ZeroHedge
Ask HN: How did you learn about stocks and the market?
81–90 of 161 posts
Re: Ask HN: How did you learn about stocks and the market?
#82"A Random Walk Down Wall Street" is THE book I recommend for accessible framework on the different strategies people approach the stock market and investing. http://www.amazon.com/gp/product/0393352242 Edit: WSJ Review: “Talk to 10 money experts and you’re likely to hear 10 recommendations for Burton Malkiel’s classic investing book.”
Random Walk is great. My favourite books on personal investing are:
- "The Four Pillars of Investing" by William Bernstein
- "A Random Walk Down Wall Street" by Burton Malkiel
- "All About Asset Allocation" by Rick Ferri
If I had to recommend _one_, it would be Four Pillars. The first part is a bit more intellectually "challenging" than Random Walk, but ultimately does a better job (IMO) at backing up the author's ideas on personal investing with data.
Random Walk covers all the major bubbles in history, and does an excellent job at breaking down asset allocation per age range in the later sections of the book.
All About Asset Allocation was very useful to me in developing a long term investment plan, and deciding what asset classes to include in my portfolio.
I refer to each book at least once a year.
Re: Ask HN: How did you learn about stocks and the market?
#83I was a total novice, I got a copy of The Naked Trader, read it on the bus and now have made quite a lot of profit using the easy to understand tips. https://www.amazon.co.uk/The-Naked-Trader-Anyone-Trading/dp/...
Aha, glad I scrolled down, I was about to suggest this book also. It's the only one I've read where I actually remembered the trading tips the next day. It's got a very easy style, and good for the total novice.
I never got as far as actually playing the market though...
Re: Ask HN: How did you learn about stocks and the market?
#84Looking at the demographics and political climate of America, I am not at all bullish on the idea of the continuation of long-term bull market.
Ignoring anything technical, there are two extremely strong things going against the markets:
1. The fact that the boomers will be drawing down on their investments as they retire and begin to spend them.
2. The sentiment that is growing against our corporatist structure that has propped earnings up (ie the jobless recovery). Whether it's Bernie or Trump you support, it doesn't matter -- well over half the country is voting against policies that have made the stock market so successful at the expense of the American middle class
My point being, market knowledge is always important to have, but I'd advise against putting all of your time into it. It's going to be stagnant for a generation. IMHO you are better off building a real business with your time. Get ahead of the game and see where the future is headed -- the trend is your friend.
Re: Ask HN: How did you learn about stocks and the market?
#85In the course of investing and reading about investing sometimes I stumble upon what I think of as particular well distilled pieces of insight. I keep a file of these in my notes. Here are a few of my favorite concepts, quoted from others:
“It all comes down to who is going to buy and who is going to sell and for what reasons,” -- Ray Dalio
Determine whether an investment opportunity is a Yes, No, or Too Hard: If you do not understand it after brief study…it’s Too Hard. If you do not love it shortly after that, it is a No. -- Warren Buffet, paraphrased
"The market is like a large movie theatre with a small door” - N. N. Taleb
Re: Ask HN: How did you learn about stocks and the market?
#86Keep putting your money(about 10% or more if you can swing it) in a good index fund and ignore it for 40 years. There's a good chance you'll do about as good as 50% of the stock market investors(or more counting fees lost) and you can do something more productive with your time. Stock market investing reminds me of that insurance commercial with the fishing pole. "you gotta be quicker than that..." If you want a bett…
> There's a good chance you'll do about as good as 50% of the stock market investors(or more counting fees lost)
A naive response may be "well, then. I'll invest in the other 50%...".
It's important to note that no one, to date, has shown they're capable of predicting who which survive, which fail, and which beat the markets. And if such a person or persons exit that can do so they're sure as hell not sharing it with you.
Re: Ask HN: How did you learn about stocks and the market?
#87Over the last couple of years, I have spend a lot of time on investing (e.g. learning about it and actually making picks) and I did not outperform the market (aka "generate alpha"): Seeing how strongly the major indices developed, it would have been better to buy an ETF (a passive investment instrument that replicates the movement of an underlying such as the S&P500 index) and do literally nothing else.
Generating alpha is very, very hard; If you want to maximize your financial wealth it might be better to focus on earning more money (for example by acquiring in-demand skills), living frugally and be content with market-returns (which have been fantastic over the last 200 years).
What is true for most skills is true for investing: instead of reading about it, start doing it right from the start: Pick a company (maybe smallish At the end of the investment process you have one task and one task only: have an opinion on whether the company is selling for less than it is worth.
You don't actually have to commit capital, just start a watchlist (a couple of dry-runs will be a good learning experience!)
Be aware of the fact that investing requires a lot of discipline: thorough analysis is tough and time-consuming. Also, investing is contrarian by default: you don't outperform the market by doing what the market does (D'oh!), you have to think and act independently.
Investing can be an emotional roller-coaster (e.g. it is tough to admit that your judgement was wrong and cut your losses).
Investing is more art than science, uncertainty about the future and facts you cannot know are lurking everywhere, you'll have to develop your own principles (and refine them over the years) to become successful. I recommend creating a checklist that reflect your principles and sticking to that list religiously.
Fundamental analysis crucially relies on understanding the three parts of financial reporting: the profit & loss-statement, the cash-flow statement and the balance sheet. Studying those from one of the numerous free online resources should serve you well.
In conclusion: investing is a intellectually rewarding endeavor (and I wouldn't want to miss it) but, and that is true by definition, almost no one can reliably generate alpha. So spend your time, effort and (!) money wisely.
Re: Ask HN: How did you learn about stocks and the market?
#88A lot of great suggestions already (especially regarding index funds), but I'd add that one of the best things I've done is get a Wall Street Journal subscription. Reading the business and markets section daily really helps. I know it doesn't sound as rigorous as reading a textbook on trading or investing, but after you read the news daily for a while, you start to make connections. You know all the current deals, you know how a lot of businesses are doing. And most importantly you start to build an internal model of how a stock will do based on certain stories that get published.
Re: Ask HN: How did you learn about stocks and the market?
#89I'm a big fan of Harry Browne's thoughts on the subject:
Re: Ask HN: How did you learn about stocks and the market?
#90You will never, ever beat the market by making smart trades. Get real- you're a beginner reading investopedia. Active funds employ hundreds or thousands of people who work more than full-time to support an operation of systematically studying investment opportunities and exploiting inside information to beat the market, and even they don't beat the market. Put your money in a diversified portfolio of index funds and…
Why does an investor have to beat the market. If the companies you invested in are getting richer and making useful products, investors should get rich too. Its not zero sum.