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Discussion Starter #1
Hey all. I'm interested in really learning how to begin in the investing world. I've got a copy of "The Intelligent Investor" on hold at the library for me. I want to learn the ins and outs of value investing. I guess the first thing is how to read a financial statement. And how to find those statements... Are the google finance statements good enough, or do I need more information.

I am not going to do this half-assed at all. I won't have significant money for many months anyways, and I plan to learn for this next year before stepping into the realm of stock investing.

I'm really looking for resources to teach me. Advice? I could google "how to invest" until my face turns blue but I don't really know if what I'm reading is helpful. I know the gist of reading financials. I can understand the raw numbers and if a company is making money or not. But I have no idea how much they are supposed to me making and what good and what is great and what is just OK. and I have no idea how to "value" a company and decide what price is a good price for a share.
Obviously I don't know much yet. Any advice of where/how to learn, without me having to pick through the garden of weeds which is the internet, would be great!
 

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There are a few threads on here about good books to read about whatever it is in the investing world that interests you.

Plus if you don't have the extra $ right now, you can go to Chapters and read for free!
 

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Cal, you're right about reading for free. I borrowed 15 books from the Public Library. I photocopied the most interesting pages, so I saved a lot of money. I think it would be a good idea for me to buy the best two of them.
 

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Most participants in these forums are 'investo-centric', that is they concentrate strictly on investing. The problem is, they dwell on the "what" to invest in part of financial planning, rather than the "how much" and "when"... ie. the scale and timing of the investments. Remember, your retirement nest egg, depositing to it while working and subsequent withdrawing from it when retired, doesn't live in a vacuum.

Loans, income tax, salary, pension, CPP/OAS, a future windfall (selling the family cottage, or a future inheritance).... these are part of the planning process. The problem is that it is hard to generate rules of thumb (how much to save, how much to draw from savings, how big should my nest egg be at retirement) when these other entities are taken into account.

These non-investment entities are different for everyone, and are all over the map in scale and timing. Don't ignore the cash flow aspects of planning... investing is one piece of a greater whole.
 

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Cal, you're right about reading for free. I borrowed 15 books from the Public Library. I photocopied the most interesting pages, so I saved a lot of money. I think it would be a good idea for me to buy the best two of them.
I only buy books if I know I am going to refer to them often. Having too many books is a hassle.
 

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I only buy books if I know I am going to refer to them often. Having too many books is a hassle.
Agreed. That's why I loan a lot, and buy just a few. Some people would several, sometimes because they say "Best Seller" on the cover, and find out that they're pretty useless. Check them out first at the Public Library.
 

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Discussion Starter #8
Thanks guys! So I'm going to start reading through the million dollar journey archives, and that book The Intelligent Investor that I'm getting from the library. Taxsaver, it just so happens that there's a seminar in my town this tuesday! I think I'll go check it out, thanks!

Are there any more reccomendations for books or articles? I want to spend time learning I just don't want to waste 10s of hours reading a crap book that I random pull off the library shelf. My main interest is learing how to pick and determine if a company is "good" and how to value it. I have little interest in fancy interpretations of markets trends. I figure I will be exposed to that eventually anyways.
 

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One great website that covers a lot of ground is:

http://www.retailinvestor.org/index.html

Really helpful for starting out and helps keep a professional skepticism on a lot of the BS out there.

Basic and oversimplified ways to value a company are:

1) Fundamental or Financial Analysis. Balance sheet shows $x amount of net assets, income statement shows $y income per year, market dictates that z# of years is appropriate for an investment to pay for itself. Stock Price = x + (y*z)

Pro: Most logical thought process
Con: Stock market can and will behave illogically.

2) Technical or Chart Analysis. Stock market trades in patterns, so if you can identify the pattern, you can exploit the pattern.

Pro: Considers human behaviour in the equation.
Con: Typically assumes past trends will repeat in the future.

3) Follow the herd or follow the hype. Who cares about analysis. If the stock is popular, people will buy it, and more buyers than sellers is what really moves the stock price regardless of what the analysis says.

Pro: Follows the real driver of stock prices
Con: Cannot hope for better than average by following, and the herd of sheep you are following is being led by wolves, not shepherds.


Generally, the optimal strategy is a combination of all three (and more if you can think of any) categories. Since there are infinite scenarios of: I could have made money if...., I should have bought that....., I would have sold that...., the lessons do not truly sink in until you get out there for real and lose your own money.

Just start small, do not use leverage, and do not get too greedy or ambitious, and have a steady income to replace the money you lose. Eventually you will figure something out or give up, decide investing is not for you and go to index funds.

I find it especially sobering to talk with other investors about decisions (especially failures) and justify your reasoning for each purchase and sale. A lot of times, you will find you abandoned a rational thought process. The other investors will come to respect your candour as long as your reasoning is sound and you demonstrate that you learned a lesson from you failures. There is a lot more luck to it than most successful investors like to admit, and people love a story about struggling with failure, learning a lesson.

I find a lot of people are not very open about their thought process when it comes to investing. I assume either they do not have one, or if they do, they are not going to tell me.
 

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Discussion Starter #10
Thank you Max that is a wonderful help and that website is exactly what I was looking for!
 

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I have found that the more I read about investing, the more confused I get. However, one of the best little books that I have read is 'The Empowered Investor' by Keith Matthews. However, it was published in 2005 and is somewhat outdated but the message remains to 'keep it simple' and keep it cheap. Don't pay high fees to the financial services industry and be aware of how these add up over time and the impact that fees will have on your long term returns. After a lot of research, I have ended up holding a low-fee portfolio of broad-based ETF's. Another way to go is to build a portfolio of 20or so good dividend paying stocks which have a history of increasing the dividend over time.

Set up a discount brokerage account with a firm that charges the lowest trading fees and then avoid the temptation to constantly buy and sell to chase after hot returns.

Set up an asset allocation that is appropriate to your individual personality and circumstances before picking the actual investments to include in your portfolio. Picking and maintaining your asset allocation is more important even than deciding what investments to hold. With a conviction in your asset allocation, you won't have a tendency to panic and sell at market bottoms or buy at market peaks. If anything, do the exact opposite!!

These are some of the key things that I have learned during my investment experience.

To thine own self be true.
 

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I have found that the more I read about investing, the more confused I get. However, one of the best little books that I have read is 'The Empowered Investor' by Keith Matthews. However, it was published in 2005 and is somewhat outdated but the message remains to 'keep it simple' and keep it cheap. Don't pay high fees to the financial services industry and be aware of how these add up over time and the impact that fees will have on your long term returns. After a lot of research, I have ended up holding a low-fee portfolio of broad-based ETF's. Another way to go is to build a portfolio of 20or so good dividend paying stocks which have a history of increasing the dividend over time.

Set up a discount brokerage account with a firm that charges the lowest trading fees and then avoid the temptation to constantly buy and sell to chase after hot returns.

Set up an asset allocation that is appropriate to your individual personality and circumstances before picking the actual investments to include in your portfolio. Picking and maintaining your asset allocation is more important even than deciding what investments to hold. With a conviction in your asset allocation, you won't have a tendency to panic and sell at market bottoms or buy at market peaks. If anything, do the exact opposite!!

These are some of the key things that I have learned during my investment experience.

To thine own self be true.
This makes sense. I just wish I could understand how to do as you suggest. Anytime I try and read websites and books about this stuff my eyes gloss over and I quickly lose interest. I think I understand what you've said but HOW to do it. Does it mean I have to make an appointment with someone or call a 1-800 # to be told my call is important to them while listening to IVR sales pitches and elevator music?
 

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I don't think there is anything you can do wrong with regards to education, just read everything that you can find and make your own opinion. The library is definitely an amazing resource, the only cost is your time. I try to spend 1 hour a day minimum learning whatever it may be.

You are on to a good start with regards to value investing. From what I have read so far, I am a keen believer in value investing.
 

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One place to start, if you are a new investor is to 'Google' Easy Chair or Couch Potato Portfolio.

Keep it cheap and easy with an instantly diversified short list of four or so broad-based ETF's held in a discount brokerage account.

And then, just turn off all of the noise that is out there.

Keep it simple and avoid advice which usually comes at a high cost.

There is a huge financial services industry out there which is thriving by taking money from the little guys. They are driving around in nice expensive cars while you end up taking the bus!!!

I often tell the story of when I had just completed my annual visit with my advisor during which we reviewed my recent losses. Then, on the way out the door and into the parking lot, he asked me how I liked his new Lexus. It was very shortly after that that I dumped him and opened a discount brokerage account in which I hold a short portfolio of broad-based Exchange Traded Funds.

It isn't rocket science but you do need to have some personal discipline and be confident in the asset allocation that you establish and then not sell when the markets tank and not buy when they peak. In other words, refuse to follow the herd.

Buy low. Dollar cost averaging into the market is one good option.
 

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One place to invest that doesn't get talked about is Share Owner It falls somewhere between discount brokers and DRIPs.

What will help a newbie is the study materiel and magazine that grinds over and over what is a good stock or why it's doesn't make there definition.

It's really easy to buy a stock that drips and never really it's potential,and even easier to buy a discount broker.
 
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