Starting out thread, hints, tips... anything really

[whitey]

hey buns thanks for your input, my double brown days are few and far between for personal reasons but i do have enough fun in my life. i prefer travel rather than wasted nights in town. could you suggest any recent material that concern someone in my starting position. i didnt stsrt this thread for instant results. just some direction to start

[shasta]

hey buns thanks for your input, my double brown days are few and far between for personal reasons but i do have enough fun in my life. i prefer travel rather than wasted nights in town. could you suggest any recent material that concern someone in my starting position. i didnt stsrt this thread for instant results. just some direction to start

Send me a Private Message with your address & ill send you my copy of "The Intelligent Investor", if your happy to do so.

This is the unofficial "investment bible", read it cover to cover, then reread it!

If you are serious about planning for your financial future, another book i would recommend is "Get Rich & Stay Rich", by Martin Hawes, alot of common sense stuff & explains it in plain english.

As Karen has already mentioned, there is plenty of information contained on the various threads within the Sharetrader site, so spending some time learning to navigate around the site, is time well spent.

[buns]

Your a kind man Shasta. However I slightly disagree with you handing off that book so soon.

I'm a huge advocate for anything Benjamin Graham, however think that book is a little to much for a newbie.

You easily forget what its like when first starting. This really hit home with me a while back as I did a complete circle with my investing thought. I started with all the Buffet, Graham books and didn't completely understand them, had to learn the hard way acting irrationally following price movements rather than value. Then went back and read them and fully understood everything.

I think this full circle thing happens a lot (in lots of disciples), as when people start something they always look for the easy way out or follow herd behavior. In this field that pushes you towards following general market sentiment and value companies using measures given to them which are mostly irrational or driven by price. The eager and untrained investor at this stage dosent even know this is irrational and probably won't doubt himself until he makes a loss. This is a critical point as it puts one at cross roads.

The typical paths are
1) Stop investing
2) Doubt your methods and seek change
3) Blame your failure on something or someone else.

As 1 and 3 are the easiest options these will typically be choosen, and in the long run will result in no gains from investing. I think option 3 is very common, as humans are very loss adverse. It's option 2 which gives that person the best chance in the long run, and with a little bit of reading they will realise the answer to this game is quite simple - it just takes a lot of hard work. Now at this point, one can be honest on whether the hard work is worth it, or whether they are smart enough to carry it out. If you don't do this, you enter a game where the odds are against you.

The smart will make money off you, thats how markets operate ('Mr Market' in the intelligent investor). Most of NZ love rugby, but most don't participate because they know they will get smashed. Investing is no different however many more are lured in, yet most get smashed.

Those Martin Hawes books are ideal for a newbie, they introduce the power of investing, and importantly explain all the asset classes and there risk/rewards. At first glance you don't think much of this, however understand 'the other option' is vital to understand your own discount rate/opportunity cost at which you need your chosen investment vehicle to exceed. I think this is the first thing one needs to understand before getting into valuation. You may get to this point and go no further, as I point out above you may work out that $800k savings at age 40 is ok - well you can do this risk free. So forget investing.

The intelligent investor is heavily built around this concept, or 'Margin of Safety' as Ben puts it. Without understanding it widely, you won't get full benefit from the intelligent investor.

[h2so4]

At 22 you can afford to spend your time reading the first 80 odd pages of any investment book that is thrown at you. If the material is too heavy after 80 pages chuck it and get another book. By the time your 23 something will have clicked, grasping some easy investing principles would be a great start. I have found Buffett books are great for that and you can listen to him on CNBC watch.

By 22 saving should be automatic, and rolling over term deposits is a fun thing to do. Involve your partner, we spend lots of time discussing financial dreams, in this case the whole is bigger than the sum. If it's "going on" for you, things have a way of falling into place.

To your investing success.

[Lizard]

... as I point out above you may work out that $800k savings at age 40 is ok - well you can do this risk free. So forget investing.

Does that take 2 good incomes and no kids? I'm mid-40's and, with family and circumstances, seem to be permanently stuck at $650k net worth... every year's "new year resolution" is to stop drinking the proceeds...

(But I agree with the suggestions that "Martin Hawes" may make a good place to start reading)

[Stranger_Danger]

I agree that "The Intelligent Investor", whilst essential reading at some stage, is the wrong book for a newbie.

Many (from the Phaedrus school?) will disagree with me on this, but you need to develop a general interest in business and businesses BEFORE developing a specific interest in investing because, well, thats what you're gonna be investing in! As (I think) Graham, often quoted by Buffett, said, "Investment is the most intelligent when it is the most businesslike". The two are bound together, or at least, should be.

Something like "Where Are The Customers Yachts?" would be far more appropriate.

Whilst totally devoid of detailed analysis and specifics, it touches on a lot of things, will help to develop the pre-requisite cynicism, and has held up remarkably well over the years.

"Fooled By Randomness" by N N Taleb is also a "basic" book that gets you thinking, without overwhelming.

Ben Graham definitely needs to be read, but, honestly, read that as one of your first investment books and you'll be scared away for life!

Other than all the normal "how to buy stocks", "how to get rich", "how to buy stocks and get rich" books which I'm sure you'll hear about from a million sources, I'd recommend finding some time for business biography.

Reading about a range of successful (and unsuccessful!) businesses, and the people that run them, can really help you in both business and investments.

For the latter, "Typo : How I Lost Four Million Dollars" by David Silverman is one of favourite books. Whilst not about investing per se, a read of that should kill any remaining interest you have in being overly gung ho and keen...

[buns]

Of course there are tons of variables in this equation which could make the $800k to high or low. At 22 with next to no savings any number in the $800k ball park sounds so large, but really is very attainable with little risk if you work hard and act pretty sensible.

Even at $500k you can live a very nice and easy life. Its very important to understand this before you kick of investing, as once you have worked out what you can earn risk free, you should ask yourself "Do I need any more?", if yes - you then work towards finding out what rate you need to earn, and the possible ways to go about that. It is also a great intro to valuations, as you use similar techniques in valuing a company.

It will also make you consider the underlying variables behind the free cash flow, of both yourself and companies.

Again, I didn't mean to get down to exact numbers but Liz, keep inflation in mind, $800k in 15-20 years time will probably be worth close to the amount you mention.

[whitey]

[QUOTE=Stranger_Danger;364333
Reading about a range of successful (and unsuccessful!) businesses, and the people that run them, can really help you in both business and investments.
[/QUOTE]


That sounds like a really good idea, thanks for the suggest. Sounds like i'll start by reading some Hawes and tracking some shares and business from the next six month, while I go through a budget, possibly some term deposits and managed funds.

I've read through everyone comments and really appreciate the time taken. Looks like I have some reading to do

[shasta]

That sounds like a really good idea, thanks for the suggest. Sounds like i'll start by reading some Hawes and tracking some shares and business from the next six month, while I go through a budget, possibly some term deposits and managed funds.

I've read through everyone comments and really appreciate the time taken. Looks like I have some reading to do

The offer for the book still stands, when ya ready for it, let me know, Buns is right, its not an easy read.

I sometimes forget not everyone is an Accountant like yours truly!

[Stranger_Danger]

lol Shasta. Not surprised to hear that - only an accountant would call Graham easy!