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Investment Education
Probably the first thing I've ever learned in investing was to invest every month. Dollar cost averaging seemed like a great way to avoid bad luck and get an average return, which was all I really wanted. So many people do worse than the average because they try to outperform. Many people even view the stock market as a scam.
That being said I've never really had a broad education in the world of investing and I think I still rely on my gut too much. I was reading an article on the best books about investing and I hadn't read either of the recommendations. It seems kind of hard after you've had some success to go back and learn the basics.
Do most of you feel confident in you fundamentals, or do you feel like you have holes in your education? I'm starting to feel like I learned how to run without ever learning to walk.
That being said I've never really had a broad education in the world of investing and I think I still rely on my gut too much. I was reading an article on the best books about investing and I hadn't read either of the recommendations. It seems kind of hard after you've had some success to go back and learn the basics.
Do most of you feel confident in you fundamentals, or do you feel like you have holes in your education? I'm starting to feel like I learned how to run without ever learning to walk.
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Comment by lea on January 11, 2010 at 8:19pm -
I would say that most people have no idea what they are doing.
I have tried to read books and online sites to improve my knowledge, but I still have very little idea of what I am doing. Even if I think I know what I am doing in some areas, the market usually slaps me back into reality.
I think my best investment education came from Benjamin Graham's book The Intelligent Investor. I had heard that this is the man who taught many things to Warren Buffet. I figured it was a book I should read. From what I remember, there were two key things I took from the book. First, most people have no idea how to beat the market so being a passive investor who invests in a broad fund (along with proper asset allocation) will probably have the most chance of success.
The second thing I remember is that if you are going to be an active trader, you need to be ahead of the pack - and sometimes going in the opposite direction. This worked for me as I started buying stocks when the market was tanking last year. So many people panicked and sold stocks as the market reached the bottom. On the flip side, a lot of people buy stocks when the market is reaching new highs. This is a problem when people buy high and sell low. Seems so basic, but a lot of people get this wrong.
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Comment by Vitaly Indinko on January 12, 2010 at 9:46pm -
I guess I'm always torn about "deep" books like Graham and Dodd and more broad issues. They all seem like tools in a toolkit and just knowing a few seems pointless. It seems problematic to decide just how much education one needs to make good decisions. Combined with my lack of faith in advisors and things become difficult...
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Comment by paul on January 13, 2010 at 2:41pm
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Investing is a very information centric activity.
You need the general books to get your basic education, but then you need to be constantly gathering information in order to keep up with what is going on.
It is like fantasy football on steroids. Yes, you need to know how to play, but everyday brings new information that might alter the outcomes of your picks.
Putting all of this information to proper use is not easy. Even if you have the time to gather the data and the ability to understand all of the informaiton, the outcomes still might not follow the predictions.
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