Skip to comments.Freeper Help Wanted: How do I learn how to invest my money? [Vanity]
Posted on 08/12/2009 1:15:30 AM PDT by Slings and Arrows
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Are you sure you want to learn how to
Step 1. Invest unsuccessfully and lose large sums of $
Step 2. Learn from your mistakes
Step 3. Apply what you learned
Step 4. Lose less this time
Step 5. Assume you know everything!
Step 6. Realize you don’t know everything and lose more
Step 7. Have a plan this time
Step 8. Make some money
Step 9. Get Cocky, lose money
Step 10. Repent. Swear you won’t squander everything the next time!
Step 11. Wife takes away control of investments
You are trying to learn the “culture” of investing and Wall Street?
Watch old reruns of The Untouchables and the movie Boiler Room.
My dad just gave us a set of CD-ROMs called “No Fear Investing” that he swears by. They are produced by Spread Trade Systems. I haven’t had time to delve into them yet, but he’s 74 and very successful and not apocalyptic about the economy like I am, so I’m taking that as a fairly strong endorsement. He’s making a decent retirement living off the market, even now.
The Only Investment Guide You'll Ever Need by Harvard MBA Andrew Tobias.
Don't let the Harvard throw you off -- he knows how to laugh at himself, and to discuss in layman's terms.
The Motley Fool who are stock pickers. They are not as good as they used to be, but their book The Motley Fool Investment Guide gives a good description of the basics of stock market trading. Most of their strategies are outdated, and, frankly, *suck*, these days. But for general knowledge of what stocks are, it's a good start. As an altenative to Motley Fool, you could try John Bogle (founder of the Vanguard Index funds.)
You *can* beat the market over time, but you have to have iron discipline and the willingness to spend a lot of time analyzing the finances of the companies you are interested in. Just remember, that the market can usually be irrational a lot longer than you can stand losses.
And if you want "infotainment" on stocks, try Jim Cramer. He comes across as a buffoon, he's a flaming liberal, and you shouldn't necessarily rely on his individual picks, but if you want a peek behind the curtain of Wall Street, he's a good resource.
Online resources would include Minyanville (Financial Infotainment), which again, give a sense of the movement of the market and why.
If you want FREEPERS to ask, the first one who comes to mind immediately -- and he trades not in stocks, but in options on commodities -- is SAJ. He has corrected my abysmal ignorance on multiple occasions, and is a fount of insight.
Thanks! I’ll take a look at your suggestions.
With all this good information coming in, maybe we could put together a Freeper guide to investment.
That sounds a bit like the way I learned to do scientific research.
I suspect that the cats have already put all my assets in a trust.
So you’re probably heavily invested in seafood and catnip!
It does explain all those commodities trades in chicken livers.
Bump for later.
Slings, first, you are **absolutely** correct to seek out the terminology and the culture. That's a great start. The terminology and usage is in many cases entirely arbitrary (bonds, for example, still trade in 1/32nds, a legacy of none other than Spanish pieces of eight), and everybody -- and I mean everybody, self definitely included -- has gotten a term wrong or misunderstood a condition of trade once in a while. VERY costly.
Three things to remember at ALL times:
1) Investing and trading (trading is just investing in a shorter time frame) are about making a profit. Period. Everything else, ABSOLUTELY EVERYTHING ELSE, is just a sideshow.
2) If, in any trade/investment, you cannot name to yourself two distinct advantages to holding your current position, GET THE HELL OUT. These advantages might be historical (a seasonal pattern in corn, say), statistical (selling overpriced IV in options, say), fundamental (owning a company's shares when the company has enjoyed 15 straight years of rising earnings, say), anecdotal (a certain company's products are simply flying off the shelf in your city, but the share price hasn't risen yet), or technical.
3) Markets are anticipatory discounting mechanisms of price. Said another way, by the time YOU have some news about company X, said news is worthless for evaluating the future prospects of the share price of X, because the mkt has already discounted it (because it, the mkt, had the news first).
Oh, yes, and sell short March OJ in mid-December, typically remaining short until mid-January. This trade has worked for decades (likely because a lot of people buy OJ in December looking for a damaging freeze of the FLA crop -- which practically never materialises).
Good trading/investing to you!
Thank you very much for the advice. I’m studying now, and it’s like a new world is opening up to me.