting the dividends into acquiring more shares. This was case of catching a news article about private prisons (who even knew they existed!) and seeing plenty of room for growth and a strong balance sheet.
It's okay, have you heard the good word?
>The Only Way to Guarantee Your Fair Share of Stock Market Returns
Check this book out .. definitely helped me a lot starting out!!
A Random Walk down Wall Street: The Time-tested Strategy for Successful Investing https://www.amazon.com/dp/0393352242/ref=cm_sw_r_cp_api_-7sNyb3CDVQKD
Updated version for Kindle through Amazon
It's a solid starting point. At times it feels like a sales pitch for Vanguard, but it's still not bad advice. It does have good info on the basics though.
Don't take investing advice from acquaintances. Don't invest in something if you can't figure out how to research it on your own.
I'm guessing your acquaintance was just trying to pretend they're smart by dropping words like 'volatility derivatives'. Nobody who is seriously involved in trading VIX options would recommend that random people start getting into it. It's kind of a specialized field.
Anyway, here are some books that can help:
But if you don't already understand what the terms 'volatility derivatives' means and you're not into math, those books aren't likely to help you.
intelligent investor is a great read, but for some more in depth stuff i like security analysis
Go read Benjamin Graham's The Intelligent Investor for everything you need to know about value investing. Buffet claims he won't ever write a book since everything is in there (also, author is the guy who Warren learned from).
Once you have a good grasp of the basics take the time to learn the option greeks. Understanding the greeks is essential for anyone looking to get into the options' market. Of course I have no idea if you are contemplating a jump into options. But just in case you are I'll leave these links.
This PDF has a pretty good rundown of the greeks:
If you're very serious about options then a copy of Sheldon Natenberg's 'Option Volatility & Pricing' is a must have.
And McMillan's 'Options as a Strategic Investment'.
I would keep maybe 5k in cash as an emergency fund. With the 10k left I'd recommend a low cost stock mutual fund or ETF. Vanguard has good ones. VTSMX is the total stock fund, although that is weighted more towards large companies. If you want to focus on smaller companies, you could go with the small cap growth fund, VSGAX.
For books, A Random Walk Down Wall Street would be a good place to start.
Tobias Carlisle written a bunch of books and runs a fund (ZIG) based on his multiple. He might be a good place to start on long/short value investing. You weren't exactly clear on what sort of long/short you were looking for.
I leaned a lot years ago from an early edition of: https://www.amazon.com/Options-Futures-Other-Derivatives-10th/dp/013447208X
That book is very mathy but if you want to learn how to think about splitting investments into pieces of risk this is the place.
A similar book https://www.amazon.com/gp/product/0471786322 gets excellent reviews
These two books explain everything about options and the how to play them. Like how to roll from a uncovered call option to a spread. Anyone who trades options has read these books.
Options as a Strategic Investment
Option Volatility & Pricing: Advanced Trading Strategies and Techniques
You should read the Boglehead's Guide
It lays out the investment path you are on, and it's pretty easy to read.
The NYSE closes at 4pm EST. I think that's 1pm PST.
This book talks about perfectly legal ways: http://www.amazon.com/Little-Book-Still-Beats-Market/dp/0470624159/ref=sr_1_1?ie=UTF8&amp;qid=1456851552&amp;sr=8-1&amp;keywords=the+little+book+that+beats+the+market
There are many studies out that as long as you weigh your portfolio by anything other than market capitalization you can beat the index. But it is only over very long time horizons and quite boring.
You could also randomize your stock selection. Random beats most active managers.
"One Up on Wall Street" by Peter Lynch was a good read and pretty informative about the basics of reading financials and where to find companies to invest in.
> Or is there something that I am missing.
So if they have more profits next year, and do the same thing, it happens again and again and again and again. The value goes back up, then it gets distributed out to the SHs. So you have your stock (similar price) PLUS income.
I suggest you read this and this.
The goal of being a prudent investor is a good one. But I think you are starting in the wrong sub. I would go to r/personalfinance and work your way through everything that seems relevant in the sidebar. Want to get basics such as emergency fund, budgeting, financial goals, and basic investing knowledge down before you start throwing money around on the stock market. Also recommend you read this book: Bogleheads guide to investing before you start tossing money into the game. That book advocates a more cautious approach, and even if you are more risk tolerant i think it's a good idea to understand what the safer plays are.
Do you have a basic understanding of finance/accounting? Present value, debits/credits, how to read financial statements? If not, I'd suggest any basic financial statement analysis textbook.
The Intelligent Investor is a good one.
I read and skimmed a bunch of books on investing and stocks. The only one that seemed to really stick with me also happened to be the shortest one. Perhaps because its brief. This was a really good launching point for me. The Neatest Little Guide to Stock Market Investing by Jason Kelly
You clearly don't have a solid understanding of capital markets if you think you can day trade successfully.
Read this book instead. http://www.amazon.com/The-Intelligent-Investor-Definitive-Investing/dp/0060555661
I recommend reading this book while you safely invest your money in a 6-month municipal bond, CD, or money market account.
After you have finished that book and any others you feel relevant, then invest your money slowly and methodically.
> prove me wrong.
Well, how about A Non-Random Walk Down Wall St, by Andrew Lo & A. Craig MacKinlay?
However, I think the form of TA that you are complaining about is several tiers of effort below that, to which my response is, of course people are Fooled by Randomness. We're hard-wired to consider skill in our successes, luck in our failures and only research winners, never the losers, to see what they have in common as fuel for our aspirational emulation.
According to Joel Greenblatt, yes.
He practically wrote a book on ways to profit from special situations including mergers, spinoffs, restructurings, etc. I'm reading it now actually.
The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) https://www.amazon.com/dp/0060555661/ref=cm_sw_r_awd_3Unbub0KY51BG
Here's the recommended reading list on this subreddit's sidebar.
I personally started off with Peter Lynch's One Up on Wall Street. It's a good book for beginners to help you start thinking about stocks analytically. Regardless of what you start off with though, definitely follow it up with The Intelligent Investor. That is a fundamental book with some big concepts in there such as "Mr. Market" and "Margin of Safety"... but it's not an easy read until you have some foundation first.
"The neatest little guide to stock market investing" might be what you're looking for. I haven't read it but I just picked it up off my book shelf and it looks like it covers the basics of how and why the markets work, common valuation ratios, brokers, how to make different types of orders...
I believe you would like Mr. Ben Graham and some of his books like this one.
I read, and quite enjoyed that book myself; althoug i concur, his arguments against FA and TA are a bit weak. Would be nice to see statistacilly signifant results disproving them. I suppose this is difficult given how some pople consider themselves FA's and Merkel doesn't.
For the OP I thought The intelligent Investor was the defactor FA book...
This is the one every options trader has: http://www.amazon.com/Option-Volatility-amp-Pricing-Strategies/dp/155738486X/ref=sr_1_1?s=books&amp;ie=UTF8&amp;qid=1408507055&amp;sr=1-1&amp;keywords=sheldon+natenberg+option+volatility+and+pricing
You can get the e-book online for free if you want to search Google for it. Shouldn't be hard to find.
The original value investing guide
Assuming you're newer to the topic--or else why else would you be asking for books to understand it--I would start with one of "The Little Book of..."
I recommend for value investing types: https://www.amazon.com/dp/0470624159/ref=cm_sw_r_cp_apa_ZmsUBbTG4X8NJ
And index investing types: https://www.amazon.com/dp/1119404509/ref=cm_sw_r_cp_apa_1psUBbBD9SS81
Interest rates have been mostly dropping over the last 30 years, for whatever reason. That means the "risk free" rate of return has been dropping, to near 0. Which means the return on newly-bought competing investments should also drop very low. Which means stock prices paid by newcomers should rise very high. Which is what's happened.
Now, if interest rates were to rise dramatically, I think we'd have a crash, like we did in October 1987. The old classic book, A Random Walk Down Wallstreet explains my reasoning, using 1987 as an example.
Read here before you start investing.
Instead of timing the market I would make monthly contributions for the next year or so. Jumping in with 100k at once might bite you. Consider doing a bulk buy of 20k into a portfolio of stocks/indexes/bonds and then contributing 5-10k of your remaining balance once a month or every other month over the next year or two. Diversifying as you go. Every 6 months to a year re balance your portfolio back to your initial diversification percentages.
Try and put your current income into the plan as well. You should be investing with your extra income and you can turn this pot into something worthwhile. Maybe an early retirement. Who knows.
Highly recommend to check this book: http://www.amazon.com/Little-Book-Common-Sense-Investing/dp/0470102101/ref=sr_1_1?s=books&amp;ie=UTF8&amp;qid=1372096522&amp;sr=1-1
if you don't want to read it, just look at the summary left by amazon reviewers.
Learning to fill in one of these spreadsheets is pretty meaningless. There are so many adjustments to make in a DCF depending on each company and/or industry you should try to start from the bottom up. If you're a beginner and really want to learn how to do a full DCF I'd recommend getting one of the below books to start learning from scratch.
A lot of people feel strongly that Bogleheads.org provides a sound strategy. They have a book as well.
The Intelligent Investor
This has been my favorite / most informative read so far.
Has anyone had any luck investing as per 'The little book that beats the markets.'?
I find it hard to believe that using his website, which picks the stocks for you, and buying those stocks each year then selling them at the end of the year and then buying new stocks the next year, works.
Has anyone have insight into this?
+1 to Vanguard. Another good book for OP.
Unlikely you'll find such a thing. Read Hull https://www.amazon.com/gp/aw/d/013447208X/ref=mp_s_a_1_1?ie=UTF8&amp;qid=1501755851&amp;sr=8-1&amp;pi=AC_SX236_SY340_FMwebp_QL65&amp;keywords=Hull+derivatives
Any earlier addition will suffice to get the most best understanding of all general classes of assets.
The problem is say you have base asset classes: equities, bonds, currencies and commodities.
The you have options on those.
Then you have futures contracts on those.
The you have options on the futures contracts.
Bonds can be broken to sovereign and corporate.
Corporate can be high yield or investiment grade.
Sovereign can be local, state, national
And it goes on and on and on.
The Neatest Little Guide to Stock Market Investing
The Neatest Little Guide to Stock Market Investing.
Do yourself a favor and read this book: The Little Book of Common Sense Investing by John Bogle
thank you.. I will start my investments by investing in this book
I strongly recommend this book for all beginning investors:
Technical Analysis of the Financial Markets
For $50 and a couple of dozen hours spent reading, you'll get an entire MBA's valuation education by reading Valuation: Measuring and Managing the Value of Companies from McKinsey.
Im a big fan of "A Random Walk Down Wall Street". http://www.amazon.com/Random-Walk-Down-Wall-Street/dp/0393340740
Based on what you are looking for I would highly suggest you read Dual Momemtum which you can buy used for $30:
Essentially the author lays out a plan where you can use very low cost vanguard funds and spending just a few minutes per month reduce your downside risk from 40-50% drawn-downs to about half that while also slightly beating the market in most years. He has done all of the proper testing across different time periods, different countries, etc. and it has worked great for the past 75+ years. Best $30 I have spent.
Here are the management expense ratios for your funds:
FCISX - 1.13%
FNICX - 1.83%
GTDDX - 1.47%
MEICX - 1.69%
SYVCX - 2.15%
THGCX - 1.99%
The average MER costs for mutual funds is ~1.5%
Its well known that in general that most mutual funds under perform the market. Personally I would just take the fee hit; get out of what you have; and become a boglehead.
This stock series really opened my eyes to the investing world, and now I've dived in deeper. I'm currently reading The Bogleheads Guide to Investing and it's also really really interesting.
The main thing I keep trying to tell myself is to not touch it. Buy a few solid things (ETFs for me), and let them sit. I won't get rich overnight, but I don't need the money tomorrow, either.
Also comes as a book.
It's worth mentioning what a "boglehead" is. John C. Bogle was the founder of Vanguard, and was the creator of the first public index fund. Followers of his principles of investments (which emphasize holding a few low-cost index funds rather than trading stocks, for example) call themselves bogleheads.
Have you read Warren Buffet's #1 recommended book? https://www.amazon.com/Intelligent-Investor-Definitive-Investing-Essentials/dp/0060555661
Yea I bought it off of Amazon:
Buy low, sell high. Not really Keynesian economics though, since the government isn't involved, and Buffet isn't trying to stimulate the economy.
The correct term is "Value Investing" and it was written about by Buffet's mentor in a book called "The Intelligent Investor" (I suggest buying it and reading it, it's a relatively easy read).
The basic premise of the book is that most market players act irrationally (When a market starts to tank, most people start to sell off with it in a panic, whereas Buffet starts buying, because everything is on sale), and you can take advantage of that at the right time if you aren't trying to make a quick buck, but rather invest in a company for the long-term.
Peter Lynch made a shitload of money for the Magellan Fund in the 80s by investing in retail brands that his teenage daughter wouldn't stop yammering on about. He talks about it in one of his books, maybe One Up on Wallstreet.
If you want to hold something for a long time you should look into investing the way Buffett did.
Start with the bible: http://www.amazon.com/Intelligent-Investor-Definitive-Investing-Practical/dp/0060555661/ref=sr_1_1?ie=UTF8&amp;qid=1411667601&amp;sr=8-1&amp;keywords=INTELLIGENT+INVESTOR
Stay away from the hyped stocks that are in the news. Learn to research. Read this.
They've updated Security Analysis too.
Maybe this one?
I do eminis occasionally and commodity futures. Books I've/am reading
Read those books and start using that software. You'll absolutely recoup your initial $100. The books will give you a basic education on investing. The software will let you find money in your budget to invest.
A Ramdom Walk Down Wall Street
A Random Walk Down Wall Street