I have never been able to wrap a good definition around my intuition of behavior once understood is no longer effective. "Anti-inductive" is very interesting crystallization of this concept. Thank you for sharing this.

https://www.goodreads.com/book/show/106835.The_Intelligent_I...

The original split of 50/50 between stocks and bonds is prescribed by Ben Graham in his book the The Intelligent Investor, but he does keep it flexible.

Skunk Works

Intelligent Investor

Man Who Was Thursday

* The Intelligent Investor by Benjamin Graham

* Complications by Atul Gawande

* The Structures of Everyday Life: Civilization and Capitalism, 15th-18th Century by Fernand Braudel

A Guide to the Good Life - William B. Irvine

-Ben Graham, from chapter 1 of The Intelligent Investor

One Up on Wall Street by Peter Lynch

http://www.amazon.co.uk/dp/0060555661

tl;dr: Facebook lacks intrinsic value. Like most tech companies out there.

Isn't the top book on value investing "Security Analysis", and "The Intelligent Investor" is just the popular science alternative?

http://news.ycombinator.com/item?id=1241165

I would start by reading The Intelligent Investor by Ben Graham. If you like it, then move on to Margin of Safety by Seth Klarman. (I have a value investing bias.)

If You Can: How Millennials Can Get Rich Slowly - William J. Bernstein

And all of the sources referenced in it. The Intelligent Investor by Benjamin Graham is also a good one.

Also check out The Intelligent Investor, which is arguably Ben Graham's most accessible work on the topic.

- The book of secrets by Osho.

- Big Data Baseball by T. Sawchik.

- The Intelligent Investor by B. Graham.

[1] http://www.amazon.com/Intelligent-Investor-Collins-Business-...
[2] http://www.amazon.com/What-Learned-Losing-Million-Dollars-eb...

I found this edition helpful in that regard: http://www.amazon.com/Intelligent-Investor-Definitive-Invest...

Each of Graham's chapters is followed by another chapter of interpretation/reflection on his advice in a modern context.

You need a lot of context for what you’re seeing in your average quarterly. Perhaps start with reading something like The Intelligent Investor to understand fundamental analysis, then read them.

Calm, mature advice for investing that has stayed true for over 50 years.

http://en.wikipedia.org/wiki/The_Intelligent_Investor

I've been getting an interest in finance, so I've been reading this type of stuff, and maybe end up at a fintech company this year.

Graham's approach shaped Buffett's. Personally, I found The Intelligent Investor to be more clearly written than Buffett's letters. It more clearly left me with a framework for how to approach value investing.

The Intelligent Investor by Benjamin Graham

One Hundred Years of Solitude by Gabriel Garcia Marquez

The Hard thing about hard things

Thinking Fast and Slow

Origin by Dan Brown

I don't think he'd touch internet stock in general because it's here today and gone tomorrow.

My top book recommendation BTW would be the 4 Pillars of Investing by Bill Bernstein.

"An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative."

-Ben Graham, from chapter 1 of The Intelligent Investor

These give a good intro on equities.

If you don't already, open an IRA (Roth or traditional). Also, consider reaching out to a certified financial professional for guidance.

Discussion of the former here:

http://www.gyroscopicinvesting.com/forum

I mean, in "The intelligent investor" the author points out that lots of companies bury important information in side notes in their annual reports, that can totally change their attractiveness.

I wonder how easy is to check these things nowadays.

Though in Buffett's case he used to lose money in the stock market as a kid - he bought his first stock at age 11. He only really started winning there after reading The Intelligent Investor at 19. He kind of started writing his letters around 27.

Essentially -- unrealized losses don't matter unless they are uncover-able losses.

I just put everything in SPY and ARKK.

Origins of Form (Christopher Williams)

Starship & The Canoe (Kenneth Brower)

The Size of Lumber (Nicholson Baker)

Zen Mind, Beginner's Mind (Shunryu Suzuki)

Deschooling Society (Ivan Illich)

Moby Dick (Herman Melville)

Bolo'Bolo (P.M.)

Le Ton beau de Marot (Douglas Hofstadter)

Gaia: A New Look at Life on Earth (James Lovelock)

Mouse or Rat: Translation as Negotiation (Umberto Eco)

Neuromancer (William Gibson)

The Intelligent Investor (Benjamin Graham)

Don Quixote (Miguel Cervantes)

So I'm willing to bet you view this app very differently than someone who finds it on the App Store in a spur of the moment enticed-by-Wall-Street feeling, where it can be mistakenly thought as a get-rich-quick scheme. There's no education component to Robinhood

(This conflation between speculator/investor has been happening for a while, see "The Intelligent Investor" by Benjamin Graham.)

Don't read The Intelligent Investor, it will just put you to sleep. Realistically, you shouldn't be picking stocks on your own. You should just be putting money into ETFs that track the market and can help you diversify your holdings cheaply.

Look up a few of the key terms in investopedia like stock, bond, etf, etc. Then, either create your own ETF portfolio via an online brokerage account, or go with a robo advisor like Betterment.

Good luck!

+ Masters of Doom by David Kushner

+ The Millionaire Mind by Dr. Thomas Stanley

+ The Intelligent Investor by Ben Graham

+ The Essays of Warren Buffet by Lawrence Cunningham

+ Buffet by Roger Lowenstein

+ The Knack by Norm Brodsky

+ Plato and a Platypus Walk Into a Bar by Thomas Cathcart, Daniel Klein

+ The Return of the Great Depression by Vox Day

+ Capitalism and Freedom by Milton Friedman

+ Road to Serfdom by Hayek

+ Iacocca:An Autobiography by Lee Iacocca

One of my friends once asked me how the growth in cryptocurrency value i an unsustainable bubble when so many smart and math proficient people believe in it. This is a handy bit of Newton trivia to make the point that the intelligent investor is not necessarily the one with the best math proficiency but the one who understands and abuses market folly. When everyone goes right look if there's anything of value people might've missed to the left.

Going through my email order history also confirms this to be true (in my case) except for programming ebooks. Prices listed for my purchases are kindle prices in USD. I can't lookup the paperback price on my day of purchase but it would be higher otherwise I wouldn't buy the ebook.

May 2015 I bought The Hitchhiker's Guide To The Galaxy (book 1) for 4.99. Today kindle is 7.99 and paperback is 7.99 (also the ultimate edition paperback with all 5 in the series is 13.31)

May 2015 I bought The Intelligent Investor Revised for 13.99. Today kindle is 16.99 and paperback is 12.39

Jun 2015 I bought Mistborn: the Final Empire for 4.99. Today kindle is 8.99 and paperback is 8.92.

Jun 2015 I bought Soul of a New Machine for 9.99. Today kindle is 9.99 and paperback is 9.79

Aug 2015 I bought Snow Crash for $7.68. Today kindle is 13.99 and paperback is 13.15

And I can keep going but I think you all get the point.

From the introduction to that book:

"Our text is directed to investors as distinguished from speculators, and our first task will be to clarify and emphasize this now all but forgotten distinction. We may say at the outset that this is not a “how to make a million” book. "

and

" “An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.”"

Fred Wilson is in a very, very different space then Ban Graham was discussing in the Intelligent Investor.

I understand the idea, and I might agree. I just wanted to point out that in the book "The Intelligent Investor", there was the idea that you could think about investing into the second best player in a certain space.

I think the reasoning was that there is more opportunity for growth for a second-grade company than a first grade company. Maybe the first-grade company is not looking at the problem in an innovative way. I think it probably depends on the case.

I tried to look into "second-grade" in my copy but that's a term relating to stocks, and not the leaders of an industry.

Maybe I'm misinterpreting that book or misremembering it

Edit: By the way, good job on the successful investments! I wish I was as confident about my observations of different businesses.

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/25-calculating-the-value-... )

If you read those materials, you will learn how to invest and using the approaches set out in those books, I believe you can turn $100k to $1m.

The Intelligent Investor, by Graham, brings up the archetypical example of a doctor/dentist and his financial misadventures. His (or her) disadvantage is that they're obviously intelligent which pushes them to be overconfident in a field in which they have zero experience. Overconfidence breeds poor risk management and eventual trouble.

You missed the whole point of Security Analysis and Intelligent Investor(another Graham book). The market is irrational from time to time, so you patiently wait on the side when prices are overvalued and invest in fundamentally good companies when prices are undervalued.

As far as books are concerned I'd always fall back on 'The Intelligent Investor' by Ben Graham. Another handy book is 'One up on wall street' Peter Lynch.

Although investment runs concurrently with tax breaks. So if you find a good book informing on where the income tax credits and breaks are allowed etc. it would be handy.

The important thing in spending is to be unrestrained when it comes to a subject close to your heart. The best things come with a price to pay.

Read "The Intelligent Investor" or "Common Stocks and Uncommon Profits", which give examples of things companies did 50 and 30 years ago.

Speculating is about what you think will happen.

Buying stocks in a business is about buying into something that has shown to be profitable, and stable. Enough to exchange your hard-earned money for it.

Read "The Intelligent Investor" by Benjamin Graham to gain a better picture of what investing really is.

Since the author mentioned Gates, I do recommend just taking a look at books he actually read and reviewed as better recommendations: https://www.gatesnotes.com/Books

The book appears more intimidating (bigger) than it actually is. In reality it is a very enjoyable read. I suggest reading the commentaries that go with each chapter before reading the chapter. They explain Grahams theories with more up to date examples.

Chapter 8 is also an excellent commentary on why markets move. I definitely recommend this book to anyone interested in the stock market.

Now official inflation figures are still quite low (around 2.5% from Bureau of Labor Statistics [1], unless I'm reading it wrong or not looking at the right chart), but from personal experience I think these figures are being lowballed significantly. Compare for example the cost of buying a condo in a major city or the price of a cup of Starbucks coffee - both have easily outpaced a 2.5% increase.

[1] https://www.bls.gov/charts/consumer-price-index/consumer-pri...

Warren Buffet often cites it as his favorite book on investing stating, "picking up that book was one of the luckiest moments of my life”. I recall he decided to read it at least 10 times before making another trade, but I can't find the source. Human nature doesn't change, so that book is still relevant.

Otherwise the "Warren Buffet Way" is a modern take on the same theories.

For those who liked Malkiel's Random Walk, read:

* Ben Graham's Intelligent Investor

* Philip Fisher's Common Stocks and Uncommon Profits
They counter Malkiel's thesis (yup, he's wrong) and Warren Buffet credits both men for teaching him how to invest. True classics.

They're both quite good. Seeking Wisdom is more about mental models and getting better heuristics for quick decisionmaking and assessment of complicated things. Derek Sivers's notes on it are good:

http://sivers.org/book/SeekingWisdom

I don't know a great summary of Intelligent Investor to link to, but it's definitely recommended - it's a finance book so not beach reading, but it's light and casual enough and not too academic. It's as about as readable as you can get for a serious book on finance.

1. Never invest money that you can't afford to lose.

2. The value of an investment is always a function of what you paid for it.

The commonsense rules also apply to college. Students shouldn't choose colleges with lofty tuitions if their expected careers will have low ROIs. And the more they invest in college, the better their investments must perform.

"Warren Buffett and the Interpretation of Financial Statements: The Search for the Company with a Durable Competitive Advantage" (2008) [1], "Buffetology" (1999) [2], and "The Intelligent Investor" (1949, 2009) [3] are more investment-strategy-focused texts.

[1] https://smile.amazon.com/Warren-Buffett-Interpretation-Finan...

[2] https://smile.amazon.com/Buffettology-Previously-Unexplained...

[3] https://smile.amazon.com/Intelligent-Investor-Definitive-Inv...

Value Investing:
https://en.wikipedia.org/wiki/Value_investing
https://www.investopedia.com/terms/v/valueinvesting.asp

Currently reading:
The Intelligent Investor by Benjamin Graham,
A Guide to the Good Life: The Ancient Art of Stoic Joy by William Irvine,
Into Thin Air by Jon Krakauer

Edit: reformatted for clarity.

For more information, you could look at Benjamin Graham's "The Intelligent Investor". This is a very good introduction to investment, but it's also quite a long read.

2. As others pointed out, having an emergency fund set up and ensuring that you're taking advantage of all employer-matching and tax-saving benefits (both company and government). Different countries have different settings, so you could probably try and research those online, or ask someone you trust

3. Along with the Intelligent Investor, another book I found helpful was "A Random Walk Down Wall Street". This will help you understand ETFs and index funds

edit: If you're not in the US (or in a significantly well-developed economy), a lot of the advice in either of these books might not be as ideal as it would be otherwise. For example, in developing economies, beating of the index by reasonably knowledgable active investors is fairly common

4.

> Also, any resources for understanding index funds would be great. I know they are a basket of securities but I don't understand why they're traded on the stock market just like a stock

Index funds and Index ETFs are slightly different. Index Funds are not traded like a stock, Index ETFs are. Funds usually have a "Net Asset Value" which changes once per day. ETFs trade like a stock, and tend to fluctuate intraday.

5. Make sure you know what your investment temperament is, what your long-term goals are, and know all the mind games which you will play on yourself (not to mention the buttons the investment industry will try to push). Dan Ariely's courses and books can help a lot with understanding and minimizing irrational investment behavior.

Also, forgetusername's point on false positives remains critical. Breaking trend lines is only a useful if it's right most of the time.

My advice to anyone who wants to be an enterprising investor (i.e. put more time into investing and try to achieve higher returns) is to read Ben Graham's The Intelligent Investor. Instead of trading based on the emotions in the market, invest by choosing great companies that are bargains.

It's extremely readable and funny and covers most of the situations in real life where you can apply economic concepts to understand why something is the way it is.

Understanding why countries and economies grow (and why some grow faster than others!) doesn't always fall under the "economics" umbrella but is really useful for informing policy (and a useful reminder these days, when both US presidential candidates rail against trade agreements). "From Poverty to Prosperity" lays out a very readable and convincing argument for how countries have grown and become rich. https://www.amazon.com/Poverty-Prosperity-Intangible-Liabili...

For finance I very much enjoyed The Intelligent Investor, which also (apparently) inspired Warren Buffett's investing philosophy. https://www.amazon.com/Intelligent-Investor-Definitive-Inves...

They decide when to buyback and choose to do it at market highs. This is not sound management and is not in the interest of the shareholders.

I learned about it in a recent edition of "The Intelligent Investor".

Most executives are shareholders only during the brief moment it takes exercising their options. They are not shareholders in the investor or even trader sense.

The claim that this amounts to distributing dividends is also not true. Options which is most of what the executives are holding don't earn dividends.

"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-...)

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.

I am Marat, co-founder of wealthX.ai. I'm super thrilled to share with you the investing app Denys and I were building for past couple years.

Just like many folks in US and around the world, we are on our path to achieve financial freedom, by constantly saving and investing what we can.
We read a number of books on investing including a famous "The Intelligent Investor" and also doing research how value investing gurus, like Warren Buffett do the companies valuation and picking.

What we found, to be a passive investor is a pretty easy task. Invest in stock index fund or ETF like SPY or VOO and you should be good :).
But if you like to get a bit better results… this is where it does take a lot of your time and knowledge.
Doing analysis just for couple companies takes significant amount of time and involves looking at financial reports and making the calculations just to understand whether the company has healthy business numbers, not to mentioned if its stock is overvalued compared to the market price.
And we are talking hundreds if not thousands of potentially good companies out there that are traded publicly.

Being software engineers, we knew we could scratch that itch and build software that will be doing all the calculations for us daily and present results in an easy to follow recommendation list of what to buy, what to sell and what to hold.
That's how wealthX.ai was born.

Join us on our path of achieving financial freedom faster!
Check out wealthx.ai and let us know if you have any questions!

A very strong input into my book choices is reading the ‘classics’ in various domains. I will make frequent use of “Top 100 X books in Y” and “best X book of all time” queries.

I very much subscribe to the idea that selected books form a cultural and intellectual endowment of society to its members. Reading these selected books allows me to competently participate in society, as so much of our communication, institutional structure, and culture is downstream of these works. Examples of such works would be Shakespeare, Dickens, Silent Spring, The Intelligent Investor, Manufacturing Consent, Plato’s Republic.

1. The Intelligent Investor by Benjamin Graham.
2. Irrational Exuberance by Robert J. Shiller.
3. Thinking, Fast and Slow by Daniel Kahneman.

OK, here's advice anyway :). Please, please do diversify your investments across different classes of products ; Equity, Debt, assets such as Gold or land and so on.

The proportion may vary according to your risk appetite, but do diversify.

How to Read a Book - Mortimer Adler

How to Read Slowly - James Sire

The Personal MBA - Josh Kaufman

The Intelligent Investor - Benjamin Graham

Think and Grow Rich - Napoleon Hill

How to Win Friends and Influence People - Dale Carnegie

Intelligent Investor - I read this book around 15 years back and I am at a better place financially, partly due to it.

Road Bike - Bought one around 5 years ago. Best way for me to exercise and feel-the-wind-in-my-face. Finally, wife agreed to get one as well. Now we are riding together. Best feeling.

A Home - It's a double edged sword. Spending tons of time working on lawn and garden. Great way to connect to the roots. On the flip side, it's easy to get sucked into projects and not have time to pursue side projects.

https://www.ozon.ru/highlight/top-200-knig-po-mneniyu-chitat...

Of the Top-12, 6 to 8 are some form of a self-help book:

* 1st: The Subtle Art of Not Giving a Fck.

* 4th: Ben Graham's Intelligent Investor.

* 5th: A Russian-author book on the art of "convincing" & "influencing" people (sound familiar?).

* 6th: Another American book, "Radical Forgiveness: A Guide to Spiritual Healing"

* 8th: Seven Habits of Highly Effective People.

* 11th: Women Who Love Too Much: If Love is Causing Suffering. Also a US book.

* 12th: Atlas Shrugged. I suppose it's not a self-help book, but it's very much in line with the spirit of "open-your-eyes" literature.

* If you go down the list, there is a bunch of other titles like Rich Dad Poor Dad, the full set of Nassim Taleb's quasi self-improvement books, etc.

We can sort of argue whether some of these books are self-help adjacent or not (like Ben Graham or Nassim Taleb), but the trend is clear: self-improvement literature is very popular in Russia.

This shows that the self-help cottage industry is not limited to the US. I think people just like the idea of self-improvement.

edit: formatting

He also has unprecedented access to financial data of companies he may be sniffing around - not the garbage you and I see in SEC documents. (although 10q documents are treasure chests of company info for research).

If stocks have gone down, that's not the right time to sell. When stocks are valued much more by the market than you think is reasonable, then selling might be interesting.

Avoid transaction costs and other fees as much as possible.

If you really want to do it Buffett's way, go check Benjamin Graham's books (The Intelligent Investor and Securities Analysis) out of the library, read through the last 40 years of Berkshire Hathaway annual reports, and then start reading !0-Ks from the SEC's EDGAR database.

1) The Millionaire Next Door
2) The Intelligent Investor (must read!)
3) How to Get Out of Debt, Stay Out of Debt, and Live Prosperously
4) Your Money or Your Life
5) I Will Teach You to Be Rich (relevant to you at your age)
6) Why Smart People Make Big Money Mistakes, and How to Correct Them (short and sweet)
7) The Rational Optimist (not specifically about personal finance but a great read about behavior)

Hope this helps, and if you ever want to discuss personal finance in more detail feel free to reach out, love helping!

People tend to trumpet their winnings and not their losses and a shocking number of people don't actually know their rate of return.

I recommend Four Pillars of Investing by William Bernstein (http://www.amazon.com/The-Four-Pillars-Investing-Portfolio/d...). It has a lot of overlap with Malkiel's book and I recommend both of them.

Until you have read at least one of them I recommend you not start investing. The Intelligent Investor is a little optimistic and in later editions even Benjamin Graham admits that maybe active investing is not the greatest idea for most people.

The market does not do better because there are fund managers, it does better if the underlying assets increase in value. All the other fluctuations are based on expectancies of those assets and arbitration.

It is entirely possible for 100% of fund managers to do below the market average, as fund managers dont own 100% of the market.
It is also likely they have a losing bet against a market, as active fund managers employ resources in their operations, by trading and actively managing a portfolio, usually in the form of fees, and potential downsides on extra taxation as well.

Tracking "the winners" is the most fallacious and common attempt at gauging how good a fund manager or a stock is doing.
Bernie Madoff was one of the winners for decades. Past results give no expectation to the future, which is so misleading given that the most common tool to show the value of a stock is a chart of how it did before, as opposed to how the company is doing (which require reading the statement).

I suggest reading "The Intelligent Investor". It is by far the best book on this topic out there , and it has enough layman terms and concepts that are very easy to understand once you expose yourself to them.

Regarding the home purchase, consider loaning yourself the money from the 401k rather than paying someone else interest.

For stock investing (long term):
The Intelligent Investor - Benjamin Graham (Warren Buffets mentor!) or anything on 'Value Investing' such as https://www.investopedia.com/investing/warren-buffetts-inves...

For property investment I recommend these: https://www.somersoft.com.au/books.htm

Some of the tax and law details are particular to Australia but the overall strategy would apply anywhere with a few adjustments and calculations.

I just wish I had read these a lot earlier in life BEFORE I went into business for myself! :)

Best of luck!

Warren Buffet is cited as an example in this article. Sure he reads a lot, but most it consists of SEC filings and balance sheets. If you examine his quotes, you'll find he cites ONE book (the Intelligent Investor) over and over again. He read that one book, and LIVED it for decades. In my opinion, that's a much better goal than reading a book a week.

This is true for people who are buying as speculative investors and focused on short term movements in stock price.

However, that's not everyone by a longshot. There are plenty of people who buy for underlying asset value and dividends.

See, for instance -

http://en.wikipedia.org/wiki/Intelligent_Investor

Warren Buffet has said that The Intelligent Investor is the best book on investing ever written.

A fundamental tenet of value investing is that you're buying a small part of a business, not something separate from the business. Keynes is talking about buying stocks to speculative on short term price movements, which is risky and probably a bad strategy for the vast majority of people. But buying a share of a business that's fundamentally solid and priced attractively is rational, even if the business isn't currently popular.

(I've never been able to figure out how EMT believers manage to maintain their faith in the face of rather large market corrections and well-documented bubbles, but that's not exactly related.)

[0] http://geoffprewett.com/BookReviews/IntelligentInvestor.html

Off the top of my head, I would add:

* "The Way to Wealth," by Benjamin Franklin: https://www.amazon.com/dp/0918222885 (also available online for free; it's in the public domain) -- no-nonsense practical advice from a super-successful individual

* Warren Buffett's Letters to Berkshire Hathaway shareholders: http://www.berkshirehathaway.com/letters/letters.html (also available organized by topic, in a bound book: https://www.amazon.com/dp/1611637589 which some will find much easier to read)

* "The Intelligent Investor," by Benjamin Graham (specifically the chapters titled "The Investor and Market Fluctuations" and "Margin of Safety"): https://www.amazon.com/dp/0060555661

* "Influence: the Psychology of Persuasion," by Robert Cialdini: http://www.amazon.com/exec/obidos/ASIN/0688128165

Also:

* "Devil Take the Hindmost," by Edward Chancellor: https://www.amazon.com/dp/0452281806

* "A Short History of Financial Euphoria," by John Kenneth Galbraith: https://www.amazon.com/dp/0140238565

* "Extraordinary Popular Delusions and the Madness of Crowds," by Charles Mackay: http://www.amazon.com/exec/obidos/ASIN/1586635581

The Intelligent Investor - Warren Buffet's favorite

A Random Walk Down Wall Street for one perspective.

Mark Douglas books for a different perspective

Options Volatility & Pricing for the technical stuff.

And Inside the Mind of a Street Addict for the bathroom read.

Even Graham has said that for most people a low cost index fund is the way to go. Competing against a computerized/connected/inside information Wall Street is very hard and because of transaction costs (higher to the individual than the institution) winning stock trading strategies are non-trivial.

However, Claude Shannon (famous computer science guy) was a pretty good investor: http://en.wikipedia.org/wiki/Kelly_criterion

Fortune's Formula http://www.amazon.com/Fortunes-Formula-Scientific-Betting-Ca... details some of Shannon's methods and covers some other interesting stories like LTCM, Mathematician Edward O. Thorp's black jack schemes and later his creation of the one of the first "computerized" hedge fund.

Investing:
1) The Intelligent Investor - Benjamin Graham
2) Security Analysis - Benjamin Graham
3) Common Stocks and Uncommon Profits - Philip Fisher
4) The Little Book of Common Sense Investing - John Bogle
5) The Most Important Thing - Howard Marks

Economics:
1) An Inquiry into the Nature and Causes of the Wealth of Nations - Adam Smith
2) Where Are the Customers' Yachts: or A Good Hard Look at Wall Street - Fred Schwed
3) stuff by John Maynard Keynes (never heard him mention exact title)

Others:
1) Poor Charlie's Almanac - Charles Munger
2) Business Adventures - John Brooks
3) How to win friends and influence people - Dale Carnegie

Then there are some things I've never heard him explicitly recommend but I think are definitely worth reading:
1) Letter to shareholders (all of them, you can find the ones of his partnership and earlier ones online)
2) The Snowball - Alice Schroeder
3) Tap Dancing to Work - Carol Loomis
(There are tons of books on Buffett, but these two are friends of his)

Also, if you ever go to his shareholders meeting, there's a whole list of "Buffett approved books". Some that I can remember from this years meeting (other then the ones mentioned above):
1) all of them found on https://www.poorcharliesalmanack.com/
2) Dream Big - Cristiane Correa
3) a bunch more that I cant remember

Finally on his investing, he has laid out a bunch of times what he believes is best for ordinary people who aren't going to devote most of their time to investing namely, buy a low cost index fund (he recommends Vanguards, I believe it was this one https://personal.vanguard.com/us/funds/snapshot?FundId=0540&... )
I'm not quite sure why so little people (that I know) listen to him. It seems that people want to show that they can outperform the market, but rarely do.

I recommend basically reading books by:

Peter Lynch, Phil Fischer, and then chapters 8 and 20 of the Intelligent Investor. The book, Applied Value Investing, is also a pretty good place to start that actually does a lot of things well, combining both theory with practical case studies.
-Reading the Buffett Partnership letters (not the Berkshire letters) is very helpful for someone managing small sums of capital, say below $10M

In addition, you need to read and learn about financial accounting and valuation. John Tracy's How to Read a Financial Report is a good starter... for valuation Aswath Damodaran has a pretty good book that can be combined with McKinsey's book on the subject. Beyond that, some more advanced accounting books, especially forensic stuff is great to know. Financial Shenanigans and Creative Cash Flow Reporting are where I'd start with that.

To be really good you also need to read quite a bit about psychology/mental models. Look for speeches/lectures by Charlie Munger. Books like Stock Market Wizards/anything that contains a ton of interviews with investors are also great. Reminisces of a Stock Operator is pretty good for giving you an account of the ups and downs that come with investing -- the guy the book is based off of blew his brains out. Studying financial history is also a must, especially with learning about prior bubbles.

Finally, you just have to commit to reading a whole lot, every day, and becoming a learning machine.

I'll assume that's your question in this response. Unfortunately there isn't a straight-forward answer, everything (precious metals, stock market, bonds, etc.) is more volatile than holding cash, but your cash is guaranteed to go down in value over time due to money printing, so you get screwed if you do nothing.

There are too many permutations and personal situations to offer a one-size-fits-all solution, but I'll offer some general guidance.

If you're just starting your career, and don't have much to invest, you should just focus on becoming the best in your field, take advantage of any retirement matching that your company offers, and invest it in low-cost broad market index funds (like Vanguard's S&P 500 Index Fund VFINX is one example). Most people who don't have very much money worry about what to do with their money when they would get much better returns just by focusing on improving their skills!

If you have money to invest, you should read about value investing, I'd start with The Intelligent Investor by Benjamin Graham. Even if you don't want to manage your own money (and most people shouldn't unless it's going to be their full-time job), it will give you a great foundation for understanding the financial markets and how to evaluate people who you select to manage your money.

Atlas Shrugged - Ayn Rand. Love her or hate her, she makes you think.

The Hard Thing About Hard Things - This is a great book about building businesses, and business in general.

Capital in the 21st Century - One of the greatest books about economics and capital written ever - let alone in the last decade.

The Intelligent Investor - This is Buffet's favourite book, and regardless of how many times I read it, I still learn more. One can never digest it in full.

Predictably Irrational - This excellent tome makes behavioural economics digestible outside of economics. It's enlightening, though provoking, and turns several accepted truths on its head, purely by being written at all.

Nexus (Ramez Naam) - This science fiction book explores transhumanism and would it could mean in the near future. It's both light and pulpy, but at the same time makes you think about the outcomes of technological progression.

> There are two ways to be an intelligent investor:

-by continually researching, selecting, and monitoring a dynamic mix of stocks, bonds, or mutual funds;

-or by creating a permanent portfolio that runs on autopilot and requires no further effort (but generates very little excitement).

> Graham calls the first approach "active" or "enterprising"; it takes lots of time and loads of energy. The "passive" or "defensive" strategy takes little time or effort but requires an almost scientific detachment from the alluring hullabaloo of the market. As the investment thinker Charles Ellis has explained, the enterprising approach is physically and intellectually taxing, while the defensive approach is emotionally demanding.

Later, Zweig goes on to say that if you must, restrict yourself to speculation with at most 10% of your assets.

> For better or worse, the gambling instinct is part of human nature--so it's futile for most people even to try suppressing it. But you must confine and restrain it. That's the single best way to make sure you will never fool yourself into confusing speculation with investment.

"The Intelligent Investor" wasn't helpful to me at all, and I could actually understand what he is talking about, having a heavy background in finance.

P.S. a college degree or being a CFA won't help, from personal experience, though every other finance grad claims it will. The moment I started doing fundamental analysis is the moment my portfolio went to shit.

Helpful tl;dr: "index funds".

I see a lot of people here recommending A Random Walk Down Wall Street, which is a good book, but you're going to finish it and say "This investing stuff is too complicated for me. I think I'll just put my money in index funds." Which is perfectly sensible investment advice, but if that's all you want, I can tell you "Go invest in index funds" right now and save you a couple hours of reading. ;-)

Jeremy Siegel's Stocks for the Long Run is like Random Walk - it's decent, but the conclusion is basically "go invest in a stock index fund and don't worry about it". I'm not even sure that's great advice right now - he bases a lot of his argument on historical performance, but when an asset class has done well over the recent past, that usually means it'll do poorly in the near future. Read neither or both - Random Walk gives you good perspective for understanding Stocks for the Long Run.

Finally, if you do get into investing, make sure you start small. I've made some wonderful investment decisions and some truly terrible ones. The wonderful ones more than compensated, but they looked very similar at the time, and if I'd put all my money into the terrible one there wouldn't be any capital available for the wonderful one.

Actually, I'd recommend doing some dry-runs: pretend that you're putting money in a stock, and then track how well you'd have done over time if it were real. Read all the 10-Ks for the stock (they're up in the EDGAR database at the SEC's website), research all the fundamentals, and listen to the analyst conference calls (Yahoo Finance webcasts them live whenever earnings come out). That'll give you a sense of what questions to ask and what events affect the stock price.

I did some of those dry runs and lost hypothetical money on a lot of them, which makes me very glad that they're just dry runs. ;-)

The New Solution Selling -- The first sales book I ever read and extremely enlightening. It demystified much of the sales process for me.

The Intelligent Investor -- Timeless ideas on investing.

Steve Jobs -- I had no intention of reading this book but found it incredibly interesting. Very insightful.

The Intelligent Entrepreneur -- This book followed 3 HBS grads from pre-HBS to entrepreneur success, and attempted to draw some overarching conclusions on what it takes to be a successful entrepreneur. Very interesting.

Name of the Wind -- The only fully fiction book I read this year. Great book. Waiting on the 3rd to come out before I read the second in the series.

Dreaming in Code -- I'd heard great things about this book but I felt it was very lacking in insight. Some interesting moments but overall a disappointment. Perhaps it is because I read it after ~6 years of professional programming experience + 4 years of school + a number of other programming books?

Teaching Minds -- Roger Schank's latest book on education. In this one he outlines key cognitive abilities that education should be centered around rather than subjects. Very interesting.

A Concise Guide to Macroeconomics -- I had read very little macroeconomics, and this book provided a very readable and quick guide on the basics.

Bounce (by Matthew Syed) -- Great book about how great performers became great performers. This goes back to the nurture vs nature debate, and sides very heavily on the nurture side. Syed was an olympic ping pong player from the UK.

The Willpower Instinct -- I'm still reading this one (with my wife), and find it to be unbelievably insightful. If you have any desires to change any habits or behaviors, this book is incredible.

The Innovator's Solution -- The book after The Innovators Dilemma. Very insightful, just like the previous one.

I've started to read the 'classic' books (The Intelligent Investor for example), and will probably do some paper trading before I jump into the 'real' thing

But, if you want to invest some more time and take additional risk (and maybe better returns) try reading some books. Peter Lynch's - One Up on Wall Street and Benjamin Graham's - The intelligent Investor are two good ones to start with. These will give you a solid platform on stock selection.

But as for why you might drop something easy for something harder, it might be as simple as that before you learned how to play the piano, it was hard. But as you learned the fundamentals of how to read music and play, it became easier and the guitar might be new territory that is hard because you haven't learned it yet- so it's exciting fresh territory.

Another situation where I might quit is if I reached something really hard and I don't think it's worth the effort to get over the hurdle. I think this is usually what makes people quit or avoid learning something new. I personally have learned that I am more likely to quit if I'm not at the right skill level. For example, I picked up The Intelligent Investor, skimmed the table of contents, found a topic I was interested in, flipped to page 300+, and I had no idea what the author was talking about, probably because I skipped the first 300 pages.

I think when people try to move too fast beyond their skill level (intentionally or unintentionally), they end up hitting a barrier because they're missing prerequisites. Then they're more likely to quit because they start to wonder if they're stupid rather than realizing they just didn't learn all the previous steps that were required. And no one likes to feel stupid so they quit and do something that makes them happy and feel smart.

Depending on how you define "are into", this could be argued as empirically wrong. A study done by the editor of the updated edition of Graham's "The Intelligent Investor" shows that the Forbes 400 (400 Richest Americans) only had 68 members who stayed on the list from some time in the 1980 to the early 2000s. The author calculated the return required to stay on the list and it was approximately 4.8% annually, which is very reasonable with their level of resources.

Due to these results (only 68 out of 400 richest people staying in that position), you could say that billionaires are NOT into preservation of capital, when making 4% annually is not even accomplished.

The hypothesized reason for these results is that most billionaire's fortunes are tied to one or two major companies/investments. Fluctuations in business over time eventually devalue their investment in the single entity. If they really cared about "preservation of capital", they would liquidate more of their stakes when one company made them rich then diversify their holdings.

Apologies for the vague dates. I am at work and do not have the book handy, but just read that passage 48 hours ago. If someone replies that they want more specific numbers and references, I can update this post in 10 hours.

Reference: http://www.amazon.com/Intelligent-Investor-Book-Practical-Co...

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.

Specifically, CFA Level 1 textbooks are among the best introductions to finance and economics I found. You don't have to sign up for the CFA exam$, the textbooks can be bought separately. CFA might not be as fun reading but are a very practical foundation (and will help put future readings in context).

You say you hope to get into finance but don't know almost anything about it. How did you decide to get into finance without knowing much about it?

I enjoy it but it's not for everyone. Finance is also huge. Economics is less relevant to finance than many realize (most roles do not require having studied econ and Goldman's CEO recently called the firm a "tech company").

May I humbly suggest, prior (or in addition) to spending precious time reading finance/econ books, speak to a few people who work in finance and read finance sites to get a better feel for it.

Books can be amazing, even if just read for intellectual curiosity, but they take a long time to read. There are other ways to learn which are quicker/more relevant to you vs. entire books.

Lastly, one "must-read" book is The Intelligent Investor by Ben Graham. The revised edition with notes from Jason Zweig is excellent. The industry is still obsessed with the book ~70 years after it came out and for good reason. Even if you disagree with it or think it's outdated (and many do), the book comes up so often it's worth reading to be in the loop.

CFA Program: https://www.cfainstitute.org/programs/cfaprogram/Pages/index...

TII book wiki: https://en.wikipedia.org/wiki/The_Intelligent_Investor

*This is my first HN comment. Apologies for any noob mistakes.

- Godel Escher Bach: An Eternal Golden Braid by Douglas Hofstadter

- Language, Truth, and Logic by A. J. Ayer

- Thinking in Systems: A Primer by Donella Meadows

Books that serve as investment philosophy guides for those who've developed a habit of saving money but are looking for the "next step" in building more wealth. From the mind of one of the greatest investors of all time:

- The Intelligent Investor by Benjamin Graham (get the annotated version with an epilogue written by Warren Buffett!)

- The Essays of Warren Buffett: Lessons for Corporate America

A book that discusses what matters most in your life from a resource-allocation, measurable results standpoint (family, etc.):

- How Will You Measure Your Life by Clayton Christensen

A book I read 10 years ago that forever changed the way I manage productivity and organization both at work and in my personal life:

- Getting Things Done by David Allen

Books that show that our universe is just as crazy, if not crazier, than science fiction:

- Black Holes and Time Warps: Einstein's Outrageous Legacy

- Quantum Chance: Nonlocality, Teleportation and Other Quantum Marvels

- ..and so on with intersecting topics!

Not to mention, I love trying to have as deep an understanding as I can by reading highly technical textbooks on cosmology, gravitation, and quantum physics.

I cant recommend a budgeting one but would recommend bogleheads, as suggested by liamcardenas. Another book worth reading, although heavier is the Intelligent Investor. I read the annotated version and its similar advice to bogleheads. If you really get into investing read Warren Buffetts shareholder letters

Especially the last one opened my eyes a lot about how to approach investing. I have the revised edition from 2006, though the original publication was in 1949. The 2006 edition has a section after each chapter discussing how the original chapter fared in the decades after publication. Without exception, the lessons discussed in the book from the 1929 recession and earlier turned out to have been very applicable in the dotcom crash of 2000, the "black monday" crash of 1987, etc. It really shows how most things are nothing new and gives a lot of perspective on the markets.

Reading up and understanding how the stock markets work can take away some of the pressure. Finally, there is no rule about having to start big or small. If it makes you feel better, start with $500 and see how it goes. The sister comment by "ForHackernews" about starting with a diversified index fund is good advice (and probably what you'd conclude anyway after reading the books).

Back when companies tended to have a lot of physical assets (relative to their overall value) that tended to depreciate slowly, that might have been easy to calculate. For a company that participates in the information or service economy, though, virtually all of their value is tied up in intangibles, and about the only physical assets that are likely to have any value at all after a few years are the office furniture.

Graham, Benjamin and Jason Zweig (2006) The Intelligent Investor, revised ed.

I would also suggest the following books, which offer more in-depth analysis of financial markets and securities:

Henwood, Doug (1997) Wall Street: How It Works and for Whom

Lynch, Peter and John Rothchild (2000) One Up on Wall Street, 2nd ed.

Mishkin, Frederic (2018) Economics of Money, Banking and Financial Markets, 12th ed.

Books on Wealth

    1. "Rich Dad Poor Dad"
     and find out exactly why someone becomes rich.
    (if you like this one, at some point you may also
     want to quickly scan through "Cashflow Quadrant
     Rich Dad's Guide to Financial Freedom".)

     2. Also "chapter 6 - How to make wealth"
     from "Hackers and Painters's chapter 6 - "

     3. "The Way to Wealth by Benjamin Franklin"

    1. Peter Lynch's One Up on wall street
    2. The Intelligent Investor  (Ben Graham)
    3. Common Stocks and Uncommon Profits
    4. Security Analysis (Ben Graham)
    5. The Warren Buffet Way is a famous business read not exceptional but read it if you have some time left
    6. A Random Walk Down Wall Street (Read it for a good laugh)

    1. AA- The Motley Fool Money Guide
    2. How Gerge Soros Knows What He Knows
    3. Investing Online For Dummies
    4. Malkiel Burton - A Random Walk Down Wall Street
    5. Cracking the millionaire code
    6. Joel Greenblatt - You Can Be A Stock Market Genius

Disclaimer: I work there!

Aside from that, I'd also recommend the previously mentioned Ray Dalio economic machine video, Benjamin Graham's Intelligent Investor (for understanding value investing) and Black Swan (for an alternative insight into tail risks such as the one we're going through)

The best advice I have ever been given: Just ignore the market noise. Invest in a broad ETF and stay in for as long as you can, don't look at your balance until then (which I still do).

To summarize the first two (very roughly): The market isn't perfect and there are a lot of undervalued companies that are great. You have to find these companies at a significant discount to what they are really worth, and then you have to be patient enough for everyone else to realize their error.

The third would IMHO be more geared towards someone that wanted to be a professional. Fisher talks extensively about ways to interview management/competitors/clients for information not found on a balance sheet, and prefers to look for new technology companies with huge potential upsides. He admits himself that most of his success was due to a half dozen huge wins in his entire life, and he tries to document how to find such wins.

Realize that with Buffet's reading list you are going to end up wanting to invest like Buffet/Graham/Fisher, which means patience and a lot of due diligence on what you buy.

If you don't have 100 hours a week to research/interview prospects, Buffet and Graham would both recommend that you set a good allocation and buy index funds. Fisher would probably tell you the same, as he makes it very clear that he never buys a single stock without knowing the company like it was his own (which often included knowing the management on a first name basis).

And remember, the key to allocation-based investing is rebalancing, so you periodically lock in gains and don't get overly concentrated in one thing over time.

Therefore there must be different models because people want to predict different things. And of course neither of them is how things really work.

"this is not how X works" doesn't need to be said, because yes that's the idea of using models. Otherwise you wouldn't use models.

"this is not how it works in principle" assumes that there is no model that would claim previously said statement. And since you can create unlimited amounts of models of course you can very often construct a model where the statement works.

I suggest instead of claiming such a thing it might be more interesting to think about how such a model would help more or less to predict things.

PS: I believe The Intelligent Investor or how that book was called and a social model called Communism are both promoting models that connect use-value to price-value. So it's not even far fetched. It's a very common thesis for discussing pricing of investments.

That doesn't fly when you only want to make a living doing what you feel is fun. Not everyone wants to become a titan of industry. The brass ring resizes to fit many hands, not just really big and ambitious ones. "Go big or go home" is a philosophy for some, but not for all.

Put it another way, the chances of injury when swimming in the shallow end are minimal compared to swimming with sharks in the deep end. Sure, that's where Zuckerbergs and Brins and Ellisons all swim, but not everyone wants that headache.

"but do it with a great product that you believe in, not with bs e-books and movie quote soundboards."

First off, you're quite presumptuous in saying his e-book is "bs". Would you call "The Intelligent Investor" by Benjamin Graham a "bs e-book"? All it does is dole out advice on value investing that even Suze Ormann dishes out every day on her CNBC show for free. Why would anyone buy Graham's "bs e-book"?

And, one person's "crap application" is another one's "purchased/downloaded application". FWIW, I despise television shows like "American Idol", "Tosh.0" and "The Jersey Shore", but that doesn't mean that the producers of that show don't believe it. They know people are watching it, so they proudly produce and air it. If kreci made crap apps, no one would download it. But download they do.

With the preponderance of apps out there, what's the harm in creating a few yourself and having a go at it? "Polluting" the market? So, you would rather app stores go back to the featurephone style of curating a "market" of only 100 games and 100 utilities all costing $10 each and 3 dollar ringtones.

Two that I liked and still refer to from time to time are How to Read a Financial Report by John A Tracy and Financial Statements: A Step-By-Step Guide to Understanding and Creating Financial Reports by Thomas R Ittelson.

I think the article missed the point though -- net worth isn't about liquidation price so much as the cost of getting to your position at a given moment... which forbes seems to have done a decent job calculating...

As Buffett got more money, Berkshire Hathaway became a conglomerate, rather than a fund. Berkshire Hathaway owns outright eight insurance companies, including GEICO, which is where Buffett originally got rich. They own the Burlington Northern Santa Fe Railroad, which is most of the railroading west of the Mississippi. Dairy Queen. See's Candies. Fruit of the Loom. A bunch of furniture chains. Acme Brick Company. Boring, important companies that have been around for half a century or more and make useful stuff, and money.

Berkshire Hathaway doesn't trade much. They just study companies, pick carefully, then buy and hold, forever. They do sell occasionally, as the world changes; Berkshire and Hathaway were US-based textile companies, and that industry is dead in the US.

I started the same journey a few years ago, and looked at every approach under the Sun. The only one that made sense for me was value investing.

Since figuring that out, I never looked back. Remember "trading" is not the answer. "Investing" is.

To start off, here are the books I would recommend:
1. The Intelligent Investor by Benjamin Graham
2. F Wall Street by Joe Ponzio (Get a taster here: http://www.fwallstreet.com/article/25-calculating-the-value-...)
3. Security Analysis by Benjamin Graham

Feel free to shoot me an email if you have any questions. Email is in my profile.

So if what I just wrote is somewhat true, the commonality between Cambridge Analytica and teens preferring Snapchat to Facebook is actually privacy or lack thereof (perceived or otherwise).

As for mass exodus - Hotmail, MySpace, Flickr, Yahoo... Where does one draw the line - is Facebook invincible?

I believe that more people care about privacy than they themselves realise. It's only a question of how much it'll take for patience to be tested. Keep in mind that easy-technology (the iPhone) has only been around for hardly more than 10 years; a lot of "non-geeky" people are still learning the ropes of how to balance their digital and physical lives.

Also don't forget that this is only one piece of bad news that Facebook has had of late. We're still wondering how useful online advertising really is, and how often it's gamed by ad click-fraud, etc. Aside from that, I can't comment on where FB's share price might be at any future point from now; not that I should even care.

Edit: With reference to big companies and which ones can eventually fail, I recommend reading Benjamin Graham's "The Intelligent Investor".

Fooled By Randomness - Taleb

The Black Swan - Taleb

Antifragile - Taleb

When Genius Failed - Lowenstein

Liars Poker - Lewis

The Big Short - Lewis

Flash Boys - Lewis

Too Big To Fail - Sorkin

Against the Gods - Bernstein

One Up On Wallstreet - Lynch

The Intelligent Investor - Graham

Maxims - Epictetus

The road to serfdom - Friedrich Hayek

De officiis - Cicero

De divinatione - Cicero

Lives of eminent philosophers - Diogenes Laertius

Confessions - Al ghazali

Illiad - Homer

Odyssey - Homer

Influence - Robert Cialdini

Guns, Germs and steel - Jared Diamond

Poor Charlie's Almanack - Charlie Munger - 2nd reading

Andrew Carnegie's Biography - Joseph Frazier

Fooled by Randomness - Nassim Taleb - 2nd reading

Bed of Procrustes - Nassim Taleb

Never Split the Difference - Christopher Voss

The intelligent investor - Benjamin Graham

Autobiography - Benjamin Franklin

I always remember this quote:

"In my whole life, I have known no wise people who didn't read all the time -- none, zero." Charlie Munger

Warren Buffett is, next to Taleb and a few others, my favorite modern thinker, and the clip seems to do him justice. It's ironic how his ideas are so simple they can be accurately presented in cartoon form. It's like reading the Intelligent Investor: business/investing isn't too complex, the hard part is executing on simple premises while keeping your emotions in check for the long term.

1. From The Intelligent Investor by Benjamin Graham: "An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative."

http://www.amazon.com/Intelligent-Investor-Definitive-Invest...

2. From Mr. Buffett on the Stock Market: "The definition is simple but often forgotten: investing is laying out money now to get more money back in the future -- more money in real terms, after taking inflation into account."

http://money.cnn.com/magazines/fortune/fortune_archive/1999/...

In this thread I've seen 'day trade', 'don't day trade', 'index funds' , 'don't do index funds'. Realise that all this advice is contrary, and only applicable to the specific people providing it. What matters is finding something compatible with your belief system, not twisting your mind to try and accept somebody else's belief system. Because when the pain and stress arrive, if you're not fully aligned with your strategy, then you're going to make the wrong choice.

Once you've decided you're going to put some effort in, then you need to work out a strategy that aligns with your personality. This needs to evaluate things like:

- your risk tolerance

- your expectations of returns

- your starting capital

- your analytical skills

Everyone is different, and the only people who succeed are ones who find an approach that works for their personality, and then take the time to get rid of their mistakes.

As for books, here's what I recommend:

- Intelligent Investor by Ben Graham - the take away in this book is the 'margin of safety' concept

- Trade your way to Financial Freedom by Dr Van Tharp - the take away in this book is that active management by position sizing and risk setting dictates more of your return than your actual strategy.

- Market Wizards, The New Market Wizards and the Stock Market Wizards, all by Jack Schwager. These books are all a series of interviews with top traders in commodities, currencies, funds, stocks and probably something I've forgotten. By understanding how an incredibly diverse set of traders have made astounding returns in the same markets should make you realise that there is no one approach that works, there are only approaches that work for specific people.

Good luck, and pray your first trade is a failure, not a success. Because you need to learn the pain of loss and how to minimise it before you taste the sweetness of profit.

Do not enter the market, right after you finish a few courses, you will just be chewed up and spit out, and find a book called "A Complete guide to Day Trading" by "Markus Heitkoetter" it is plain and simple with lots of examples, and put "the Intelligent Investor" away for six months at least, that is a good book but is not for now.

I Started three years back when i was in engineering final year, and went on to get the certification as a derivatives and equity trader from the regulatory body.

Good Luck

If you've read Security Analysis or Intelligent Investor by Benjamin Graham (also from Columbia), this shouldn't concern you. Even the conclusion from the paper is that "there is no emergency requiring immediate, poorly-considered action." The day-to-day micro trades of a HFT firm bear little consequence to the long-term performance of a security. What should concern you is Mr. Market[1]. Mispricing of securities (i.e. from a poor earnings report, sell from an instituitional index fund because it dropped from a large cap to a mid cap, etc.) and the inefficiencies of irrational trades create opportunities for investors, even for the individual investor.

In a bull market like our current one that is going over 6 years strong, it's hard to find that value (and even then, if you don't have time to learn investing, you're still best off holding a broad, low-cost, tax-efficient index funds in stocks and bonds), but it still exists. And it's not being exploited by HFT or Institutional pollution. You just have to know where to find it.

[1] http://www.investopedia.com/terms/m/mr-market.asp

What 'old yellow book' is that? As far as I know, Buffett hasn't written a book. You might be thinking of The Intelligent Investor; he's written the introduction for an edition of that one.

Regarding your larger point: I don't think anyone claims that the entire recession was due to the fact that loans were made or homes were bought. The recession was due to the prices at which these activities took place. It's not hypocritical to say that, for example, GE was overpriced at $30, but it's cheap at $10.

And I would take issue with the idea that the current crisis is due to anything 'selfish'. It's centered on a highly subsidized market, which was designed to give people homes, not make the government rich. The fact that this well-meaning behavior backfired so dramatically is only obvious in hindsight, or to anybody who reads much history at all.

Also, there are "safer" / "more classic" way to buy such puts, gold bullion works wonders in times of severe disruption, and I don't think it's unreasonable to commit 5-10% of your capital to gold, almost regardless of personal situation and net worth levels. Of course you never know when the next "Executive Order 6102" happens, but there's kind of no good solution for that :(

(all of the above are personal opinions, feel free to disagree as much as you like)

My personal projects are sort of stagnant but I'll occassionally try to tinker with Rust, hone my front end skills or just dump more hours into real work.

My guitars probably annoy my neighbors as I slowly start to increase the volume on my amp that much closer to 11.

I saw my brother after 2 months and a friend after 3. Dating just stopped in all forms (e.g. virtual).

I'm reading The Intelligent Investor by Benjamin Graham and taking "stock" in my overall investment strategy and just trying to be more aware.

Been asking myself what I really want as a dude with over 23 years of IT exposure, living by himself. The life questions really have become more prominent during this time.

Lost my ex-brother in law who I really got along with. He died suddenly of cardiac arrest due to stress. He was 33 yrs old. 10 yrs old when he came to the US. It hurts a great deal thinking about that, but it forces me to ask some serious questions about what I'm doing with my life.

(Really, sometimes I think that money managers would do well to read Benjamin Graham's The Intelligent Investor and nothing else. Many of the complicated mathematical stuff - which my employer makes a business of selling - actually hurts your performance in the long run.)

There's a lot of money pumping into the market by central banks. Markets are no longer free. Central banks manipulate their markets. With these kinds of manipulations, we get diminishing returns. Let's say the economy gets back on its feet. Where does it get the leverage to invest? We're overloaded with debt. The interest rate is probably 0 or negative at that point.

We have now, certainly, and now is amazing. But we have the past, too; at least for a while (dementia and all sorts of other things can rob us of the past). We have the future, too (though we can be robbed of that).

I live for all three. The past is where I draw from to inform my present actions; the present is where I enjoy myself and prepare for the future; the future is where we're all heading.

If I lived for the now, I wouldn't be going to college. I wouldn't be planning to study for a PhD in Neuroscience and researching assistive brain/spine implants. I wouldn't study programming languages and designs. I wouldn't be reading The Intelligent Investor. In fact, if you lived for the now, you'd probably be living in a soma-induced haze à la Huxley's Brave New World: it'd be the optimal choice, in fact. Pure neurochemical bliss.

The argument that you should live for now because you could be dead at any second is obscene, to me: it's more likely that you live than you die, and you're likely to be consistently happier now and in the future if you act like you'll be alive in the future. Evidence: planning for retirement. Seriously.

So live for yourself, sure, but live for all of yourself. Think of yourself as a smudge on a timeline: not in one place, not just in the past, not just in the future. Optimize the smudge.

Rule 2 just emphasizes this.

IIRC 'The Intelligent Investor' has graphs of various scenarios above. This is just my understanding though, I don't remember it being explicitly stated.

The first time I read this I thought, ok, that a sounds cool but does it really mean anything or is it just meant to be catchy, but now I think I get it.

Also, I remember reading (I think it was one of his old letters to shareholders[2]), I remember him stating that if there is a year in which a year in which the DOW loses 40% and his portfolio loses 20%, and another year in which the DOW gains 30% and his portfolio gains 30%, he would consider the first to be a better year.

[1] http://en.wikipedia.org/wiki/The_Intelligent_Investor
[2] http://www.berkshirehathaway.com/letters/letters.html

And this talk by Charlie Munger on stockpicking and the art of worldly wisdom:
http://ycombinator.com/munger.html

The two major mental models which I've found helpful in understanding the market are the Efficient Market Hypothesis (EMH; http://en.wikipedia.org/wiki/Efficient_market_hypothesis) which explains how the market acts under idealized conditions of rationality. Temper this with learning about Behavioral Economics (http://en.wikipedia.org/wiki/Behavioral_economics) which covers issues of human perception and how us semi-rational beings actually act, such as perceiving a loss of $100 as twice as painful as a gain of $100.

The Intelligent Investor by Benjamin Graham is a wonderful book, but reads densely. In more recent editions contains thoughtful side commentary by Jason Zweig which help break up the text and give a more modern perspective. A key idea is the separation between investing and speculation: set aside some percentage of your portfolio for speculating, and experiment with it, but investing for the long-term is the way to go in the absence of something which allows you to escape the financial gravity of the efficient market.

A Random Walk on Wall Street by Burton Malkiel covers efficient market theory thoroughly. The Intelligent Asset Allocator by William Bernstein for approaches to constructing long-term portfolios.

Lots more to say on this issue, but hopefully some of these starting points will get you thinking.

Long term is the way to go, IMHO. It is nearly impossible to predict short term price movements. Also, forget the efficient market hypotheses; if the SP500 can go up 5% one day and down 5% the next it's obviously bogus. You can count on the average stock owner to be either overly optimistic or overly pessimistic (and not just a little bit). Do you homework first and keep your head.

Find companies with business models you can understand: how are they making revenue, what are their costs, what are their risks? Use discounted cash flows (i.e. NPV) to find a fair market price (P/E is good rough estimate). Be very conservative when doing this, especially with regards to expected EPS and growth. Double digit growth cannot be maintained and generally high growth companies are overvalued. Most libraries have S&P reports that you can study for free (good for EPS data although take it with a grain of salt). Some discount brokers also offer stock reports. Note that analysis recommendations are usually bogus but it doesn't hurt to take note.

Index funds are a good way to diversity but watch out for fees (I like Vanguard, especially their ETFs) and too much portfolio turnover (some are just badly designed). However, it's my opinion that you can do better than the indexes with a little common sense (see above) and if you can stomach the extra risk. Stick to large cap stocks because they are more liquid and less susceptible to insider information. It doesn't hurt to look at insider activity (although note the effects of stock options).

$2000 is not much money, probably not enough to start messing with individual stocks. I would stick it low fee, value ETF and forget about it. $10,000 is probably a more reasonable starting amount, say 25% in high-grade bonds, 25% in a index fund, and 50% in individual stocks of your choosing (say 2 or 3).

I don't know about he level of your economic and financial sophistication, but just to get your feet wet, skim the following:

The Handbook of Financial Instruments, Frank Fabozzi, editor. A bird's eye view of what is out there.

The Intelligent Investor, Benjamin Graham. The book the created the Value Investing philosophy, by Warren Buffet's teacher. Buffet was the only student in that class to get an A+.

Financial Statement Analysis, Fridson and Alvarez. How to read corporate reports and papers; whatever the CFOs want you to see,.

The Secrets of Economic Indicators, Bernard Baumohl. How to read the whole economy's report cards.

Hedges on Hedge Funds, James Hedges. Exactly what you need to know before you hand over your money to a hedge fund. Hopefully, the first book above by Fabozzi told you how many baskets you have available to put your eggs in. Hedge Funds rarely outperform the market, but that's not the whole story.

The Vital Few vs The Trivial Many, George Muzea. Good stuff :-) more geared toward active investors (even traders) but it's a good, insightful read. The mindset of "who should I listen to" is excellent. If you make a habit of reading financial statements, and scanning the market from time to time, seeing how movements in a given stock correspond with company news (a fun hobby, btw!) then you will get something from this book, specially on insider trading.

That's it for now.

Anyway, I'm not making any argument here for how the market works, other than pointing out that saying that half of fund managers do worse than the median does not imply that they are unskilled or not providing value. Nor am I saying that they do provide value, but rather the original theory is both flawed and insufficient to make a conclusion.

In games of skill, past results certainly give expectations of future results. Going back to the hockey analogy, I would expect the top 10% of performers over five years (determined by some metric) would as a whole outperform a random sample of 10% of the league in a sixth year. Madoff is a bad example here - he was breaking the law, but nobody knew. If you catch a top sports player doping, it doesn't suddenly mean that the game is a game of chance, or that all of the top performers are cheaters (although repeatedly catching cheaters may indicate systematic problems) - rather it means that someone cheated to fake performance. They were playing a different game, but nobody knew.

Going back to the original point, if you want to determine whether something is a game of chance or skill, you have to fix the prior.

Let's say we had coin flipping tournaments, and people were claiming that it's a game of skill. Looking at past statistics, some people seemed to perform far better than the expected 50-50 split. You however claim that coin flipping is just a game of chance. How do you prove it? You look at results for some period of time, say five years. Take the "winners" from that group - say the top 20% of performers. Under the hypothesis that it's a game of skill, these should be a selection of the most skilled people.

Now track their results for a sixth year. If it was a game of skill, the expectation would be that as a whole, these individuals would continue to perform at a high level. However, as a game of chance, you would expect performance to be completely random among these high performers - and by doing this, you can determine whether coin flipping is a game of chance or skill.

Outside of software I have:

- The Intelligent Investor by Benjamin Graham

- Zero to One: Notes on Startups, or How to Build the Future by Peter Thiel

- Screenplay: The Foundations of Screenwriting by Syd Field

- Critique of Pure Reason by Immanuel Kant

One book that I have been meaning to add next to Syd Field's Screenplay is Story: Style, Structure, Substance, and the Principles of Screenwriting by Robert McKee.

There is not a logical/objective explanation, because markets do not follow logic. Markets are powered emotions. Seems the market feels that APPL is not worth so much these days. That will change tomorrow, and then change again the day after. There is no way to predict it. If you would like to learn more, read the book called "The Intelligent Investor" by Benjamin Graham. Mr. Graham was Warren Buffets professor and mentor in college.

The way I look at it, an index fund (like S&P index fund) is merely a layer of abstraction over trading stocks. But instead of putting all your money in one stock, the index fund divies up your money across many different companies and sectors in the same ratio as the target index. This protects you from major fluctuations in the market, so in the long term you essentially grow at the same rate as the index. On the flip side, if one of those companies sees astronomical growth, you won't see the same growth.

[All: This is my understanding of index funds, so if I am wrong, please, do correct me]

There are several good books in the market if you want to go down this route, including the aforementioned "The Intelligent Investor" [must read] and "A random walk down wall street"

Another book that I surprisingly found to be very good was "Mutual funds for dummies" [http://tinyurl.com/5ulpvw][The other book "Personal finance for dummies" by the same author is a good book too. There is another one [http://tinyurl.com/5wso5z] that is short and sweet to read.

Good luck!

Arrighi, Giovanni (1994) The Long Twentieth Century: Money, Power and the Origins of Our Times

Brealey, Myers, Allen (2011) Principles of Corporate Finance, 10th ed.

Bruck, Connie (1988) Predators' Ball: Inside Story of Drexel Burnham and Rise of Junk Bond Raiders

Fisher, Philip (2003) Common Stocks and Uncommon Profits and Other Writings, 2nd ed.

Fridson, Martin and Fernando Alvarez (2002) Financial Statement Analysis, 3rd ed.

Graham, Benjamin, J. Zweig, D. Dodd (2006/08) Intelligent Investor, rev ed; Security Analysis, 6th ed.

Greenblatt, Joel (1999) You Can Be a Stock Market Genius

Greenwald, Kahn, Sonkin, Biema (2001) Value Investing: From Graham to Buffett and Beyond

Henwood, Doug (1997) Wall Street: How It Works and for Whom

Levitt, Arthur (2003) Take on the Street: How to Fight for Your Financial Future

Lewis, Michael (2010/1989) Big Short; Liar's Poker

Lynch, Peter and John Rothchild (2000) One Up on Wall Street, 2nd ed.

Mishkin, Frederic (2004) Economics of Money, Banking and Financial Markets, 7th ed.

Taleb, Nassim Nicholas (2005/10) Fooled by Randomness, 2nd ed.; Black Swan: Impact of the Highly Improbable, 2nd ed.

Vilar, Pierre (1976) A History of Gold and Money: 1450-1920

Tracy, John A. (2009) How to Read a Financial Report: Wringing Vital Signs out of the Numbers, 7th ed.