PPBT Question - What Source for Understanding the Market?

[asphaltgambler]

OK,

So while I'm fairly adept with a whole lot of things, including basic investing in tangible assets, I still know almost nothing about the market.

I have a strong desire to understand what and how it works before I learn how to go investing money. Like anything else in my life, I'm very much a do-it-your-selfer. As in; if I knew nothing about cars but wanted to do my own maintenance and repairs, where do I go to learn long term?

I know the best way ( for me) is to read a few books and have an experienced and successful mentor guide me. Which is exactly what I did in the mid 90's where I traded / taught a guy who was a former member and worked the floor ( he said) of NYSE. He wanted to learn cars and how to work on them, I wanted to learn about the market. It didn't work out so well for me because he was all over the place, a poor communicator, had ADD. This was just prior to the internet as we know it so I couldn't 'see' active trades or other software useful for evaluating.

The short story is he learned a lot about what he wanted, I learned almost nothing.

I checked with my local college and a few other places, no one offers a beginners course to more advanced about understanding what, how, why.

I think at least for now the source of that information is audio books / podcasts where I could listen, study and establish a strong, but basic understanding then progress to more advanced on my own time.

My question is which author / audio book(s) would you recommend?

Thanks!

[Bill Verburg]

Originally Posted by asphaltgambler

OK,

So while I'm fairly adept with a whole lot of things, including basic investing in tangible assets, I still know almost nothing about the market.

I have a strong desire to understand what and how it works before I learn how to go investing money. Like anything else in my life, I'm very much a do-it-your-selfer. As in; if I knew nothing about cars but wanted to do my own maintenance and repairs, where do I go to learn long term?

I know the best way ( for me) is to read a few books and have an experienced and successful mentor guide me. Which is exactly what I did in the mid 90's where I traded / taught a guy who was a former member and worked the floor ( he said) of NYSE. He wanted to learn cars and how to work on them, I wanted to learn about the market. It didn't work out so well for me because he was all over the place, a poor communicator, had ADD. This was just prior to the internet as we know it so I couldn't 'see' active trades or other software useful for evaluating.

The short story is he learned a lot about what he wanted, I learned almost nothing.

I checked with my local college and a few other places, no one offers a beginners course to more advanced about understanding what, how, why.

I think at least for now the source of that information is audio books / podcasts where I could listen, study and establish a strong, but basic understanding then progress to more advanced on my own time.

My question is which author / audio book(s) would you recommend?

Thanks!

You might want to start w/ the Basics like Ben Graham, Security Analysis & The Intelligent Investor

The thing I remember most is his quote
"In the short run, the market is a voting machine but in the long run it is a weighing machine"?

Go from there

[RWebb]

as above; also A Random Walk Down Wall Street - or a similar title

You can also get a bunch of pamphlets (now pdfs?) from Vanguard - you don't need an account there, just call their 800 # and tell them you are thinking of investing and ask for a Getting Started kit

I can also give you some very simple rules to follow (quoting or paraphrasing):

1. It's time in the market, not market timing that counts

2. Ignore anything with the following words: technical analysis, forming a xxx chart or pattern, hot tip, margin, leverage, option, put, call, naked

3. for most, a 60%/40% split of a stock fund & a bond fun will be a very good solution - use low cost index funds for both

4. Fees matter greatly

I just posted a few - ...

[asphaltgambler]

Are the above out on audio books or podcasts?

[RWebb]

dunno - I like things written down

[VincentVega]

'

yes, there is an audio book available

if you dont have time for that just automate buy orders for vgstx or similar and move on

[Seahawk]

Originally Posted by asphaltgambler

I think at least for now the source of that information is audio books / podcasts where I could listen, study and establish a strong, but basic understanding then progress to more advanced on my own time.

My question is which author / audio book(s) would you recommend?

I would start by understanding a simple truth: You will never catch up and be able to "invest" in the market by your lonesome. You won't. You'll need the right Mutual Fund, etc. geared to the following:

The absolute best you can do now is get smart on your current portfolio: How much, where is it, risks involved, etc. Baseline your finances including income, debt, savings, investments, assets, your age, years left before you want to retire, etc.

Start by assessing YOU and your families current financial position without blinders. Put it all in an excel spreadsheet or similar. The web is full of free financial tracking software.

Then get smart on risk/reward at your age and your tolerance for LOSING money at your age. Are you protecting your portfolio, willing to try and grow your portfolio? Can you afford to lose money?

Once that is done, honestly and without recrimination, there are literary thousands of books purporting to help.

I would start with this guy, the first money management s/w I owned (Managing Your Money) and it has served me very, very well.



Here are two more that make sense to me. Remember, you will find the right investment vehicles and not invest by your lonesome. Repeat that over and over.

[legion]

"The market" is just the term for other investors. Some are individuals, some are large institutions, some are computer algorithms. What makes them do what they do is a case study in psychology and machine learning. The factors are always changing in relative importance. For example, two months ago, viruses in China were not a big market mover.

[Bill Douglas]

Pick a company you know of on the stock/share market and follow that one company. Listen to the news, employment stats, Donald survives another attempt to take him down etc, and see what sort of effect they have on the share price hour by hour through the day. see how long it climbs up to what sort of good news. And see how long it drops depending on the magnatude of the bad news.

Another good one is to look at a companies annual report the moment it comes out. If it's better, or considerably better than expected, jump on it and ride it up for a day or two.

Again it's easier to follow one company to see what sort of $ reaction it has to news events.

Invest a couple of hundred (save the big money until you are comfortable) in the next few days, just to get a feel for it. Lots of fun, just like the horses but generally you don't lose the whole lot when you get it wrong LOL

[brainz01]

The books mentioned above are good. Another good one is the Bogleheads Guide to Investing. And/or go to Bogleheads.org and read the primers. And ask questions on the forum, which is very good.

Low-cost index buying via mutual funds and ETFs can produce returns that likely meet or exceed what any professionally managed fund will generate for the same level of risk.

[masraum]

This guy is a successful investment advisor who is now retired and has decided that as a retired guy he wants to pursue educating folks. I think he's pretty much all non-profit based (he's already made his money). He's got several articles and a bunch of podcasts, although he doesn't generally recommend purchasing individual stocks. He's much more of a low cost index fund kind of guy. (why buy 5 or 10 stocks when you can buy 500 or 1000). Yes, you can make more money buying 5 or 10, but you can also lose more that way. His theory is maximizing growth while minimizing risk by diversification across asset classes using low cost index funds.
https://paulmerriman.com/

[asphaltgambler]

Thanks all...……...

[LWJ]

I have an MBA. I think that there are so many variables to impact single stocks that it often makes my head hurt.

I bought Apple in about 2000. Just after the crash. Why? I saw people with an absolute irrational affection for the brand. It did pretty well.

I bought Lithia Motors (LAD) around 2009 when the car industry completely cratered. It was under $5 per share. Lithia figured out how to buy other dealerships and is over $130 today. Again. I did well.

I bought as very nicely located 4-plex that was grossly under-rented. I gutted it and put in nice stuff. Doubled the rent. Re-fied it and pulled out all my investment. Very well again.

All examples of "The Market." I couldn't tell you what book to read. Look around. What do you think makes sense? Who do you see that understands how things work? Watch them.

I read an article today how Applied Materials is the greatest stock for 5G and AI. I don't expect to do anything with this as I don't understand it.

More people are full of BS that don't understand anything. The same people will lose their home in a recession. It is pretty damn easy to make money in the last decade. Most everyone did this. Me included. I don't think there is a "secret code" that one learns from a book. It is more incremental. You see what works and repeat a little here and there. There will be some big setbacks as well. I have made many. Thankfully, I seem to forget most of these. Like selling Microsoft in about 1991.

[Sooner or later]

Originally Posted by LWJ

I have an MBA. I think that there are so many variables to impact single stocks that it often makes my head hurt.

I bought Apple in about 2000. Just after the crash. Why? I saw people with an absolute irrational affection for the brand. It did pretty well.

I bought Lithia Motors (LAD) around 2009 when the car industry completely cratered. It was under $5 per share. Lithia figured out how to buy other dealerships and is over $130 today. Again. I did well.

I bought as very nicely located 4-plex that was grossly under-rented. I gutted it and put in nice stuff. Doubled the rent. Re-fied it and pulled out all my investment. Very well again.

All examples of "The Market." I couldn't tell you what book to read. Look around. What do you think makes sense? Who do you see that understands how things work? Watch them.

I read an article today how Applied Materials is the greatest stock for 5G and AI. I don't expect to do anything with this as I don't understand it.

More people are full of BS that don't understand anything. The same people will lose their home in a recession. It is pretty damn easy to make money in the last decade. Most everyone did this. Me included. I don't think there is a "secret code" that one learns from a book. It is more incremental. You see what works and repeat a little here and there. There will be some big setbacks as well. I have made many. Thankfully, I seem to forget most of these. Like selling Microsoft in about 1991.

You are basically using the Peter Lynch method. Buy into things you know or see.

Lynch has a book One Up On Wall Street that is pretty good for a beginner investor. It is terribly dated but still offers some insight into his investing style and markes.

[Chocaholic]

Here’s what you need to know...it’s legalized gambling. Ultimately, the house doesn’t lose.

Leave it to the pros.

[RWebb]

Don't worry about "The Market"

Earnings count

Over time the stock averages will go up because companies will innovate and expand. Buy a low cost index fund and ride along with the averages for a decade or a few decades.

Low cost, low effort, good returns.

[Sooner or later]

He is wanting to learn. I read Bogle. I read Lynch. Jim Roger's (Mr Bow Tie, Investment Biker) I read about investment club methodology but never joined a club. It gave me the views of many successful investors.

I am a big believer in index funds and always kept the majority of my investments in them. On the other hand I took pleasure into learning different methods and playing with about 10% of my total in individual stocks. I did well with my buys. I bought into Merck with their DRIP when it was killed by Clinton and sold it 4 years later after it quadruped. Everybody said I was Crazy. I also bought Lucent and tripled my money and got greedy and lost all the gains when it crashed. I fell in love with it. BP with a DRIP did well for me. I doubled Tesla. Two different times. Killed it with Apple. I had a real estate fund that spun off huge dividends but I can't remember its name. Most everything I bought was when it had been hammered down. I didn't get greedy and in hindsight I sold most too early (damn Lucent) and ended up beating my index funds returns.

[jyl]

I’d suggest approaching from both sides.

On the stock side, pick 10 stocks and follow them closely. That means print out the 10Ks, study the financials, read the shareholder reports, assess the debt, cashflow, margins, returns, growth, valuation. Read everything you can find about those stocks, from WSJ to Seeking Alpha. Every quarter, examine the earnings report, read the call transcript, study the 10Q. Decide which of those stocks you like, if none then pick 10 more and study those. I’d suggest a mix of stocks, not all hot tech names, some should be old school names too. Invest $1000 in a portfolio of 10 stocks you like, there has to be money at stake. Track the performance of this portfolio, trade when appropriate, add and drop names after similar careful study. Compare your performance to the S&P 500 index and don’t forget dividends. When you outperform the index, or underperform, figure out why and look for patterns.

On the market side, use SPY, IEFA, IEMG, HYG, IEF. Those are ETFs for the S&P 500, for developed country foreign, for emerging country foreign, for junk bonds, and for US Treasuries. Study these and invest $1000 in a combination of some or all. Adjust weights as you think best, and track the performance versus a 60% SPY 40% IEF portfolio. Again, don’t forget dividends and coupon.

What you are trying to find out is if you enjoy stockpicking, allocation, both, or neither. And over the coming year, to assess if you have some promise at either. If you enjoy it and are doing decently after a year, increase the sum invested by 5X. After another year, by 5X again - unless you decide this isn’t for you.

You should be spending 10-20 hours a week on this. If you’re going to progress to actively investing your money, you’ll want to be professional and serious about it.

You may find that it’s easier and more fruitful to simply use SPY instead of an active stock portfolio, and a 60% SPY 40% IEF instead of an active allocation - and have 10-20 hours of your life back. That’s cool - if this isn’t fascinating and fun for you, there’s no reason to do it.