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I'm completely new to the world of investing and stocks. Knowing that I shouldn't invest or buy stocks until I know it well enough, I was wondering which cheap or affordable resources would be the best to get started?

I've seen quite a lot of books and websites that teach investing, but it's hard to choose. To narrow it down, what book and/or what website would you recommend that does a good job teaching investing in stocks to beginners?

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Related non-book questions: money.stackexchange.com/questions/1625 and money.stackexchange.com/questions/2825 –  Chris W. Rea Apr 13 '11 at 13:45
    
Are you interested in investing as in save-for-retirement-and-college type stuff? In that case I'd point to a general basic financial planning book, because all you really have to do is pick an asset allocation, avoid getting ripped off selecting mutual funds to implement it, and set up automatic deposits/rebalance so it's on autopilot. Done. If you're interested instead in investing as a stocks-are-a-fun-hobby, then I'd point to Benjamin Graham and so on. But it really is a hobby, i.e. do it only if you enjoy it, don't expect to make money. –  Havoc P Apr 14 '11 at 0:45
    
You're right Havoc. I should have pointed out that I meant "investing as a stocks-are-a-fun-hobby". However, why do you say "don't expect to make money"? Are expectations like that wrong? Shouldn't I expect some money, even as a side income? –  YOMorales Apr 14 '11 at 2:43
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If you're careful about diversification and don't fall in any behavioral traps (big ifs), you would probably stay somewhere close to market returns (maybe think of it as +/- 20% with both equally likely?) So you aren't that likely to completely lose (as long as you avoid day trading). Most likely I'd say is to do a bit worse than a decent fund, which would likely mean a bit worse than 6-7% annual real returns. –  Havoc P Apr 14 '11 at 12:26
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Just keeping track of your returns properly is a whole section of the CFA stuff and sort of hard. I'd guess most people tend to bucket their winning picks in their mind and overestimate success, plus take too much credit for years that go well vs. those that don't. –  Havoc P Apr 14 '11 at 12:31

4 Answers 4

up vote 9 down vote accepted

The Motley Fool's How to Invest

How To Invest

Benjamin Graham's The Intelligent Investor

The Intelligent Investor

If you like The Intelligent Investor then try Benjamin's Security Analysis. But that one is not a beginner book.

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Thanks. I've seen quite a bunch of people recommending the Motley Fool. I will take a glance at your suggestions and decide if they are really what I'm looking for. –  YOMorales Apr 14 '11 at 2:48
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My criticism of Motley Fool is that they're having too much fun... I guess that's also what some people like about it. But investing is sort of about avoiding emotional action, so I question the value of their tone. Perhaps you get more analysis and quantitative data for your money at Morningstar, too. In the end I guess a lot of people mess with stocks primarily in order to talk about them (in person or on forums) so Motley Fool may be good for that purpose... –  Havoc P Apr 14 '11 at 13:37
    
I'm picking this as the answer after giving enough time for more answers. It was answered concisely and the resources are proving to be helpful. @Havoc: Yeah, I've seen what you mean about Motley Fool. But at least their website is helpful for absolute beginners like me. I'll take your resources as backup/advanced options. –  YOMorales Apr 15 '11 at 21:55

If you just want to save for retirement, start with a financial planning book, like this one: http://www.amazon.com/Smart-Simple-Financial-Strategies-People/dp/0743269942 and here's my editorial on the investing part: http://blog.ometer.com/2010/11/10/take-risks-in-life-for-savings-choose-a-balanced-fund/

If you're thinking of spending time stock-picking or trading for fun, then there are lots of options.

Web site:

Morningstar Premium (http://morningstar.com) has very good information. They analyze almost all large-cap stocks and some small caps too, plus mutual funds and ETFs, and have some good general information articles. It doesn't have the sales-pitch hot-blooded tone of most other sites. Morningstar analyzes companies from a value investing point of view which is probably what you want unless you're day trading. Also they analyze funds, which are probably the most practical investment.

Books:

If you want to be competent (in the sense that a professional investor trying to beat the market or control risk vs. the market would be) then I thought the CFA curriculum was pretty good:

However, this will quickly teach you how much is involved in being competent. The level 1 curriculum when I did it was 6 or 7 thick textbooks, equivalent to probably a college semester courseload. I didn't do level 2 or 3. I don't think level 1 was enough to become competent, it's just enough to learn what you don't know. The actual CFA charter requires all three levels and years of work experience.

If you more want to dabble, then Benjamin Graham's The Intelligent Investor certainly isn't a bad place to start, but you'd also want to read some efficient markets stuff (Random Walk Down Wall Street, or something by Bogle, or The Intelligent Asset Allocator http://www.amazon.com/Intelligent-Asset-Allocator-Portfolio-Maximize/dp/0071362363, are some options). It wouldn't be bad to just read a textbook like http://www.amazon.com/Investments-Irwin-Finance-Zvi-Bodie/dp/0256146381 which would be the much-abridged version of the CFA level 1 stuff.

If you're into day trading / charting, then I don't know much about that at all, some of the other answers may have some ideas. I've never been able to find info on this that didn't seem like it had a sketchy sales pitch kind of vibe. Honestly in a world of high-frequency trading computers I'm skeptical this is something to get into. Unless you want to program HFT computers: http://howtohft.wordpress.com/

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Your "CFA" link is down.... –  Pacerier Nov 27 '13 at 0:28

The Winning Investor
http://winninginvestor.quickanddirtytips.com/
This is a blog and a podcast. Load a bunch of these onto your iPod and start listening.

Stikky Stock Charts
http://www.amazon.com/Stikky-Stock-Charts-professionals-smart/dp/1932974008
This is a beginner's guide on how to read charts. Lots of charts, not too many words.

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Chart reading as an introduction to investing? I would hope beginners would ignore charts and focus on the fundamentals instead. –  Chris W. Rea Apr 14 '11 at 0:51
    
@Chris That seems like good advice. –  YOMorales Apr 14 '11 at 2:52

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