Investing

Resources to learning about Investing.

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  • Jul 25th, 2012 4:26 pm
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[OP]
Newbie
May 30, 2009
44 posts
25 upvotes
Burlington

Resources to learning about Investing.

Hi All,

Long time lurker, I'm interested in any books or websites/forums recommendations that can introduce a complete novice to financial investing.
Either with knowing what to look for in a good financial adviser or self-management.
20 replies
Deal Addict
Jul 23, 2007
3599 posts
1419 upvotes
hoan86 wrote:
Jul 21st, 2012 11:52 pm
Hi All,

Long time lurker, I'm interested in any books or websites/forums recommendations that can introduce a complete novice to financial investing.
Either with knowing what to look for in a good financial adviser or self-management.
Assuming you mean do it yourself self-management, I would look at Canadian Couch Potato and another Canadian, Andrew Hallam, author of "Millionaire Teacher".
Deal Addict
Nov 26, 2005
3085 posts
249 upvotes
Vancouver
if you are busy or lazy or arnt smart, follow stryker's advise.
else, if you want to do individual stock analysis, FA or TA, start by study accounting, at least to the level you can understand financial statements and its notes.
also need to learn bond and stock pricing models to the level of being able to construct a target stock price based on data from FS using models.
furthermore on the marco side, learn some basic marco econ. at least need to know what GDP is, what monetary policy is etc. so that you can tell the effect of financial news on market, like why lowing interest rate is good for stocks, why cds is driving banks to BK etc.
thats all for FA.
for TA, all FA plus to learn various indication and theories, chart patterns, etc.

last step for FA and TA, start with paper trade for a few months or a year, figure out mistakes in the process and such...by then you should know if you are good for self direct trade or have to settle for couch potato.
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Jun 19, 2009
5246 posts
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Scarborough
ccyk wrote:
Jul 22nd, 2012 5:53 am
if you are busy or lazy or arnt smart, follow stryker's advise.
else, if you want to do individual stock analysis, FA or TA, start by study accounting, at least to the level you can understand financial statements and its notes.
also need to learn bond and stock pricing models to the level of being able to construct a target stock price based on data from FS using models.
furthermore on the marco side, learn some basic marco econ. at least need to know what GDP is, what monetary policy is etc. so that you can tell the effect of financial news on market, like why lowing interest rate is good for stocks, why cds is driving banks to BK etc.
thats all for FA.
for TA, all FA plus to learn various indication and theories, chart patterns, etc.

last step for FA and TA, start with paper trade for a few months or a year, figure out mistakes in the process and such...by then you should know if you are good for self direct trade or have to settle for couch potato.
I wouldn't preface that Couch potato investing is for people that aren't smart. Plenty of smart people passively invest because they see it as the superior option.
Deal Addict
Jul 23, 2007
3599 posts
1419 upvotes
A few quotes from Nobel Laureates:

"It is not easy to get rich in Las Vegas, at Churchill Downs, or at the local Merrill Lynch office."

Professor Paul A. Samuelson, Massachusetts Institute of Technology, Economist, Nobel Laureate in Economics, 1970

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"Most of my investments are in equity index funds. "Why pay people to gamble with your money?"

William F. Sharpe, Nobel Laureate in Economics, 1990

----------------------

Question: So investors shouldn't delude themselves about beating the market? Answer: "They're just not going to do it. It's just not going to happen."

Daniel Kahneman, Nobel Laureate in Economics, 2002

--------------------------

Question: I wonder if I might ask you, ...how do you think people should invest for the future...? Should they buy index funds? Answer: "Absolutely. I have often said, and I know this will get some of your readers mad, that any pension fund manager who doesn't have the vast majority—and I mean 70% or 80% of his or her portfolio—in passive investments is guilty of malfeasance, nonfeasance or some other kind of bad feasance! There's just no sense for most of them to have anything but a passive investment policy."

Merton Miller, Nobel Laureate in Economics, 1990

-----------------------

Not a Nobel Laureate, but the response Warren Buffett gave when asked if an investor should buy Berkshire Hathaway on this short video.
Deal Addict
Nov 26, 2005
3085 posts
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Vancouver
SkimGuy wrote:
Jul 22nd, 2012 9:57 am
I wouldn't preface that Couch potato investing is for people that aren't smart. Plenty of smart people passively invest because they see it as the superior option.
I should say not smart in investing/trading.
Deal Addict
Nov 26, 2005
3085 posts
249 upvotes
Vancouver
Stryker wrote:
Jul 22nd, 2012 12:01 pm
A few quotes from Nobel Laureates:

"It is not easy to get rich in Las Vegas, at Churchill Downs, or at the local Merrill Lynch office."

Professor Paul A. Samuelson, Massachusetts Institute of Technology, Economist, Nobel Laureate in Economics, 1970

--------------------------

"Most of my investments are in equity index funds. "Why pay people to gamble with your money?"

William F. Sharpe, Nobel Laureate in Economics, 1990

----------------------

Question: So investors shouldn't delude themselves about beating the market? Answer: "They're just not going to do it. It's just not going to happen."

Daniel Kahneman, Nobel Laureate in Economics, 2002

--------------------------

Question: I wonder if I might ask you, ...how do you think people should invest for the future...? Should they buy index funds? Answer: "Absolutely. I have often said, and I know this will get some of your readers mad, that any pension fund manager who doesn't have the vast majority—and I mean 70% or 80% of his or her portfolio—in passive investments is guilty of malfeasance, nonfeasance or some other kind of bad feasance! There's just no sense for most of them to have anything but a passive investment policy."

Merton Miller, Nobel Laureate in Economics, 1990

-----------------------

Not a Nobel Laureate, but the response Warren Buffett gave when asked if an investor should buy Berkshire Hathaway on this short video.
quoting nobel prize winners and following their advise is not something I will do. ever remember Long Term Capital Management? they hired many nobel price winners and phds. yet it bankrupted. they are economists, not successful trader/investors. they are speaking out of their field of profession.

as re buffett, the god who many worship. I can say if you follow his advise, you can never be as rich as him or even come close to 1% of his wealth.

edit: I should add this: just like GS, for buffett follow what he does, not what he says. own what he holds, not what he tells you to hold. way too many lies on wall street.
Deal Addict
Aug 28, 2010
3521 posts
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Halifax
ccyk wrote:
Jul 22nd, 2012 4:46 pm
I should say not smart in investing/trading.
We're smart enough to read all of the evidence which says that trading is hazardous to your wealth. Just because you don't believe the evidence and choose to trade, doesn't make the evidence any less true.

ccyk wrote:
Jul 22nd, 2012 4:51 pm
as re buffett, the god who many worship. I can say if you follow his advise, you can never be as rich as him or even come close to 1% of his wealth.
You're correct. For the average investor, indexing will not lead to a portfolio worth roughly $400 million. So?

I don't want to try to get a portfolio that massive. The odds of amassing a portfolio that large are exceptionally low, and the chances are extremely high that if you try, you will end up with close to nothing.


I'm not aiming to become super rich. I'm aiming to have a comfortable retirement. And all of the studies are exceptionally clear that passive investing has a much higher chance of giving me a comfortable retirement than trading.
Jr. Member
May 17, 2009
162 posts
14 upvotes
Thunder Bay
I'm not aiming to become super rich. I'm aiming to have a comfortable retirement. And all of the studies are exceptionally clear that passive investing has a much higher chance of giving me a comfortable retirement than trading.[/QUOTE]

I agree with FunSave that passive investing will result in better results than trading.

I've tried to both trade and invest passively. Trading for me has been hit or miss. And I've had a couple major misses. My best results have been with DRIPS and optional cash purchase plans. Stick to the bluest of the blue chips. Dividend payers like Bell, big banks, Enbridge, TransCanada, Fortis etc. Make purchases as often as you can, monthly or quartery and let the dividends re-invest and compound.

One book I thought was excellent was The Intelligent Investor by Benjamin Graham. It is about the philosophy of value investing where you evaluate a company's balance sheet to determine whether a stock is undervalued, fairly valued, or overvalued.
Deal Addict
Nov 26, 2005
3085 posts
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Vancouver
cheapcanoehead wrote:
Jul 22nd, 2012 9:11 pm

I agree with FunSave that passive investing will result in better results than trading.

I've tried to both trade and invest passively. Trading for me has been hit or miss. And I've had a couple major misses. My best results have been with DRIPS and optional cash purchase plans. Stick to the bluest of the blue chips. Dividend payers like Bell, big banks, Enbridge, TransCanada, Fortis etc. Make purchases as often as you can, monthly or quartery and let the dividends re-invest and compound.

One book I thought was excellent was The Intelligent Investor by Benjamin Graham. It is about the philosophy of value investing where you evaluate a company's balance sheet to determine whether a stock is undervalued, fairly valued, or overvalued.
it really depends on goal of investing/trading. just like running a business - making profit or helping others as a npo.

and I agree, if you are not good at trading, best bet is indexing.
Deal Addict
Jul 23, 2007
3599 posts
1419 upvotes
Back in the 80's and 90's I used to hear professionals whine that the reason it was so hard to beat the market was because aside from the crash of 1987 (which lasted only a few days), it was for the most part a bull run. Wait til we're in a trading range type market, then we'll show our stuff. Well we've been in a traders market for well over a decade now, and I see now that the results of the professionals aren't any better than what it was during the bull market. Then the amateurs think they can do better? I very much doubt that. In fact any studies I've seen show they do worse. Actually it also came out in the study that females did better than the males because they tend to trade less.
Deal Addict
Nov 26, 2005
3085 posts
249 upvotes
Vancouver
Stryker wrote:
Jul 23rd, 2012 5:37 am
Back in the 80's and 90's I used to hear professionals whine that the reason it was so hard to beat the market was because aside from the crash of 1987 (which lasted only a few days), it was for the most part a bull run. Wait til we're in a trading range type market, then we'll show our stuff. Well we've been in a traders market for well over a decade now, and I see now that the results of the professionals aren't any better than what it was during the bull market. Then the amateurs think they can do better? I very much doubt that. In fact any studies I've seen show they do worse. Actually it also came out in the study that females did better than the males because they tend to trade less.
even in 2008 there are people, professional or not, made money. just because on average people lose money does not mean it is not profitable. it highly depends on skills.
indexing gets you no where in past 10 years. it cant even beat bonds.
Deal Addict
Aug 28, 2010
3521 posts
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Halifax
ccyk wrote:
Jul 23rd, 2012 9:45 am
it highly depends on skills.
The evidence that there is skill involved in active investing is extremely weak. The studies show that there might be an extremely small percentage of people who can consistently display skill in active investing, but nearly all active investors are just taking a random walk. An expensive random walk.

indexing gets you no where in past 10 years.
Indexers outperformed the vast majority of active investors over the past 10 years. As they are nearly guaranteed to do over any 10 year span. That's the point of indexing.


I believe that over the long term the world's economy is going to grow. And I believe that this means that over the long term the world's stock markets are going to grow. So over the long term indexing makes perfect sense as long as you don't expect civilization to collapse.

I don't need the money I'm investing for a couple of decades. Why would I care about the past 10 years? Market history shows there are often long downturn periods. I knew that when I started investing that I would likely go through at least one. Why should I be concerned?
Deal Addict
Jul 23, 2007
3599 posts
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Looking at the TD e-Series index funds in globefund under Canadian fixed income, and also Canadian, U.S. and International equity, and doing a comparison with active funds in these same categories over the last ten years, the e-Series seem to be not just average, but in the top third of all funds based on performance. That's not all. What we do know is that globefund doesn't account for the dead funds, in other words funds that have been dropped, merged etc. over the last ten years, until we're left with the fact that only about 10% of these active funds have beat the index in their respective categories. Of that 10% of winning funds from the last decade, we don't know how many of those will reach the top in the following decade. We know that some won't. That's quite a hurdle for an amateur to climb over.
Deal Addict
Nov 26, 2005
3085 posts
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Vancouver
Stryker wrote:
Jul 23rd, 2012 11:51 am
Looking at the TD e-Series index funds in globefund under Canadian fixed income, and also Canadian, U.S. and International equity, and doing a comparison with active funds in these same categories over the last ten years, the e-Series seem to be not just average, but in the top third of all funds based on performance. That's not all. What we do know is that globefund doesn't account for the dead funds, in other words funds that have been dropped, merged etc. over the last ten years, until we're left with the fact that only about 10% of these active funds have beat the index in their respective categories. Of that 10% of winning funds from the last decade, we don't know how many of those will reach the top in the following decade. We know that some won't. That's quite a hurdle for an amateur to climb over.
why not just invest in bonds? much safer, much higher return than indexing.

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