Hello, everyone!
I've just started my journey as an investor and I would like to be able to pick my own stock and get returns better than S&P 500. I'm a structural engineer at my everyday job. I have never really learned anything about finance. The only economics courses I had in high school many years ago, so my knowledge in microeconomics and macroeconomics is close to zero (although I understand the concept of supply and demand equilibrium price, and other simple concepts).
I have been reading Investopedia articles for some time now as well as finished my first book on investing - "The Little Book of Valuation" by Aswath Damodaran.
The real question I'm stuck with at this point is how to structure my learning. As I'm a father, a husband and work full time in engineering I don't have a lot of spare time for studying, so I need to be efficient at learning the things that matter the most first and then only supplement these basics as I go.
This is why I wanted to start this thread, which is meant for people like me, that don't have a lot of spare time for studying, want to learn as fast as possible and are confused at where to start.
I've been trying to group all of the knowledge a "perfect" investor would need to know in "knowledge groups", if you will. So far I have identified groups like:
a) Microeconomics;
b) Macroeconomics;
c) General bussiness (just the basic of how companies are structured and work, what components go into running a business (like labor, equipment, etc, how to think about costs and revenues, etc));
d) General investing (what are stocks, how you get a return on investment and such basic information which is paramount);
e) Accounting (from a perspective of an investor - everything you need to know so that you can navigate through financial reports and understand what you see as well as to protect yourself from misleading information or accounting tricks);
f) Valuation (intrinsic and relative - what you need to know to be able to judge the price of an asset like a stock);
g) investment philosophies/strategies (including risk management, diversification, philosophy about how to think about owning stocks, etc).
The first question is - would you rearrange some of the groups or would you add some I haven't mentioned (if there is information which would not fit well into the groups mentioned above)?
The second question is - what would be the logical order for a person to learn all the needed information of these "knowledge groups"? In a way (not perfect of course) I've laid down these groups in the order I see it would be a good way to build up knowledge and understanding - do you agree or would you say different order would be more appropriate?
The third question is about information sources. Of course, the more you read and learn through your life the better, but at the start, it is important to gain enough knowledge in any particular subject so that you feel comfortable in your investing, as well as understand everything needed well enough to not make stupid mistakes while investing. What is your opinion on information sources? Should you start by reading one or maybe a few books of your choice in each of "knowledge groups" in the particular order your prioritized those "knowledge groups", or would you rather start with a single all-around information source, for example, like Investopedia, which has many information concentrated articles on particular subject which fit in some "knowledge groups", and then, after reading the basic information about each of "knowledge groups", gaining some insight on every "knowledge group", for your way to reading particular books?
The fourth question is about the importance of each "knowledge group". How would you allocate your 100% of the time to studying each "knowledge group"? Would you spend equal amounts of time on each group? Please subdivide 100% of your time to each "knowledge group" to reflect your view of the importance of each particular subject.
I hope that this thread will be helpful to many new investors and I hope that senior members of the forum will share their understanding. I see this topic as important mostly on my understanding that there basically are no books on investment which cover all you need to know sufficiently to set you up to succeed, so you will need to read many books - the question is in what priority to read them and how much spend on each of the topics.
Thanks
Submitted February 16, 2019 at 05:57AM by ReinisGailitis http://bit.ly/2SXCqHJ
