

Ask HN: How can I learn how to invest in the market? - Retailslave

Hello, I'd like to learn how to invest in stocks, bonds, options, etc. However I find that there are no classes, and no realistic( please no make 100K in 5 days!!) books that would teach me what skills I need to learn.<p>I'd just like to learn what to look for in market trends, how to accurately research stocks, and how to make money etc. I know some basic terminology and researching but I'd like to be better before investing any money.
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patio11
Nobody ever _wants_ to hear this, but I have to say it anyhow: read A Random
Walk Down Wallstreet, give up, and invest in index funds.

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Retailslave
I hope this is not "above me" I don't know as much as the average hacker would
probably know about markets. I'm 20 and don't have THAT much knowledge.

>>give up, and invest in index funds. Alright, Any book recommendations for
that?

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patio11
It is not a commentary on you, but rather on markets. On average, investor
performance is market average minus expenses, and this holds regardless of
investor sophistication.

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btilly
Actually my understanding is that investor performance is usually better than
the market average, but not by enough to meet expenses. Therefore after market
returns usually lose. Markets are not perfect. But the imperfections are
small.

There was a study I saw a decade ago about whether any funds produced better
results than chance. Due to the difficulty of modeling the possibilities, only
mutual funds were considered. So people like George Soros did not get counted.
In the end 2 names had performed high enough that, with 95% confidence, their
performance was not by chance. Their names were Peter Lynch and Warren
Buffett. Peter Lynch retired before he got to the 99% confidence.

Interestingly both Peter Lynch and Warren Buffett recommend low cost index
funds for average investors.

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rada
Google "fantasy investing" to find a good online trading simulator and then
trade, trade, trade. Nothing compares to trading a real portfolio with "play
money". Books are good for teaching basics about stock research but they don't
teach you about your own psychological biases, risk tolerance, individual
stocks' trading volume, etc.

At the same time, subscribe to some financial channels on YouTube (like Peter
Schiff's for example) and watch them every day. Whenever you hear something
you don't understand, read up on it. It'll take time but it will be worth it.
(Just make sure you don't end up with all-bull or all-bear channels, like I
said you want to keep your own emotional biases in check).

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yoseph
This is a comment I made on a previous submission:

"Trading" is not the answer. "Investing" is. Read The Intelligent Investor and
Security Analysis, both by Benjamin Graham; and F Wall Street by Joe Ponzio
(His website fwallstreet.com also has a number of gems. Particularly, his post
about how to value a business
[http://www.fwallstreet.com/article/26-calculating-the-
value-...](http://www.fwallstreet.com/article/26-calculating-the-value-of-a-
business-part-ii))

If you read those materials, you will learn how to invest. They will teach you
how to value stocks and more importantly, teach you how to think about the
markets - be emotionally detached.

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AN447
Warren Buffets letters to shareholders would be a good place to start. Read
all of them.

The intelligent investor and securities analysis by Ben Graham are essentially
reading albeit abit dry.

I'd also recommend (when looking at equities) that you do lots and lots and
lots of research on individual stocks and really get to know them before you
take the plunge and fully understand why you've decided to buy.

Also, have an entrance and exit point on all investments. Unless you're going
for the 'value investing' strategy buying and holding forever.

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Retailslave
I'm looking for more applied advice. Your advice seems to have more of that,
does Buffets' letters include such things?

Thanks for the entrance/exist point strategy. I am planning to invest for the
short term so that should be useful

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zzeroparticle
Well, I'd say Buffett's letters' strong points are the way it breaks down
tough concepts into a language that most people can understand. While I
wouldn't say that he dispenses much in the way of investment advice, they make
good reading if you're looking for a broad stroke of the US economy
(especially the financial sector) as well as the factors that affect his
business.

It also helps that his letters tend to be free of the BS that permeates some
of the annual reports I've had to read through. When a business he owns isn't
doing well, he admits to it without needing to couch behind platitudes.

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CyberFonic
Read some books by Michael Lewis and then reconsider your plans.

You need to understand the psychology of markets, booms and busts and how the
professionals fleece the wannabes. Understanding economics and reading Warren
Buffet's remarks will lead you to invest in safe stocks, et al. That is not
the way to getting rich anytime soon.

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adrianscott
read jack schwager's books, the better biographies on warren buffett
(lowenstein's, also snowball effect), lowenstein's book on ltcm is also worth
reviewing.

i highly recommend the origin of wealth -- an amazing book

mark douglas' books can be helpful,

how to make money in stocks by o'neil,

steenbarger's book

george soros' books

hank pruden's book

you want to learn what a trading plan is, and you want a trading plan that
will work in irrational markets (since humans are not rational etc.), has some
risk mgmtn (risk does not equal volatility), rules to buy and sell, etc.

hope this helps,

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Retailslave
But these are autobiographies, I would like a book that gives me APPLIED
knowledge on trading in index funds, options, stocks, bonds, forex..etc. I'll
start with stocks/index funds because they're easier.

I want to invest short term(less than a year)

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adrianscott
not all are (auto-) biographies.

o'neil's book is very applied.

schwager's books are not all biographies, and include several very applied
books. the market wizards series include significant amounts of practical
advice on risk mgmt, exit strategies, trading plans, etc. -- from some of the
best investors.

consider your level of commitment to trading. are you willing to dedicate 4
years of work to becoming a winning trader? are you willing to read 20 books
about trading?

there is a zen aspect to learning about trading, which can help explain the
value of biographies, when you think about it ;)

best wishes in your journey! ;)

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iworkforthem
I reckon Reminiscences of a Stock Operator & Monkey Business: Swinging Through
the Wall Street Jungle are absolute MUST.

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happyrichpinoy
I highly recommend Benjamin Graham's The Intelligent Investor

