Beginner Stock Market Books

[pitboss12]

There's always Jim Cramer's Mad Money books.

 

[appolyon]

Originally Posted by gnatty8

Read books on technical trading before Malkiel? Now there's some sound advice. Technical trading is bullshit, always was, always will be. Now excuse me, I am late for my Flat Earth Society meeting.

Woah there Nelly! Without turning this thread into a fundamentals vs technicals thread, I think your wrong in totally discounting technical information. Using the two in combination is much more useful than just sticking to either one.

For one, fundamental information isn't refreshed as often as technical information, so you have to make decisions based on information that can be several months old and on the other hand you wouldn't want to run the ruler over a company that has bad fundamentals to begin with.

Technical analysis is also a good measure of sentiment in the stock allowing you to time your entry and exits better and is also a very good way to gauge fear and greed in the market at any particular time.

 

[aragoona]

Read... "The Disciplined Trader" and "Trading in the Zone" both by Mark Douglas. Im a purely technical trader. Also, paper trade for less than a month just to get a feel of the platform then start using real capital. I use to trade stocks but I strictly trade futures now. Also, decide if your swing trading or day trading. Btw, Warren Buffet sucks, the market will never rally like that agian. I mean common back then the Dow was at like 100 lol. The best advice I will tell you is look at PRICE and cut losses short. DONT USE ANY OTHER INDICATOR BUT PRICE AND VOLUME! Trading is all about discipline, thats why 95% fail.

 

[appolyon]

I disagree with 'Trading in the Zone' ... its a very tedious book.

I think the one book that has been terribly overlooked in this thread is Dr Alexander Elder's 'Trading for a Living'.

 

[aragoona]

Honestly no book will help you, when you have 10000 hours of screen time then you will be ready. Trading in the Zone will help him with the psychology involved with trading, which imo is what makes great traders.

 

[appolyon]

Originally Posted by aragoona

which imo is what makes great traders.

Agree 100% with this.

1. Trading psychology
2. Money management
3. Trading system

 

[gnatty8]

Originally Posted by appolyon

Woah there Nelly! Without turning this thread into a fundamentals vs technicals thread, I think your wrong in totally discounting technical information. Using the two in combination is much more useful than just sticking to either one.

For one, fundamental information isn't refreshed as often as technical information, so you have to make decisions based on information that can be several months old and on the other hand you wouldn't want to run the ruler over a company that has bad fundamentals to begin with.

Technical analysis is also a good measure of sentiment in the stock allowing you to time your entry and exits better and is also a very good way to gauge fear and greed in the market at any particular time.

Sorry, I just disagree. If you flip a coin 100 times and chart a head as an up move and a tail as a down move, you will come up with charts that have the same features and "information" as most technical charts. People are not stupid and widespread availability of processing speed and real time market information made sure that any advantages offered by technical signals have long been arbitraged away.

 

[vitaminc]

Originally Posted by TUspiv

So, for my birthday I asked for some money to "play around" on the stock market with. Not much, but hopefully something I can turn into some real cash. That said, I'm a noob to the stock market and wanted to do some reading before I got too far into it -- does anyone have any book recommendations for a complete beginner? Any other tips/advice is welcome This was the only other thread I could find on the topic, but it's not terribly helpful: http://www.styleforum.net/showthread...t=stock+market
Don't invest/pick your own stocks if you don't have a lot of free time to monitor the market for news and information. Investing in stocks while you have a full time job doing something else is much like playing poker in Vegas while getting a lap dance (or **). Lack of full time attention will get you wiped out one way or another. Instead you should focus on how to better manage your cashflow and spending habits.

Originally Posted by SkinnyGoomba

You're best bet is to stop listening to boo-hoo horror stories of investing in stocks, and fallow the warren buffet way of investing. Warren Buffet has a net worth of 54 billion dollars, made a vast majority of it with good moves in the stock market. Now is a perfect time to buy alot of the Buffet stocks are at good prices.
Strongly disagree on following Buffett's moves. He invests a good portion of assets into private equities that typical investors don't have access to. And FYI, Buffet's private investments are not marked to market so he doesn't get burned badly when things turn sour.

Originally Posted by gnatty8

Sorry, I just disagree. If you flip a coin 100 times and chart a head as an up move and a tail as a down move, you will come up with charts that have the same features and "information" as most technical charts. People are not stupid and widespread availability of processing speed and real time market information made sure that any advantages offered by technical signals have long been arbitraged away.
I understand where you are coming from but not everybody process market information in the same way thus there will always be some arbitrage opportunities. I believe the market is only semi-efficient.

 

[gnatty8]

Originally Posted by vitaminc

I understand where you are coming from but not everybody process market information in the same way thus there will always be some arbitrage opportunities. I believe the market is only semi-efficient.

Here's the definition of semi-strong efficiency from Wiki (a subset of the Efficient Markets Hypothesis) which states in part:

Semi-strong-form efficiency implies that neither fundamental analysis nor technical analysis techniques will be able to reliably produce excess returns.

I think technical traders need to read Nassim Taleb's "Fooled by Randomness" as part of their required reading, or at least before they blow up and lose their house when odds finally catch up with them. Technical trading has been so roundly debunked, its almost surprising to hear people mention it any more.

 

[appolyon]

Originally Posted by gnatty8

Sorry, I just disagree. If you flip a coin 100 times and chart a head as an up move and a tail as a down move, you will come up with charts that have the same features and "information" as most technical charts. People are not stupid and widespread availability of processing speed and real time market information made sure that any advantages offered by technical signals have long been arbitraged away.

I'm sorry but I have to disagree with that. There is no memory effect in tossing a coin ... you can toss it 100 times and the probability that it will land on heads is always 50/50 and randomness implies that the coin can string along 100 turns of heads.

There is a memory effect in the markets, there are emotions at play, and 'mum and dad' investors have got access to markets like never before. These people may not be 'stupid' but they are inexperienced and there are opportunities to make money. Processing speed and real time information means very little if you don't have tight money management and risk control which is the essential part of technical trading. Reading charts and picking entry and exit points is only one facet of it.

 

[lithium180]

Originally Posted by eidolon

Swing trading is popular (researching or trading stocks over a period of weeks to months, which is probably what you think of when you think of "playing" the stock market), swing trading works for plenty of people, but it's not really worth it without at least $20,000 in my mind (totally my own opinion, so don't take it as absolute).

I'd just recommend reading The Four Pillars of Investing and going from there, although the focus is retirement (as is the focus of A Random Walk, and most books that espouse the efficiency of trying to track markets). .

(Noob) Question: I assume you mean 20k per investment? Does this mean your portfolio should be composed of a couple hundred thousand before you start to do anything other than buy and hold investing?

I'm also putting together a short book list for myself on investing. My list includes:

1. The Four Pillars - Bernstein
2. The Secrets of Economic Indicators - Baumohl (to better understand economic news, conditions, how they superficially (or more deeply) effect markets)
3. Random Walk - Malkiel
4. The Informed Investor - Frank Armstrong

Another topic that I hope to build some understanding of is corporate finance. I plan to just use an MBA textbook for that.

I also regularly read John Mauldin's e-newsletter, which is free online and which was recommended to me by a former introduction to financial planning teacher. I have found it very informative. He covers a broad array of subjects and always takes care to explain them in clear language.

I am in the third month of working in my first job, at a pharmaceutical company, and I'm trying to use the information about biotechnology and the pharmaceutical research process that I gain day to day to build some sector specific knowlege. That way, when I research companies for investment purposes, I can get a better understanding of what those companies actually do and where they fit in to the bigger picture of their industries.

 

[untilted]

this is actually something i can advise on:

get Random walk down wall st by malkiel. don't bother with anything else. you don't need them.

follow malkiel's advice and put your money in a market index fund. hold it there until when you need to withdraw. in a mature equity market (like the one in US), very, very, very few investors (including mutual fund managers who study finance every day) can beat the market index benchmark (S&P for example) in the long run. You'll sleep soundly every night, and make more than everyone else. Buffet's one of the exceptions, so are the top hedge funds like citadel, d.e.shaw, SAC capital, etc. You are not them.

 

[untilted]

Originally Posted by gnatty8

Read books on technical trading before Malkiel? Now there's some sound advice. Technical trading is bullshit, always was, always will be. Now excuse me, I am late for my Flat Earth Society meeting.

i used to think technical analysis is bs too. not anymore. by not analyzing something everyone else analyzes, you are losing an edge. if everyone jerks off before trading stocks, you gotta jerk off before you trade stocks. So it's still BS, but it's very important BS (especially in foreign exchange market).

 

[untilted]

to anyone who suggested "security analysis" or "the intelligent investor" by graham, even graham himself acknowledged that his way of value investing no longer works well in the current market condition as the market has become more efficient.

i've read many PhD research paper on behavior finance (claiming market's not efficient), but at the end of the day, a casual individual investor won't make excess return without taking excess risk. what's good about market inefficiencies if you can't make $ from it?

 

[eidolon]

Originally Posted by lithium180

(Noob) Question: I assume you mean 20k per investment? Does this mean your portfolio should be composed of a couple hundred thousand before you start to do anything other than buy and hold investing?
No, twenty grand total. It's an arbitrary number, but in my mind it's a point where you start seeing returns that justify the investment of your time. I don't think you'll find much need to read both the Malkiel and the Bernstein books. Also, to be blunt, I would recommend you ignore most of the posts in this thread, or in any other thread discussing investing beyond the basics on any forum on the internet not regularly visited by financial professionals.