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If one has time, a few books I would highly recommend: The Intelligent Investor by Ben Graham Security Analysis by Graham and Dodd Common Stocks and Uncommon

If one has time, a few books I would highly recommend: The Intelligent Investor by Ben Graham Security Analysis by Graham and Dodd Common Stocks and Uncommon Profits and Other Writings by Philip Fisher The Little Book That Still Beats the Market by Greenblatt Warren Buffett's annual letters Actually, anything by Ben Graham or Joel Greenblatt is worth reading if one is interested in the investing world. I don't know if I'll ever invest enough time doing fundamental analysis and actively (value) investing but I am making my way through these just to understand value investing properly.

throw0101a 11mo ago
> Warren Buffett's annual letters Buffett says to buy index funds. > Actually, anything by Ben Graham or Joel Greenblatt is worth reading if one is interested in the investing world. Ben Graham in the last interview before he passed ("A Conversation with Benjamin Graham", Financial Analysts Journal, Vol. 32, No. 5 (Sep. - Oct., 1976), pp. 20-23): >> In selecting the common stock portfolio, do you advise careful study of and selectivity among different issues? > In general, no. I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities. This was a rewarding activity, say, 40 years ago, when our textbook "Graham and Dodd" was first published; but the situation has changed a great deal since then. In the old days any well-trained security analyst could do a good professional job of selecting undervalued issues through detailed studies; but in the light of the enormous amount of research now being carried on, I doubt whether in most cases such extensive efforts will generate sufficiently superior selections to justify their cost. To that very limited extent I'm on the side of the "efficient market" school of thought now generally accepted by the professors. * https://www.tandfonline.com/doi/abs/10.2469/faj.v32.n5.20 https://www.tandfonline.com/doi/abs/10.2469/faj.v32.n5.20 * https://www.jstor.org/stable/4477960 https://www.jstor.org/stable/4477960 * https://www.bylo.org/bgraham76.html https://www.bylo.org/bgraham76.html Graham was also of the opinion that analysis is of questionable use even in 1976 (nevermind now, ~40 years later).
- tome 11mo ago
  > 1976 ... ~40 years later I think it would have been ok to say 50!
- zipy124 11mo ago
  More recent analysis has many things that imply the EMH is weak if it exists at all. 2008 at it's core is a rather good example that the market was not efficient at all, as was the dot com bubble. And then you have the behavioural side where investors are not rational such as meme-stocks. Even COVID was a good example. It was clear to most value investors for instance that Zoom was over-priced, when you had teams already included in your bundle, and that school wasn't going to stay remote forever. The failure of MOOCs in the previous decade proved that. There are many examples like these.
  - throw0101a 11mo ago
    If markets are not efficient, that means prices do not reflect the information available about various financial instruments (e.g., stocks). So if information is not being properly disseminated and processed, it means it should be easy to swoop in and outperform The Market™: * https://en.wikipedia.org/wiki/Grossman-Stiglitz_paradox https://en.wikipedia.org/wiki/Grossman-Stiglitz_paradox This is how some folks (see The Big Short) were able to make a killing leading up to the GFC: they properly processed the information and traded on it. And yet if you look at something like the SPIVA reports, yes there are some funds that may outperform the market in a single year, but the numbers drop quite quickly for being able to outperform over 3/5/10/15/20-year horizons. If you personally believe markets are not efficient, and prices are not accurate, then perhaps you should take up day trading. (I am not sure anyone is saying markets are perfectly efficient, or efficient-ish all the time: certainly not Fama or French, who won the Nobel for work on the topic; shared with Shiller).
    - deaux 11mo ago
      > If you personally believe markets are not efficient, and prices are not accurate, then perhaps you should take up day trading What does it mean for a price to be accurate? Most think of it as representing future revenue and profit. Anything else quickly gets you into tautological territory of "an accurate price is what the market thinks it's worth". I don't think the belief leads to your conclusion. It's beyond doubt that the price of TSLA does not accurately represent the value of the company in terms of future revenues and profits relative to how other stocks are priced. Does this mean I should take up day trading? Definitely not! We don't live in an era where prices are guaranteed to eventually return to being accurate, any more so than if they were a random walk. And even under the presumption that they would return to this, there's always the 'Markets can remain irrational longer than you can remain solvent'.
- assemblyman 11mo ago
  zipy214 below has given much more eloquent explanations about the non-applicability of the EMH than I can. For me, the vast majority of my personal savings are in index funds. The reading list above, even if the methods are outdated (the broad details still apply even though many ways of analyses no longer apply especially to tech stocks), are mainly to get the curious started on one principled path to investing with the caveat that, if they do experiment, they should do so with amounts they are willing to lose. Just one more comment to what you said below: "If you personally believe markets are not efficient, and prices are not accurate, then perhaps you should take up day trading." Value investors famously oppose any kind of day trading or "in and out" trading. People like Phil Fisher used to advocate never selling unless the fundamentals change drastically (change of management, new technological developments that make a company's products obsolete etc.). Of course, one doesn't have to be that extreme but equating value investing with day trading is misleading.
thisisit 11mo ago
I have read both The Intelligent Investor or Security Analysis and I can't say there is any value - no pun intended - in reading both these books. Most of these methods are arcane. It just seems that people in value investing circles like to hype these book up just because Buffett got his start by reading these books. Under Munger things have turned - > A great business at a fair price is superior to a fair business at a great price. Philip Fisher and Peter Lynch's books are much better read. That said, as the article says in a bull market when markets are going up it is difficult to know if your value picks are actually great. In bear markets no one wants to touch undervalued companies.
- assemblyman 11mo ago
  I think a lot of this depends on where you started. I don't disagree that the details of the methods don't apply especially to technology stocks. On the other hand, one learns a principled way of looking at companies. It's easy, if one hasn't paid attention to anything in the financial world, to think of stocks as abstract numbers that "will go up" or "go down" or "has good prospects because everyone is talking about it". Any of these books are a good antidote to that because they teach a framework to reason about companies. I also do find it strange that this idea gets so much push back. For people who don't want to think about investing, just put your savings in index funds (and/or cash equivalents depending on your plans). For people who are curious about these aspects, read some of the books and invest with small amounts and learn. Maybe you won't consistently beat SP500 and maybe you will. After all, it's not like all active investors shut their hedge funds down and started investing in SP500. The usual argument is that the funds have much more resources but it's actually easier to invest with smaller amounts than millions or billions of dollars.
NoMoreNicksLeft 11mo ago
Thanks for the book recommendations. Do You mean "Ben Graham Was a Quant"? Can't seem to find the other title.
- assemblyman 11mo ago
  Ah no, I meant these ones by Graham: https://www.amazon.com/Intelligent-Investor-3rd-Ed/dp/0063356724 https://www.amazon.com/Intelligent-Investor-3rd-Ed/dp/006335... https://www.amazon.com/Security-Analysis-Seventh-Principles-Techniques/dp/1264932405 https://www.amazon.com/Security-Analysis-Seventh-Principles-... I'll paste a couple more readable ones too :) https://www.amazon.com/Concentrated-Investing-Strategies-Greatest-Investors/dp/1119012023 https://www.amazon.com/Concentrated-Investing-Strategies-Gre... https://www.amazon.com/Value-Investing-Graham-Buffett-Finance/dp/0470116730 https://www.amazon.com/Value-Investing-Graham-Buffett-Financ... Like I said to someone else above, I myself put almost all my savings in index funds and slowly read/study these just for curiosity. Eventually, I hope to actually spend some time looking at real data but even if I don't find any interesting stocks or lose my modest starter funds for this activity, I would be okay with it.

throw0101a 11mo ago

> Warren Buffett's annual letters Buffett says to buy index funds. > Actually, anything by Ben Graham or Joel Greenblatt is worth reading if one is interested in the investing world. Ben Graham in the last interview before he passed ("A Conversation with Benjamin Graham", Financial Analysts Journal, Vol. 32, No. 5 (Sep. - Oct., 1976), pp. 20-23): >> In selecting the common stock portfolio, do you advise careful study of and selectivity among different issues? > In general, no. I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities. This was a rewarding activity, say, 40 years ago, when our textbook "Graham and Dodd" was first published; but the situation has changed a great deal since then. In the old days any well-trained security analyst could do a good professional job of selecting undervalued issues through detailed studies; but in the light of the enormous amount of research now being carried on, I doubt whether in most cases such extensive efforts will generate sufficiently superior selections to justify their cost. To that very limited extent I'm on the side of the "efficient market" school of thought now generally accepted by the professors. * https://www.tandfonline.com/doi/abs/10.2469/faj.v32.n5.20 https://www.tandfonline.com/doi/abs/10.2469/faj.v32.n5.20 * https://www.jstor.org/stable/4477960 https://www.jstor.org/stable/4477960 * https://www.bylo.org/bgraham76.html https://www.bylo.org/bgraham76.html Graham was also of the opinion that analysis is of questionable use even in 1976 (nevermind now, ~40 years later).

tome 11mo ago
> 1976 ... ~40 years later I think it would have been ok to say 50!
zipy124 11mo ago
More recent analysis has many things that imply the EMH is weak if it exists at all. 2008 at it's core is a rather good example that the market was not efficient at all, as was the dot com bubble. And then you have the behavioural side where investors are not rational such as meme-stocks. Even COVID was a good example. It was clear to most value investors for instance that Zoom was over-priced, when you had teams already included in your bundle, and that school wasn't going to stay remote forever. The failure of MOOCs in the previous decade proved that. There are many examples like these.
- throw0101a 11mo ago
  If markets are not efficient, that means prices do not reflect the information available about various financial instruments (e.g., stocks). So if information is not being properly disseminated and processed, it means it should be easy to swoop in and outperform The Market™: * https://en.wikipedia.org/wiki/Grossman-Stiglitz_paradox https://en.wikipedia.org/wiki/Grossman-Stiglitz_paradox This is how some folks (see The Big Short) were able to make a killing leading up to the GFC: they properly processed the information and traded on it. And yet if you look at something like the SPIVA reports, yes there are some funds that may outperform the market in a single year, but the numbers drop quite quickly for being able to outperform over 3/5/10/15/20-year horizons. If you personally believe markets are not efficient, and prices are not accurate, then perhaps you should take up day trading. (I am not sure anyone is saying markets are perfectly efficient, or efficient-ish all the time: certainly not Fama or French, who won the Nobel for work on the topic; shared with Shiller).
  - deaux 11mo ago
    > If you personally believe markets are not efficient, and prices are not accurate, then perhaps you should take up day trading What does it mean for a price to be accurate? Most think of it as representing future revenue and profit. Anything else quickly gets you into tautological territory of "an accurate price is what the market thinks it's worth". I don't think the belief leads to your conclusion. It's beyond doubt that the price of TSLA does not accurately represent the value of the company in terms of future revenues and profits relative to how other stocks are priced. Does this mean I should take up day trading? Definitely not! We don't live in an era where prices are guaranteed to eventually return to being accurate, any more so than if they were a random walk. And even under the presumption that they would return to this, there's always the 'Markets can remain irrational longer than you can remain solvent'.
assemblyman 11mo ago
zipy214 below has given much more eloquent explanations about the non-applicability of the EMH than I can. For me, the vast majority of my personal savings are in index funds. The reading list above, even if the methods are outdated (the broad details still apply even though many ways of analyses no longer apply especially to tech stocks), are mainly to get the curious started on one principled path to investing with the caveat that, if they do experiment, they should do so with amounts they are willing to lose. Just one more comment to what you said below: "If you personally believe markets are not efficient, and prices are not accurate, then perhaps you should take up day trading." Value investors famously oppose any kind of day trading or "in and out" trading. People like Phil Fisher used to advocate never selling unless the fundamentals change drastically (change of management, new technological developments that make a company's products obsolete etc.). Of course, one doesn't have to be that extreme but equating value investing with day trading is misleading.

thisisit 11mo ago

I have read both The Intelligent Investor or Security Analysis and I can't say there is any value - no pun intended - in reading both these books. Most of these methods are arcane. It just seems that people in value investing circles like to hype these book up just because Buffett got his start by reading these books. Under Munger things have turned - > A great business at a fair price is superior to a fair business at a great price. Philip Fisher and Peter Lynch's books are much better read. That said, as the article says in a bull market when markets are going up it is difficult to know if your value picks are actually great. In bear markets no one wants to touch undervalued companies.

assemblyman 11mo ago
I think a lot of this depends on where you started. I don't disagree that the details of the methods don't apply especially to technology stocks. On the other hand, one learns a principled way of looking at companies. It's easy, if one hasn't paid attention to anything in the financial world, to think of stocks as abstract numbers that "will go up" or "go down" or "has good prospects because everyone is talking about it". Any of these books are a good antidote to that because they teach a framework to reason about companies. I also do find it strange that this idea gets so much push back. For people who don't want to think about investing, just put your savings in index funds (and/or cash equivalents depending on your plans). For people who are curious about these aspects, read some of the books and invest with small amounts and learn. Maybe you won't consistently beat SP500 and maybe you will. After all, it's not like all active investors shut their hedge funds down and started investing in SP500. The usual argument is that the funds have much more resources but it's actually easier to invest with smaller amounts than millions or billions of dollars.

NoMoreNicksLeft 11mo ago

Thanks for the book recommendations. Do You mean "Ben Graham Was a Quant"? Can't seem to find the other title.

assemblyman 11mo ago
Ah no, I meant these ones by Graham: https://www.amazon.com/Intelligent-Investor-3rd-Ed/dp/0063356724 https://www.amazon.com/Intelligent-Investor-3rd-Ed/dp/006335... https://www.amazon.com/Security-Analysis-Seventh-Principles-Techniques/dp/1264932405 https://www.amazon.com/Security-Analysis-Seventh-Principles-... I'll paste a couple more readable ones too :) https://www.amazon.com/Concentrated-Investing-Strategies-Greatest-Investors/dp/1119012023 https://www.amazon.com/Concentrated-Investing-Strategies-Gre... https://www.amazon.com/Value-Investing-Graham-Buffett-Finance/dp/0470116730 https://www.amazon.com/Value-Investing-Graham-Buffett-Financ... Like I said to someone else above, I myself put almost all my savings in index funds and slowly read/study these just for curiosity. Eventually, I hope to actually spend some time looking at real data but even if I don't find any interesting stocks or lose my modest starter funds for this activity, I would be okay with it.