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Hello everyone,

I was wondering if anyone had any book recommendations for me who is looking to do a bit of active investing. My goal is to reach a point where I can look through a company's record of financial statements and be able to tell if its garbage or not (given enough time). Please only recommend books that you've read through personally if you don't mind. I do not come from a financial background so preference towards lay-person books.

Right now, I am time-rich and am personally motivated to learn this skill. I am close to opening up an account with QTrade and while I'm going to have most of my money in passive index funds or ETFs to begin with, I'd eventually like to get a percentage of it in small-caps that I've done my due diligence on; this, going on the theory read that most small or micro-caps are ignored by analysts because its too small-fry.

Big thanks to anyone who gives a reply, I've been reading the blog for awhile now and hope to gain mastery over this part of my life. Reading through your comments and posts has been very helpful for me to learn from.

Books I've read so far:

1.) One up on Wall Street - Peter Lynch

Mostly principles based, lacking in the practical nitty gritty implementation details I found. A lot of the amazing "10-bagger" type examples were from the dot-com boom so it felt kinda dated. Didn't really find the material as invaluable as reviews of the book made it out to be just because by now, many of the principles are found in most intro investing literature.

2.) The Intelligent Investor (Modern edition) - Benjamin Graham

Major disappointment considering its "holy grail" status among the investing community. I definitely felt that this book falls into Mark Twain's definition of a classic - a text everyone recommends but that no one actually reads -. The prose was extremely difficult to read and most of the chapter examples were dated if not outright obsolete (warrants, railroads etc.). Again, mostly principles based but granted there was a bit of implementation stuff near the end. I have absolutely no idea how Warren Buffet could read and really comprehend this in high-school, its a really tough/boring read. I can understand how revolutionary the book would have been back then (introducing so many new brand new revolutionary concepts), but given that most of the book concepts are now taken for granted today (like index investing), I feel there are probably way better primer books out there that explain it to intro investors.

3.) Fundamental Analysis for Dummies - Matt Krantz

Got this after I read through Intelligent Investor b/c I realized that after reading that book, I still didn't know how perform a fundamental analysis. Surprisingly good, modern examples (yay!), written after the dot com crash (yay!), easy digestible read (yay). The most useful section for me was the chapter where he walked through how to do a DCF analysis (albeit using a simplified model). Downsides are that the book lacks depth, but I couldn't really fault that for a dummies book. I would recommend this book because of its practicality.

4.) Securities Analysis - Graham

Currently sitting on my bookshelf unread b/c of my experience with Intelligent Investor. I didn't enjoy Graham's writing style and not sure I want to dive into such a huge and complex book if its gonna use examples from 50 years ago. Open to suggestions for an alternative "modernized" equivalent.
 

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While I am not personally a proponent of active investing, never underestimate the 'Dummies' series of financial books which I always find interesting, informative, and easy to read and understand.

One such book that I can recommend for 'Couch Potato' investors is 'Exchange-Traded Funds for Dummies' by Russell Wild which however is a U.S. publication and so doesn't cover Canadian ETF's. But, the theories of portfolio development still apply.

I realize that this doesn't address your particular question, harpo--er, hypo but you too might find this Dummies book of interest.:cool:
 

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Join Canadian Shareownwer that gets you the magazine for year and a study program. It's good solid info on the #'s and charts and how they apply.

The magazine takes a sector and looks at the best company's in that sector.
 
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