Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Rhyd6,87investor,longview,Sussexlad, for Donating to support the site

Babylon? TMF? Or You Tube?

Investment discussion for beginners. Why you should invest your money, get help getting started
tonyreptiles
Lemon Pip
Posts: 77
Joined: November 6th, 2016, 6:07 pm
Has thanked: 42 times
Been thanked: 180 times

Babylon? TMF? Or You Tube?

#311982

Postby tonyreptiles » May 25th, 2020, 10:33 am

Hi All,

While I don't intend on becoming a stock-picking investor, I would like to understand a little about investing. I've skimmed through the 'Books on Investment' thread but there's no way to evaluate how good the book suggestions are.

I guess what I'm asking is - is there a book aimed at a novice investor looking to understand the mechanisms and principles of investing? I'd like to understand how my index tracker will work and what I need to know in order to avoid rookie mistakes. And if I learn enough to pick a stock or two in the future, then that's a bonus.

The book which gets the most mentions in the afore-mentioned thread is 'The Richest Man in Babylon'. Is this likely to satisfy my needs?
The Motley Fool's investment guide is also mentioned, although I worry that the 2002 publication date is a bit ancient.

I'd also be interested in good You Tube channels, if such a thing exists.

Where would you direct a newbie who understands personal finance well enough and is ready to start some tentative investing?

TIA on this fine day!

TR

TUK020
Lemon Quarter
Posts: 1094
Joined: November 5th, 2016, 7:41 am
Has thanked: 293 times
Been thanked: 617 times

Re: Babylon? TMF? Or You Tube?

#311984

Postby TUK020 » May 25th, 2020, 10:39 am

tonyreptiles wrote:Where would you direct a newbie who understands personal finance well enough and is ready to start some tentative investing?

TIA on this fine day!

TR


Welcome TR,

a useful starting point is this website:
https://monevator.com/
tuk020

AsleepInYorkshire
Lemon Quarter
Posts: 1250
Joined: February 7th, 2017, 9:36 pm
Has thanked: 1205 times
Been thanked: 572 times

Re: Babylon? TMF? Or You Tube?

#311993

Postby AsleepInYorkshire » May 25th, 2020, 11:10 am

tonyreptiles wrote:Hi All,

While I don't intend on becoming a stock-picking investor, I would like to understand a little about investing. I've skimmed through the 'Books on Investment' thread but there's no way to evaluate how good the book suggestions are.

I guess what I'm asking is - is there a book aimed at a novice investor looking to understand the mechanisms and principles of investing? I'd like to understand how my index tracker will work and what I need to know in order to avoid rookie mistakes. And if I learn enough to pick a stock or two in the future, then that's a bonus.

The book which gets the most mentions in the afore-mentioned thread is 'The Richest Man in Babylon'. Is this likely to satisfy my needs?
The Motley Fool's investment guide is also mentioned, although I worry that the 2002 publication date is a bit ancient.

I'd also be interested in good You Tube channels, if such a thing exists.

Where would you direct a newbie who understands personal finance well enough and is ready to start some tentative investing?

TIA on this fine day!

TR

It's a huge question Mr T :) .

Some quick thoughts

Investing at any level comes with risk.
  1. Understand the risks
  2. Manage them
  3. Use them to your advantage (optional and not for all)
  4. Embrace pound cost averaging
There are investment costs too
  1. Understand how much it's costing you to invest
  2. Mange those costs well
If it sounds to good to be true it is too good to be true
  • Don't listen to "advice" on the next winner. No one can predict the future direction of stocks. There will always be those who show you how they predicted a win and it arrived. Hindsight.
  • If you feel tempted by "quick wins" refer to "understanding and managing the risks" as stated above
Why write a book?
  1. If I had made a fortune on dealing in stocks and shares why would I write a book? I would be sat on a beach or walking my dog or fishing or gardening or even doing up an old boat. I wouldn't have time or the enthusiasm to write a book and I wouldn't need to speculate with my time and money if it would make me more money that I don't really need
AiYn'U

tonyreptiles
Lemon Pip
Posts: 77
Joined: November 6th, 2016, 6:07 pm
Has thanked: 42 times
Been thanked: 180 times

Re: Babylon? TMF? Or You Tube?

#312001

Postby tonyreptiles » May 25th, 2020, 11:23 am

AsleepInYorkshire wrote:It's a huge question Mr T :) .

[*]If I had made a fortune on dealing in stocks and shares why would I write a book? I would be sat on a beach or walking my dog or fishing or gardening or even doing up an old boat. I wouldn't have time or the enthusiasm to write a book and I wouldn't need to speculate with my time and money if it would make me more money that I don't really need[/list]
AiYn'U


If doing up an old boat is the desired end-game of stock investing, then I'm already a winner!!

:-)

Thanks for your insight, it's much appreciated.

TR

AleisterCrowley
Lemon Quarter
Posts: 4497
Joined: November 4th, 2016, 11:35 am
Has thanked: 1204 times
Been thanked: 1210 times

Re: Babylon? TMF? Or You Tube?

#312010

Postby AleisterCrowley » May 25th, 2020, 11:44 am

'The Richest Man in Babylon'. Is this likely to satisfy my needs?

No, it's more an 'inspirational' tome... and it was written in the 1920s
I'd recommend ;
Tim Hale -Smarter Investing: Simpler Decisions for Better Results
Lars Kroejer -Investing Demystified

Monevator is a good blog, as mentioned above.

GrahamPlatt
Lemon Slice
Posts: 341
Joined: November 4th, 2016, 9:40 am
Has thanked: 122 times
Been thanked: 102 times

Re: Babylon? TMF? Or You Tube?

#312012

Postby GrahamPlatt » May 25th, 2020, 11:52 am

You just need a lucky pin

https://youtu.be/--Znlz-7eUg

vagrantbrain
2 Lemon pips
Posts: 118
Joined: November 17th, 2016, 7:12 pm
Has thanked: 39 times
Been thanked: 40 times

Re: Babylon? TMF? Or You Tube?

#312036

Postby vagrantbrain » May 25th, 2020, 12:53 pm

I'd recommend the FT Guide to Investing - 500ish pages so not a quick read but written in plain english without being patronising and covers the practicalities of company accounts, types of investments, risk management etc. If you've got any interest in tech stocks then Zero to One by Peter Thiel might be of interest. It's not about investing per se but it does cover the culture in tech startups and what factors and traits have been present in the really successful ones.

YouTube - Ben Felix is worth watching. He's a Canadian fund manager who leans towards index tracking ETFs as being the default for most investors but he also makes some good evidence-based videos on various financial topics like housing, leverage etc. Him aside i've found most YT creators seem to be either doom merchants like Ray Dalio or Peter Shiff or else trying to push BitCoin, daytrading, penny stocks or some other guff.

Wuffle
2 Lemon pips
Posts: 188
Joined: November 20th, 2016, 8:14 am
Been thanked: 55 times

Re: Babylon? TMF? Or You Tube?

#312241

Postby Wuffle » May 26th, 2020, 9:01 am

'The long and the short of it' by (professor, I think) John Kay. He dabbles in a bit of journalism as well.
with the tag
'finance and investment for normally intelligent people who are not in the industry'

It is bright pink.

Does what it says on the tin,
simple intro,
some maths in the middle if you are interested that he says you can skip if you want
and simple conclusions at the end.

First out in 2005 (having read the reverse of my copy) with an update to account for the financial crisis.
I think a good it for your specific requirements.

W.

AleisterCrowley
Lemon Quarter
Posts: 4497
Joined: November 4th, 2016, 11:35 am
Has thanked: 1204 times
Been thanked: 1210 times

Re: Babylon? TMF? Or You Tube?

#312245

Postby AleisterCrowley » May 26th, 2020, 9:22 am

Got that one - it's pretty good so far (50% through it, like many of my books)
The cover is a lurid bright pink, but the later edition seems to have changed to black so nobody will think you are reading 'chick lit' :)

Urbandreamer
Lemon Slice
Posts: 967
Joined: December 7th, 2016, 9:09 pm
Has thanked: 65 times
Been thanked: 259 times

Re: Babylon? TMF? Or You Tube?

#312268

Postby Urbandreamer » May 26th, 2020, 10:29 am

tonyreptiles wrote:The book which gets the most mentions in the afore-mentioned thread is 'The Richest Man in Babylon'. Is this likely to satisfy my needs?
The Motley Fool's investment guide is also mentioned, although I worry that the 2002 publication date is a bit ancient.

I'd also be interested in good You Tube channels, if such a thing exists.


I'd second the post arguing that "The Richest Man in Babylon" doesn't meet your stated needs, though that doesn't make it not worth reading.

There are loads of good books on the subject and more come out every day. A recent one is A J Bells "The DIY investor". A cynic may argue that he is not a disinterested party, but it's still quite good. John Bogle wrote "The little book of common sense investing" and also was not a disinterested party. I haven't read it but it does strike me that if you are interested in index trackers that it might be worth reading a book by the man reputed to have invented them. Personally I'm not a huge fan of index trackers (though I do own some), but many are and they can be low cost. John Lee (Britains 1'st ISA millionare) wrote "Yummi Yoghurt" to introduce young people to stock market investment.

I don't know of any YouTube channels, but am sure that they exist. Instead I recommned podcasts from the Investors chronicle, FT money and Shares Money and markets.

Regarding "understand the mechanisms and principles of investing" it's quite easy. Investing consists of buying things that provide a return. Buying things consists of paying sombody some money and they in turn give you the product that you purchased.

Ok we could get into more complicated stuff like modern portfolio theory. Thematic investing, momentum, quants ......
However if you are happy with index trackers the only complexity is ensuring that you have some diversification. You may have noticed that Covid has affected ALL stockmarkets and indexes.

tonyreptiles
Lemon Pip
Posts: 77
Joined: November 6th, 2016, 6:07 pm
Has thanked: 42 times
Been thanked: 180 times

Re: Babylon? TMF? Or You Tube?

#312292

Postby tonyreptiles » May 26th, 2020, 11:40 am

Hi All,

there's some great stuff to get my teeth into listed there.
I should probably read them before I pester the boards with questions again, but I doubt that will transpire.

Thanks for the pointers.

TR

tonyreptiles
Lemon Pip
Posts: 77
Joined: November 6th, 2016, 6:07 pm
Has thanked: 42 times
Been thanked: 180 times

Re: Babylon? TMF? Or You Tube?

#312294

Postby tonyreptiles » May 26th, 2020, 11:46 am

Urbandreamer wrote:
Personally I'm not a huge fan of index trackers (though I do own some), but many are and they can be low cost.


Thanks for your pointers Urbandreamer. I'll take a look at those.

In the meantime, I wonder if you would expand on the comment quoted above. I've always understood that Index Trackers are a 'good thing' and particularly suited to novices who know they have no investing skill. (And even good for those who don't have the skill they think they do.)

I'd be interested to know why you don't like them, even if that is something which pertains to your particular circumstance.

TIA
TR

AleisterCrowley
Lemon Quarter
Posts: 4497
Joined: November 4th, 2016, 11:35 am
Has thanked: 1204 times
Been thanked: 1210 times

Re: Babylon? TMF? Or You Tube?

#312304

Postby AleisterCrowley » May 26th, 2020, 12:06 pm

In normal times I'd suggest your local library - my village library (in west Berks) doesn't have a massive stock of finance books (approximately two I think) but I can find and order books within the wider region online and pick up locally for a small fee (£3)
The system down here is called SELMS - I'm sure there are equivalents elsewhere
Ah but when will we be allowed to go to libraries again?

Urbandreamer
Lemon Slice
Posts: 967
Joined: December 7th, 2016, 9:09 pm
Has thanked: 65 times
Been thanked: 259 times

Re: Babylon? TMF? Or You Tube?

#312348

Postby Urbandreamer » May 26th, 2020, 2:36 pm

tonyreptiles wrote:
Urbandreamer wrote:
Personally I'm not a huge fan of index trackers (though I do own some), but many are and they can be low cost.


Thanks for your pointers Urbandreamer. I'll take a look at those.

In the meantime, I wonder if you would expand on the comment quoted above. I've always understood that Index Trackers are a 'good thing' and particularly suited to novices who know they have no investing skill. (And even good for those who don't have the skill they think they do.)

I'd be interested to know why you don't like them, even if that is something which pertains to your particular circumstance.

TIA
TR



Index trackers are certainly not a bad thing in and of themselves. They are well suited to those who have little interest in the stockmaket but want stockmarket returns.

Here are some arguments as to why they may not be a "good thing".

If everyone buys index trackers, then what price/value are the companies in the index? The wisdom of crowds only works when the crowd has an opinion. Without wishing to reopen the passive/active debate the market simply can't function correctly if it isn't a market but simply a formula. To be a market someone has to set the price of a individual share.

Index trackers usually function by owning all, or most of the biggest companies in an index. Hence a FTSE 100 tracker would own tobbaco companies and banks. I personally would have no issue with owning either, and indeed do through both an index tracker and an investment trust. However there are ethical and religious issues with those two sectors. Ok you can get more complicated ETF's or funds that avoid parts of an index or create a different index, but you have to pick from many hence you are not avoiding the work or the risk you feel a novice exposes themself to by making a choice.

Then there is the joy of being involved, even fairly remotely, in an enterprise. I'm a fan of renewable energy. I enjoy my holdings that suport that enterprise. Likewise my holdings that search for new drugs or provide social housing. Compaired to that, index trackers lack soul.

Mike4
Lemon Quarter
Posts: 1341
Joined: November 24th, 2016, 3:29 am
Has thanked: 214 times
Been thanked: 466 times

Re: Babylon? TMF? Or You Tube?

#312373

Postby Mike4 » May 26th, 2020, 3:42 pm

Urbandreamer wrote:
tonyreptiles wrote:
Urbandreamer wrote:
Personally I'm not a huge fan of index trackers (though I do own some), but many are and they can be low cost.


Thanks for your pointers Urbandreamer. I'll take a look at those.

In the meantime, I wonder if you would expand on the comment quoted above. I've always understood that Index Trackers are a 'good thing' and particularly suited to novices who know they have no investing skill. (And even good for those who don't have the skill they think they do.)

I'd be interested to know why you don't like them, even if that is something which pertains to your particular circumstance.

TIA
TR



Index trackers are certainly not a bad thing in and of themselves. They are well suited to those who have little interest in the stockmaket but want stockmarket returns.

Here are some arguments as to why they may not be a "good thing".

If everyone buys index trackers, then what price/value are the companies in the index? The wisdom of crowds only works when the crowd has an opinion. Without wishing to reopen the passive/active debate the market simply can't function correctly if it isn't a market but simply a formula. To be a market someone has to set the price of a individual share.

Index trackers usually function by owning all, or most of the biggest companies in an index. Hence a FTSE 100 tracker would own tobbaco companies and banks. I personally would have no issue with owning either, and indeed do through both an index tracker and an investment trust. However there are ethical and religious issues with those two sectors. Ok you can get more complicated ETF's or funds that avoid parts of an index or create a different index, but you have to pick from many hence you are not avoiding the work or the risk you feel a novice exposes themself to by making a choice.

Then there is the joy of being involved, even fairly remotely, in an enterprise. I'm a fan of renewable energy. I enjoy my holdings that suport that enterprise. Likewise my holdings that search for new drugs or provide social housing. Compaired to that, index trackers lack soul.



And putting forward the opposite argument, which I'm surprised no-one here has mentioned yet, is the one put forward back in the early days of The Motley Fool and when both the internet and index trackers were a new idea, that stock picking is actually highly skilled and few people doing it ever consistently "beat the market". That is to say over long-ish periods of time, few people picking their own stocks achieve a total return (capital growth plus dividends re-invested) better than someone buying an index tracker on the same dividends re-invested basis.

In fact IIRC, the whole point of TMF was in addition to basic personal finance education, to spread the word about how well the then-newfangled index trackers performed compared to the way "The Wise" would have you do it,i.e. letting your stockbroker suggest what to buy and paying him for his dodgy (compared to index trackers) advice.

Anyway I've probably got some details wrong but the gist of it I think is right. The one reason NOT to choose an index tracker is it means your investing goal is a rather unambitious 'average', by definition. But then the temptation to think you can do better than average by picking your own was the illusion in the first place. I'll stop now, I'm rambling....

Urbandreamer
Lemon Slice
Posts: 967
Joined: December 7th, 2016, 9:09 pm
Has thanked: 65 times
Been thanked: 259 times

Re: Babylon? TMF? Or You Tube?

#312394

Postby Urbandreamer » May 26th, 2020, 4:29 pm

Mike4 wrote:......
In fact IIRC, the whole point of TMF was in addition to basic personal finance education, to spread the word about how well the then-newfangled index trackers performed compared to the way "The Wise" would have you do it,i.e. letting your stockbroker suggest what to buy and paying him for his dodgy (compared to index trackers) advice.

Anyway I've probably got some details wrong but the gist of it I think is right. The one reason NOT to choose an index tracker is it means your investing goal is a rather unambitious 'average', by definition. But then the temptation to think you can do better than average by picking your own was the illusion in the first place. I'll stop now, I'm rambling....


Well I seem to remember things more or less the same.

However we can both be "right", given the fact that nothing I said disagree's with your post or that anything that you said disagree's with my post.

I prefer active investment, others prefer passive.

Since I started benchmarking my portfolio it seems that I have slightly outperformed the index, but not by enough to "justify" any effort that I didn't want to put in. Were it to underperform, then clearly I would be paying for my hobby.

I was not trying to start a active/passive debate. I simply stated my preference and provided reasons when asked.

I would also point to another reason NOT to choose an index tracker. If you want a higher income than the average would give you then you have to do something different. I think many here will be familiar with HYP. It dates back to TMF and we have a board dedicated to it here.

tjh290633
Lemon Half
Posts: 5115
Joined: November 4th, 2016, 11:20 am
Has thanked: 427 times
Been thanked: 2026 times

Re: Babylon? TMF? Or You Tube?

#312405

Postby tjh290633 » May 26th, 2020, 4:51 pm

Mike4 wrote:And putting forward the opposite argument, which I'm surprised no-one here has mentioned yet, is the one put forward back in the early days of The Motley Fool and when both the internet and index trackers were a new idea, that stock picking is actually highly skilled and few people doing it ever consistently "beat the market". That is to say over long-ish periods of time, few people picking their own stocks achieve a total return (capital growth plus dividends re-invested) better than someone buying an index tracker on the same dividends re-invested basis.

In fact IIRC, the whole point of TMF was in addition to basic personal finance education, to spread the word about how well the then-newfangled index trackers performed compared to the way "The Wise" would have you do it,i.e. letting your stockbroker suggest what to buy and paying him for his dodgy (compared to index trackers) advice.

Anyway I've probably got some details wrong but the gist of it I think is right. The one reason NOT to choose an index tracker is it means your investing goal is a rather unambitious 'average', by definition. But then the temptation to think you can do better than average by picking your own was the illusion in the first place. I'll stop now, I'm rambling....

You also have the question of which index to track, and whether anyone offers an index tracker for that index.

TJH

tonyreptiles
Lemon Pip
Posts: 77
Joined: November 6th, 2016, 6:07 pm
Has thanked: 42 times
Been thanked: 180 times

Re: Babylon? TMF? Or You Tube?

#312684

Postby tonyreptiles » May 27th, 2020, 3:32 pm

Urbandreamer wrote:
Index trackers are certainly not a bad thing in and of themselves. They are well suited to those who have little interest in the stockmarket but want stockmarket returns.

<Snip?

Then there is the joy of being involved, even fairly remotely, in an enterprise. I'm a fan of renewable energy. I enjoy my holdings that support that enterprise. Likewise, my holdings that search for new drugs or provide social housing. Compared to that, index trackers lack soul.


I hear ya!

I wouldn't say I have 'little interest' in the stock market, but I am painfully aware that I have little expertise. While there is the argument that I could learn, or that I might indeed already have more savvy than many who partake in stock picking, the statistics oft-quoted convince me that I'm probably going to be crap at it - at least for now anyway.

As a writer I've watched people try to do my job and, while some perform at a level which isn't exactly awful, few perform at a level which could be described as 'good'. The desired result of their endeavour is often handicapped by their lack of expertise. Indeed, it was always interesting to watch people who thought they knew what they were doing in my previous lives when I was working with reptiles. More blood was spilt under those circumstances as the lack of expertise had visible consequences.

And I think that's my point. I can't afford for my novice to spill the blood of my finances. It would be foolish of me to think I could do a decent job of stock picking and of managing my portfolio with any skill or savvy.

That said, the urge to pick a winner is almost overwhelming. I'm looking at the current market and thinking 'surely there's a killing to be made' and worrying that I'm missing the boat. I think, sometime in the future, I'll take a punt and see what happens. This will probably be when I've enough cash behind me to feel more comfortable with financial risk - by which point I'll hopefully have more of a clue about stock picking.


Thanks for clarifying. It reassured me that I'm not making a rookie error.

TR

AleisterCrowley
Lemon Quarter
Posts: 4497
Joined: November 4th, 2016, 11:35 am
Has thanked: 1204 times
Been thanked: 1210 times

Re: Babylon? TMF? Or You Tube?

#312690

Postby AleisterCrowley » May 27th, 2020, 3:53 pm

TR: It would be foolish of me to think I could do a decent job of stock picking

Most professional 'stock pickers' don't do a decent job - the majority of professionally-managed funds don't beat the index in the long run. And there's no way to accurately select the ones who will beat the index. Even those with terrific multi-year records often crash and burn eventually (cf a certain Neil Woodford)

For most people, most of the time, a cheap index tracker is the way to go. There are some on discussion boards such as this who will point out their superior returns compared to an index tracker, but survivorship bias looms large. The under-performers don't post about their inferior returns...if they post at all. You could have a pool of 100 people RANDOMLY selecting stocks with a copy of the FT nailed to a dartboard, and some would significantly outperform the index.

tonyreptiles
Lemon Pip
Posts: 77
Joined: November 6th, 2016, 6:07 pm
Has thanked: 42 times
Been thanked: 180 times

Re: Babylon? TMF? Or You Tube?

#312712

Postby tonyreptiles » May 27th, 2020, 4:57 pm

That's exactly how I view things.

Maybe one day...but not today.

Thanks all
TR


Return to “How Do I Invest”

Who is online

Users browsing this forum: No registered users and 3 guests