Learning how to research and follow stocks

[Anonymous]

We have a fee-only financial planner whom I like. However, we only pay him once every few years to go over our investment plan. We do own several individual stocks, some inherited, some we invested in.

I would like to learn how to understand business finances and the stock market well enough to know if I have "good" companies or duds, and well enough to recognize if we need to buy or sell (or pay for a consultation again before everything is out of whack).

Is there a book I can read or a class I can take that will teach me more than "invest in index funds," "watch out for points," and "don't sell in a panic?" I'd like to learn more than the basic principles of investing, but I'm not interested in a finance degree, either.

Any recommendations?

[Anonymous]

Anonymous wrote:We have a fee-only financial planner whom I like. However, we only pay him once every few years to go over our investment plan. We do own several individual stocks, some inherited, some we invested in.

I would like to learn how to understand business finances and the stock market well enough to know if I have "good" companies or duds, and well enough to recognize if we need to buy or sell (or pay for a consultation again before everything is out of whack).

Is there a book I can read or a class I can take that will teach me more than "invest in index funds," "watch out for points," and "don't sell in a panic?" I'd like to learn more than the basic principles of investing, but I'm not interested in a finance degree, either.

Any recommendations?

Seekingalpha.com - Tons of articles and good discussions. Make it a habit. You'll learn a lot.

[Anonymous]

Please read "A Random Walk Down Wallstreet". The basic premise is that there's no get rich quick scheme with stocks, and that the best investment for the highest amount of return with the least amount of risk is to buy and hold a broad swath of stocks, not to try and cherry-pick "winning" stocks. The larger the pool of stocks, the less risky the investment will be, for the largest return. He also talks about bubbles and the influence of crowds on stocks.

[Anonymous]

Also, please read the bogleheads forums for tons of great advice.

Mainly, try and avoid the people who are always buying and selling and trading stocks like a game. Your general strategy should be to buy and hold stocks (not sell them) and accumulate wealth over a long period of time, generally not looking at the market's ups and downs. Over the long run (20-30+ years) the total stock market has about a 7% return.
In your 50s and 60s, you can gradually convert some of your portfolio from stocks to bonds, but the people who are watching the stock market like hawks and freaking out all the time are like gamblers, not investors.

[Anonymous]

I'm a strong advocate of "buy what you know." If there is a product or brand you like, find out more about the company. Go to their website and click on "investors." Get a copy of the annual report and read it cover to cover. Where is the company operating, what are its sales trends, what is its growth strategy, what is the experience of the board and senior executive team? Then go find out what outside analysts are saying about the company and how it is performing relative to its competitors/peers.

If you want solid returns, stick to broad funds that follow the S&P500, but if you want to make it more of a hobby, then at least look at companies that will make it interesting for you.

[Anonymous]

https://www.amazon.com/Intelligent-Investor-Definitive-Investing-Essentials/dp/0060555661/

This is a lot of work. Just buy indexes.

[Anonymous]

Thank you everyone.

Yes, I know the advice, which I've followed for 40+ years now. However, I also know that I can be more active in managing my money -- I mean, my financial planner occasionally suggests we change some things -- and we are getting to the point where we may actually need to liquidate some of our investments to pay for college tuitions (for which purpose some was invested in the first place). I'd like to know more on my own about how to decide which stocks to sell first, and if I have money to invest, which to buy.

And yes, I know it's a lot of work, which is why I haven't done it before now.

Thank you for pointing me to some places to start.

[Anonymous]

Anonymous wrote:https://www.amazon.com/Intelligent-Investor-Definitive-Investing-Essentials/dp/0060555661/

This is a lot of work. Just buy indexes.

This. I don’t have the time or expertise to delve into a company’s earnings, debt, plans for growth, issues re. leadership, etc etc. Nor could I, a layperson, get access to the best information. Indexes are good enough for me.

[Anonymous]

Stupid way to lose money and lose time.

[Anonymous]

Anonymous wrote:Stupid way to lose money and lose time.

So condescending. If it doesn't interest you, move on, but many investors are willing to invest the time and energy into managing their own investments. Many who do enjoy solid returns and enjoy the activity much like others might enjoy their own hobbies.

[Anonymous]

Active management in general is more costly and riskier than passive mgmt. assume you don’t know better than the market.

If you need to sell stocks, sell the individual ones rather than the low cost mutual funds you should have, then sell any with high fees (greater than half a percent per year), then rebalance to what makes sense for your age and portfolio.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Stupid way to lose money and lose time.

So condescending. If it doesn't interest you, move on, but many investors are willing to invest the time and energy into managing their own investments. Many who do enjoy solid returns and enjoy the activity much like others might enjoy their own hobbies.

I am not trying to be condescending. Think of it this way, only 3 out of 10 stock pickers beat the index. These folks are professionals pickers. Do this 24/7... You may pick one winner but, over time, you will lose.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Stupid way to lose money and lose time.

So condescending. If it doesn't interest you, move on, but many investors are willing to invest the time and energy into managing their own investments. Many who do enjoy solid returns and enjoy the activity much like others might enjoy their own hobbies.

I am not trying to be condescending. Think of it this way, only 3 out of 10 stock pickers beat the index. These folks are professionals pickers. Do this 24/7... You may pick one winner but, over time, you will lose.

That's entirely different from calling people stupid, so yes, you were trying to be condescending. Way too much of that around here. There are nicer ways to talk to people.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Stupid way to lose money and lose time.

So condescending. If it doesn't interest you, move on, but many investors are willing to invest the time and energy into managing their own investments. Many who do enjoy solid returns and enjoy the activity much like others might enjoy their own hobbies.

I am not trying to be condescending. Think of it this way, only 3 out of 10 stock pickers beat the index. These folks are professionals pickers. Do this 24/7... You may pick one winner but, over time, you will lose.

That's entirely different from calling people stupid, so yes, you were trying to be condescending. Way too much of that around here. There are nicer ways to talk to people.

I don't even know what that means. You do you I suppose...

[Anonymous]

Anonymous wrote:I don't even know what that means. You do you I suppose...

Well, your first comment was, "Stupid way to lose money and lose time." That's condescending.

Your second comment was, "Think of it this way, only 3 out of 10 stock pickers beat the index. These folks are professionals pickers. Do this 24/7... You may pick one winner but, over time, you will lose." That's constructive.

See the difference? You don't realize the tone of the first comment versus the tone of the second? Be nice!