

Ask HN: Good finance books? - matt1

In a recent post by Don Dodge, he says: "Diluted earnings per share are expected to be in the range of $2.12 to $2.18." I'm a compsci guy, and have no idea what something as sexy as diluted earnings per share is, let alone why it is important, what the other metrics exist, or why I should care.<p>Googling it brings up a lot of definitions, but its hard to grasp the big picture with these. The finance section of the book store is an intimidating section at first glance -- can anyone recommend a good book that will bring me to a level where I can comfortably read a financial blog post or the WSJ?
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sebg
Here's what I did in the past when I encountered the same situation:

1\. Looked up what reports a company has to file. The key one I liked is 10-Q.

10-Q: (from investopedia) A comprehensive report of a company's performance
that must be submitted quarterly by all public companies to the Securities and
Exchange Commission. In the 10-Q, firms are required to disclose relevant
information regarding their financial position. The form must be submitted on
time, and the information should be available to all interested parties.

2\. Look up your favorite public companies 10-Q. For me: Google's 10-Q filing
=>
[http://www.sec.gov/Archives/edgar/data/1288776/0001193125072...](http://www.sec.gov/Archives/edgar/data/1288776/000119312507238468/d10q.htm)

3\. Get a book like Brealey, R., and S. C. Myers. Principles of Corporate
Finance. 7th ed. Irvin McGraw-Hill.

4\. Using 10-Q, book, and google, go through each line of the financial
statement to figure out what it means.

5\. For some insight and wisdom, look at Warren Buffet's letters to investors.
=> <http://www.berkshirehathaway.com/letters/letters.html>

enjoy!

~~~
matt1
i will do just this, thank you for the pointer.

also, i scanned through one of buffet's letters, and wow, what a wealth of
information.

~~~
sebg
great. I haven't made it through buffet's letters, but from the one's I've
read I've always been very very impressed. Also worth reading are the writings
by Buffet's business partner, Charlie Munger ( with this one being my favorite
=> The Psychology of Human Misjudgement =>
<http://vinvesting.com/docs/munger/human_misjudgement.html>).

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nostrademons
Have you checked out Investopedia?

<http://www.investopedia.com/terms/d/dilutedeps.asp>

They hyperlink to all the related terms too. Probably the easiest way to get
around financial terminology.

~~~
matt1
nos, thanks. i did see that site and have come across it several times while
looking up terms. but as much as wikipedia and investopedia help, its tough to
link everything together in the meaningful way a book might.

where to most people learn these terms? econ degrees and mbas?

~~~
nostrademons
Probably not an econ degree - I took a couple econ courses and they didn't
cover any standard financial terminology. Pretty sure a typical MBA doesn't
cover it either. Maybe accounting, but I've never taken an accounting course.

I think most people learn through going to work at a financial firm. My
friends in hedge funds actually have classes (with tests, and homework) that
they take within their employer, and they cover a lot of the corner cases of
financial terminology. I guess I learned most of what I know through osmosis
from former I-bankers and quants when I worked at a financial software
startup.

If you don't mind a book from the 1930s, you could also try Benjamin Graham's
_Securities Analysis_ , widely considered the bible of the field. Warren
Buffett learned from that, and from pestering Graham until he hired him for
his investment fund. It's really dry reading, but covers almost everything you
need to know to understand income statements and balance sheets, including
little adjustments you have to make to the company's numbers because they
always try to paint things a little better than they are.

