You can start by subscribing to newsletters that can give you some exposure to all these topics and you can learn at your own pace. WSJ newsletters are pretty good. I run a stock market newsletter targeted for casual and beginner investors https://bullish.email
Ask HN: How to start learning about investments?
51–60 of 105 posts
Re: Ask HN: How to start learning about investments?
#52Earlier quoted context omitted.
Doesn't the investment world say something like "no one can beat the market forever?" Of course some people can win sometimes. But to do it consistently is a different story. You have to have some kind of edge: being faster (unlikely), smarter (unlikely), or access to information other people don't have (also unlikely). Or do you really think the average guy can do better than the market, and why or how?
No. Stop it with this mentality. When managing a small portfolio, < 5 million dollars, you can be very agile in how you invest. Small hedge funds in NYC with less than 10 million under management regularly make 50-100% a year. It’s not a controversial opinion. It’s just that the financial industry has pushed this narrative as a way to sell index fund products. Completely diversifying your investments is a terrible wa…
> When managing a small portfolio,
Most stocks suck:
> We study long-run shareholder outcomes for over 64,000 global common stocks during the January 1990 to December 2020 period. We document that the majority, 55.2% of U.S. stocks and 57.4% of non-U.S. stocks, underperform one-month U.S. Treasury bills in terms of compound returns over the full sample. Focusing on aggregate shareholder outcomes, we find that the top-performing 2.4% of firms account for all of the $US 75.7 trillion in net global stock market wealth creation from 1990 to December 2020. Outside the US, 1.41% of firms account for the $US 30.7 trillion in net wealth creation.
* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3710251
> Four out of every seven common stocks that have appeared in the CRSP database since 1926 have lifetime buy-and-hold returns less than one-month Treasuries. When stated in terms of lifetime dollar wealth creation, the best-performing four percent of listed companies explain the net gain for the entire U.S. stock market since 1926, as other stocks collectively matched Treasury bills. These results highlight the important role of positive skewness in the distribution of individual stock returns, attributable both to skewness in monthly returns and to the effects of compounding. The results help to explain why poorly-diversified active strategies most often underperform market averages.
* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2900447
What are the odds that you manage to pick those few stocks that produce those returns? How much effort does a person have to put in to find these stocks? How much time to do that that is not spent (a) working a full-time job, (b) spending time with friends and family, (c) perhaps having a non-investing hobby? And do that over decades to build (e.g.) their retirement fund, and then another few decades (again) to protect their retirement nest egg.
Perhaps someone can beat the market, but what is the trade-off versus accepting "only" market returns by investing in a total market fund?
Re: Ask HN: How to start learning about investments?
#53Thanks for all comments, it's helpful.
Is there a sort of a digital playground for financial instruments?
I would like to simulate some strategies, construct some virtual portfolios of stocks, mutual funds, ETFs and observe after one year how well each strategy did.
Re: Ask HN: How to start learning about investments?
#54You can start by subscribing to newsletters that can give you some exposure to all these topics and you can learn at your own pace. WSJ newsletters are pretty good. I run a stock market newsletter targeted for casual and beginner investors https://bullish.email
Thanks!
Re: Ask HN: How to start learning about investments?
#55Some books that I read and found useful. These are mostly older books that have withstood numerous market cycles. Even if you decide to branch out, these are a good base to start from. 1. “Random Walk Down Wall Street” to understand index funds and why they generally outperform. 2. “Common Stocks and Uncommon Profits” for a general understanding of how to choose stocks (and companies) for the long-term 3. “The Intell…
>If you’re short on time and don’t want to make this a hobby, read #1
I am kind of trying to make it a hobby, that's why I want to learn.
Thank you for recommendations!
Re: Ask HN: How to start learning about investments?
#56Thanks for all comments, it's helpful. Is there a sort of a digital playground for financial instruments? I would like to simulate some strategies, construct some virtual portfolios of stocks, mutual funds, ETFs and observe after one year how well each strategy did.
Interactive Brokers supports paper trading through their desktop client. They have a programmable API and support the most kinds of financial instruments across standard online retail brokers
Re: Ask HN: How to start learning about investments?
#57Re: Ask HN: How to start learning about investments?
#58> I want to start investing some money and before doing it I want to learn how to do it. Start with reading two books: * https://en.wikipedia.org/wiki/The_Index_Card (more US specific) * Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (Second Edition) by Andrew Hallam (author is a Canadian ex-pat, but the advice is general/international) For reasons why you should (probably) not invest…
Thanks! Even if I don't live in US I want to invest in US market because it is better studied and seems more solid.
Re: Ask HN: How to start learning about investments?
#59Thanks for all comments, it's helpful. Is there a sort of a digital playground for financial instruments? I would like to simulate some strategies, construct some virtual portfolios of stocks, mutual funds, ETFs and observe after one year how well each strategy did.
Interactive Brokers supports paper trading through their desktop client. They have a programmable API and support the most kinds of financial instruments across standard online retail brokers
Great, thank you!
Re: Ask HN: How to start learning about investments?
#60I'd start with a couple of great books you should be able to get from the library:
* The Four Pillars of Investing: https://www.amazon.com/Four-Pillars-Investing-Building-Portfolio-ebook/dp/B0041842TW
* Are You a Stock or a Bond: https://www.amazon.com/Are-You-Stock-Bond-Financial/dp/0133115291
* A Random Walk Down Wall Street: https://www.amazon.com/Random-Walk-Down-Wall-Street/dp/0393358380
* The first step is to identify your risk tolerance and goals. That's way more important that the specific vehicles of investing.
* Unless you are a professional investor, it is highly unlikely you'll beat the professionals (and not likely even then) so broad diversification is a good idea.