Books and Resources on the Stock Market / Investing / Personal Finance

[ex_banana-eater]

Do you have any recommendations from these three non-fiction genres? I am looking for a general education so I am not being specific. Personal finance and investing can mean anything from how to buy and sell a house, handle a mortgage, get through school without student loans, or how to save for retirement.

[softwareNerd]

For investing, start with books where opinion is very limited. I'm not familiar with names, but it would be books like "Wall Street Guide to Understanding Personal Finance", or even some of the "Idiot's Guide..." books. I imagine that Suze Orman covers a lot of the basics too, along with providing some opinion. Your local library probably has a good selection.

This first set of books should make you comfortable with topics like: what stocks are, what dividends are, what general types of tax-protected accounts are available in the US, can people invest in bonds, how do mutual funds work, given an example does one use money to pay off a credit card or to invest in a CD, and so on.

Once you have understand the basic concepts (and vocabulary) of investment, the next step is to gain enough of a layman's investment philosophy that let's you choose a good expert. To draw an analogy with medicine, first you need to learn the basics of biology, vitamins, etc.; then, you need to understand the something about the issues in medicine: issues like over/under prescribing, wholistic versus conventional allopathic medicine, and so on. You need enough to allow you to find a good doctor.

For this part, I'd recommend reading about a whole lot of famous investment successes, and some failures. Here are some books that come to mind:

Wizards of Wall Street, Wall Street People, The Market Gurus, A Random Walk Down Wall Street, "What Works on Wall Street", "Buffett: The Making of An American Capitalist", "Hedge Hogging", "The Little Book that Beats the Market", "Yes, You Can Time the Market", "Extraordinary Popular Delusions". When you read a few of these books, you'll sometimes find that one investor advises exactly the opposite of what another does, and they're both billionaires!

Still, it is important to understand enough of the ways that money is made and lost. As you go through books like these, you will probably start to build a philosophy of investing. Meanwhile, put your money somewhere safe for a few years while you figure things out.

[Toolboxnj]

I proudly recommend The Motley Fool's Guide to Investing. I bought the book myself when I was a teenager to learn more about investments. Granted, it's not a detailed/academic book (for more of that read Peter Lynch), but it will provide excellent insight into mutual funds, options, individual stocks... how to read balance sheets, what to look for in companies as far as good investments, etc. There is also a good amount of humor (laugh out loud humor) throughout the book.

If you have any general questions I possess a Series 6 and 63 and also Life Insurance license that I do not use anymore. I can offer general advice on financial products as far as suitability, retirement, college planning, tax savings, your needs, etc and would be happy to make myself available to anyone that wants to bounce some ideas off me.

[softwareNerd]

I proudly recommend The Motley Fool's Guide to Investing.

Does anyone here use the Motley Fool investment message boards? If so, what would be a quick review. Browsing through them, I see that some stock-boards (like BRKA) are busy and high quality, but many other stocks have almost no members posting. A lot of the board posts seem to be on general finance topics e.g. "Living Within One's Means", "Credit Cards and Debt" etc. and also on non-financial topics, e.g. "Atheist Fools" or "Political Asylum".

If anyone uses the boards, I'd be interested if they find them useful specifically as regards bouncing stock -investment ideas off other members.

[khaight]

I believe Yaron Brook has a taped course on "Investing: An Objective Approach". He used to be a professor of finance at Santa Clara University before he went to ARI, so I expect he knows what he's talking about. I haven't listened to the lectures myself, so I can neither recommend nor dis-recommend them, but I thought I'd point out their existence.

I also found this collection of blog posts by Clayton Cramer, on "How To Become Wealthy", to be very useful basic read. It has explanations for what stocks and bonds are, how to budget, why credit card debt is a killer, and a number of other useful pieces of basic financial knowledge. It's a good place to start.

[Mammon]

[Mod's note: Merged with earlier thread - sN]

Quite simple, I was wondering if anyone had any recommendations of books or internet sites with good information about the basic workings of the stock markets.

I'm thinking about getting into banking/private equity after college so I wanted to look up stuff right now and become familiar with the concepts.

Thanks in advance.

Edited May 18, 2007 by softwareNerd

[softwareNerd]

One needs to understand the:

• mechanics of investing (what are shares, what are bonds, etc.)
  
• philosophies of investing
  

I think that any consumer-intro book would serve to understand the mechanics. When it comes to the competing philosophies, any professional must have some understanding of the following philosophical approaches:

• Efficient Market: The idea that no evaluation technique can consistently make money in the stock-market. There are lot of texts that approach this very abstractly; I'd recommend John Bogle's "The Little Book of Commonsense Investing".
  
• Valuation approaches: The idea that there are ways to evaluate what financial instruments are really worth and to make such judgements better than others can. There are many variants of this, but a good starter that proposes one variant, is Joel Greenblatt's "The Little Book that Beats the Market". Another book in the series is probably in the same vein (I haven't read it, but I base it on my knowledge of the authors) "The Little Book of Value Investing".
  
• Technical approaches: The idea that there are certain patterns to the way prices of stiocks move, and that one can profit from understanding the patterns. You could try "Trader Vic", written by Rand fan Victor Sperandeo, though there are probably better books available.
  

Since these books are based on different philosophies, they will contradict each other in fundamental ways. Still, reading them (or substitutes) will get one started about some very basic questions to do with investing.

[dan_edge]

Hello All,

I'm currently reading Rich Dad Poor Dad and enjoying it immensely. The author offers general, practical advice about personal finance -- what he calls "financial intelligence." For example, he challenges the notion that a house is an asset. He considers it to be a liability because the costs (taxes, finance charges, upkeep, etc.) usually far exceed the rate at which the house appreciates. He does not argue that one should not buy a house, but we should realize that a house is a liability, not an asset.

His general philosophy is: buy more assets, less liabilities. Examples of assets are: businesses that one does not have to work for full time, stocks, bonds, and other investments. Examples of liabilities are: house, car, and long-term debts. He writes that one is "wealthy" when the income produced by his assets (not taking one's salary into account) is greater than his total expenses. At that point, you can do what you want with your salary, like buying more assets.

I will enjoy reading more books like this. No one book will make you rich, but reading these sorts of books gets one into the mindset of living responsibly and making a long term plan for financial health.

--Dan Edge

[Chops]

I would like to second "Rich Dad, Poor Dad." It was a very enlightening book about financial intelligence from someone who worked his way from having very little, and even against the advice of his socialistic father, to become a highly successful businessman and investor.

Admittedly, the writing style is somewhat simplistic (and can get a little repetitive), but could probably be clear even to a child.

Overall, though, a very insightful book about investing and overall wealth generation.

For the programmers out there, I'd recommend "Founders at Work," though not an investment or money management book, it tells the stories of the founders of successful (and some not-so-successful) tech companies in their early days. Very inspiring, to say the least.

Edited May 18, 2007 by Chops

[softwareNerd]

The discussion boards on "Motley Fool" finance web-site used to be subscription-only, but from this month, they're free. For starters, they are opening the site to people to get invites from current members (and these new members get invites, and so on). If anyone is interested in an invite, PM me and and I'll send one along. All I need from you is an Email address.

Edited July 19, 2007 by softwareNerd