Learning to invest
I'm graduating from college soon and entering the workforce but know absolutely nothing about investing. I figured it's time for me to grow up and learn how. Does anyone have any resources/books/videos that they recommend to a complete newb? I was thinking about reading the "Intelligent Investor" but am completely open to suggestions.
Thanks!
Read everything on investing you get your hands on. And build a stronger foundation in terms of discipline, mathematics, and self awareness. Buffet will touch on those a lot..
Every book you can find. Lot of great resources too.
Investing your own money helps too. Nothing worse than losing money- you learn an important lesson Everytime
Financial times offers good insight
i have close to 10 years investing experience.. I would start by reading a couple of warren Buffett books. The most interactive one I find is the one about understanding financial statements.. Also challenge yourself by reading wide and thinking about how different things could apply to investing/ create economic value... think, live and breathe about how business can make money. I learnt from reading internet investing forums and losing money but most importantly, thinking about why my investments went bad. There is no other way. at this stage in your career you can afford to lose money and dont be ashamed to lose money. because experience is worth more than money.
http://www.valuewalk.com/john-griffin-reading-list-books/
Punch your way through John Griffin's reading list, and you're ahead of most retail investors and students. I started with One Up on Wall Street, Random Walk Down Wall Street and Greenblatt's books. These might be easier to stomach than Intelligent Investor as an intro.
If you're able to start a real portfolio of a couple stocks you can closely follow and just start doing it. Having a bit of money on the line really puts you in the same mindset as the writers, and you can start to see parallels between their experiences and your own.
John Griffin's checklist for his class is a good start for research. http://www.mebanefaber.com/2011/01/20/hedge-fund-analyst-checklist/. Just spend a bit of your free time filling out the answers on those sheets for one company, then do another.
The mechanics will come quick. the discipline and research skills come through failure and practice.
Just my take, everyone learns differently.
Everyone has their own opinion about investing. David Einhorn once said he listens to key people with polar opinions, when one side gets less confident its a good indicator sentiment will change in the market. E.g. Krugman vs peter schiff. (macro)
Micro - Carl Icahn vs Bill Ackman
Read as many books as possible and study accounting and valuation.
As always actually investing will help more than theory. "You don't know a company / stock until you own it"
I think the biggest thing you can do, on top of improving your knowledge about finance and investing from an intellectual standpoint, is also learning personal finance skills.
This includes things like benefiting from your 401K, IRA plans, mutual fund/personal account asset allocation. Over time, as you have more discretionary income, if you can combine your interest in investing as an intellectual challenge and personal finance as a way to manage your own lifestyle, you will have a strong combination.
Pure investing books I have enjoyed: - You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits - Distressed Debt Analysis - Deep Value Investing: Finding bargain shares with big potential (this ones new, but actually runs through examples)
Im currently reading the Intelligent Investor, it is a fantastic read. I can also recommend "Beating the Street" (1994) by Peter Lynch
Anyone have any good books for getting a good foundation for FI research?
For the most part, would you all still recommend "The Intelligent Investor"? Just wondering, due to it's age.
I would say its a timeless classic, the principles within the book are what matters
Intelligent Investor, yes. Age ain't nothin' but a number.
Graham/Dodd are big in the value space Fisher for growth Swanson for overall portfolio management (how to allocate during inflation, deflation, etc). I believe he managed a substantial endowment for decades and was the best.
You have zero preconceptions. I would suggest you read about investors that go against the school of diversification. I don't diversify, I stick with what I know. I can't possibly know everything there is to know about one thing let alone hundreds of different things. I am not talking about one company but rather asset classes. Pick one and stick with it. Real Estate, Stocks, Bonds, Commodities, Currency. Then if you want to diversify in a class pick one or two sectors and focus on those.
Delete
What about diversification within said asset class?
Define asset class. I think you and I have very different definitions of asset class.
Hey whyddd, I know a site that helped me a lot. Australian investment education this site helped me a lot when I was leaning the tactics of investment. You can try this and I think this will definitely help you.
Learning to Invest advice (Originally Posted: 10/31/2014)
I am interested in investing, and want to learn how to do it for myself. There are so many investment opportunities, and I am finding that I am a little bit overwhelmed. I do not really know where to begin in developing an investment thesis. How did you guys start investing? also, I have access to a Bloomberg terminal and i was wondering if it is accurate to pull financial data such as enterprise value from there as opposed to calculating it myself?
Work backwards, tell me all the reasons why I thought VLO was a good buy at 44-45ish.
How did you come up with the idea to make that investment in the first place? Would it be a bad idea to focus on one particular sector to begin with? I know this would be risky from a portfolio standpoint, but just for the sake of learning is this a decent way?
Understand investment tools. Choosing a broker is a crucial part of your investment plan.
Set Your Investment Goals. Before you invest a single dollar, it's helpful to figure out exactly why you're investing. Here's how to start: Grab a piece of paper and list all of the things that you want to do in your life, focusing on those big moments that come with a price tag. Use time frames to help organize your goals and future plans.
Learn the Different Types of Investments. Knowledge is power. Even if you don't plan on personally managing your individual investments, it pays to know the details about the most common types of investment instruments: stocks, bonds and mutual funds.
Choose an Investment Broker. To buy and sell stocks, bonds and mutual funds, you need a broker.
Build Your Portfolio. Your investment portfolio consists of all of your individual investments in stocks, bonds, mutual funds, REITs and other instruments. The goal of any portfolio, whether you're just starting out or have decades of investing experience, is diversity.
Hmm. I guess shale tailwinds mostly and increased competitiveness of US refining? Just took a quick look at the company.
Edit: Oh and better spreads.
Low p/e relative to the industry, cheap crude to refine, best scale out of all the refiners, committed future investments. Interested in hearing you thoughts.
I only read a little bit about VLO, but I was convinced it looked cheap and I bought in around $36 in July 2013.
One method I stole from someone else but seems to work is look at a favorite money manager (say sequoia fund) pick a top holding and look at the news and financials from around the time they initiated a position. Assuming you're looking at a money manager whose philisophy you agree with, you'll be able to source ideas after you do this a few times
It's a lifelong learning process, so don't worry about the excess of material. Start somewhere you trust - could be a mentor, an investor you respect as suggested above, maybe a writer or professor you've heard about - and work through some of their past investments. Everyone seems to default to Buffett but there are a lot of investors to learn from. Search the forum - there are a few 'great books' threads - if you don't know of anyone offhand you'd like to learn from, there are at least a few good books you can read to get a sense of others' approaches, and go from there.
Watch the first couple seasons of Gold Rush (Discovery Channel).
This sounds like a joke but I'm serious. It's a surprisingly good way to introduce folks to concepts like capital allocation, returns, due diligence, deal making, human error/optimism/emotion, etc.
Learning to Invest (Originally Posted: 03/24/2012)
This is a comment for those of us students who AREN'T finance majors and never had the pleasure of learning how to follow the markets through classes.
This advice will be really obvious to finance majors but I was a math student and never knew how to actually follow the markets. Financial news didn't make much sense to me, and even if I did understand what I was reading, I didn't know how to apply the knowledge.
The biggest piece of advice I can give is NOT to put too much time into finance itself. You will need to know some basics like what valuation multiples are and how to read over financial statements. But the most important thing you can do is to read about as much as possible about companies.
So if you're just starting out, put down the investing book, pick an industry you like, (consumer staples and consumer discretionary are the easiest) and start learning about companies and their story. What is their strategy? How do they differentiate themselves? How did they do financially? What are the main factors influencing their business?
To do that, go through the annual report and 10-k. Read sections 1,6,7,8. Read all of the company press releases, then browse the website to learn more about its products. Do the same for competitors. If you can, make a benchmark analysis that visually puts all of the numbers/facts side by side. MEMORIZE these numbers and facts as this will be your foundation to form opinions.
After you've seen 10 companies in the same industry - and studied how the stock reacted due to earnings releases & current events, you'll start to form a basic opinion on what a good company is. The more companies you see, the better.
After you have your own opinion of what a good company is and bad company, you can start making predictions. This is when you should be reading industry reports and financial news. This is also when reading investing books will actually start yielding value.
If you don't know, almost every analysis I've seen in finance is a company comparable analysis in a different form. So I can't stress how important it is to start out with studying COMPANIES and not FINANCE
Hope it helps.
TL;DR - investing books won't help you follow the markets - read as much about companies, focusing on finance/valuation later
Thats a great insight. I watch that show simply for the entertainment aspect, but thinking about it in that way actually makes sense. Those guys are the kings of poor capital allocation and decision-making
Good advice. I personally like bouncing between the two. I'll study some info about companies/industries and than I'll study finance related things such as fundamental ratios and screening strategies than I'll go back to studying companies. This allows me to put what I have learned into practice ASAP. Btw I come from a CS background and I've found this to work for me. The one thing I am struggling with is trying to control my learning. I feel like I have to learn everything when reading my daily news sites like(market watch, bloomberg, seeking alpha, etc.. This may sound like a good thing but it is not. It become hard to really narrow in and build a learning foundation when you feel the need to be in all places on these sites. It's almost like ADD lol.
don't study watch cnbc for 30 days and you'll learn the lingo
Thanks for the post/tips couchy!
I have a similar strategy Oracle and like you sometimes get overwhelmed with all the information out there but at least it is interesting for the most part and holding my attention.
I studied finance in college, as well as my exclusive focus for my MBA program -- your post is dead accurate. Academic finance is useful in helping you understand the theory behind valuation, portfolio construction, etc. Aside from basic financial accounting or financial statement analysis course work, the finance classes don't teach you what you really need to know.
Your post is very accurate, and very useful for anyone who is interested in the field -- finance major or not.
Also, I would say that an analyst's job is way more about strategy and understanding how that affects the financials. Ultimately, running a relative valuation or a DCF are fundamentally based on the quality of your inputs. The only way you can put in quality inputs is to have informed, justified reasoning behind why you like a stock. This comes back to strategy.
If I could do it all over again in my collegiate days, I would have taken way more strategy classes. Yes, you learn it on the job, but a deeper foundation at the beginning is a key differentiator.
So be encouraged, going about it this route is way more practical and applicable in the long run, whether your pursue a career in finance or just like to manage your own assets.
Bump. This is one of the best posts on WSO.
positive feedback feels good =]
great post!
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