Where can I learn about the stock market?
September 28, 2008 9:01 AM   Subscribe

I've never had anything to do with the stock market. I would like to learn more about it. Where do I start?

So, I've never had anything to do with the stock market. I'm completely clueless. I was chatting with a friend the other day and he mentioned that he bought some shares of Fannie Mae because they were so cheap and he plans on selling them when the value rises. He said I should jump on it too if I was willing to take a risk.

I thought about it and searched the internet for some advice and such. I don't think I'm going to do it because 1) Everything on the internet says not to. 2)I have no idea what I'm doing and 3)I can't seem to find a thorough site that lays out the stock market for the average clueless person such as myself.

Having read a lot of sites the past few days I have learned many things about the stock market but just when I get a grasp on one idea I discover an entirely new rule to the game with a whole new list of vocabulary that I don't know. Does anyone know of a killer site that breaks it all down for you? I'm not looking for financial advice. I'm not puting any money anywhere for a while. I would just like to lay my eyes on the best free web site or cheap book that is basically "Stock Market 101" and maybe a little 102 as well. Any suggestions? Thanks so much in advance.
posted by smeater44 to Work & Money (15 answers total) 35 users marked this as a favorite
I don't think I'm going to do it

Good idea. It's risky, and you don't even have an informed grasp of what the risk is, so I'd pass on this for now.

The Motley Fool has lots of information on various investment subjects.
posted by grouse at 9:22 AM on September 28, 2008

Investopedia. Probably the most objective resource on the web for novices. Also, use the tag-based search here and look up finance and economics. We have literally dozens on threads on this topic and hundreds of comments with links to books, papers, websites, and anecdotal commentary.
posted by SeizeTheDay at 9:27 AM on September 28, 2008

Buying stocks on a tip is a sure way to lose money. As a beginner, do yourself a favor and learn as much as possible about ONE American publicly traded company that you admire. Go to their website and view their investor relations page. Go to finance.yahoo.com and read all about the company. Go to investopedia and learn what all the vernacular like P/E ratio, means.

then and only then, buy stock. Once you have figured all this out for your ONE company, you can now extrapolate this info out all other publicly traded companies, then Bonds, ETFs, Funds, blah blah, blah. I think you will find that your increased knowledge of the market and how companies are valued will make you a more informed investor and citizen.

Good luck.

PS. THE ONLY investment book I recommend is The Buffett Way by Warren Buffett.
posted by Paleoindian at 9:37 AM on September 28, 2008

Or goto Mutant's user page here.
posted by SeizeTheDay at 9:37 AM on September 28, 2008

Check out the Investing Basics section at the American Association of Individual Investors. I'd also not advise buying individual stocks, but a lot of what you learn about investing comes from experience--good or bad.
posted by mattbucher at 9:48 AM on September 28, 2008

Read Jim Cramer's Books.
Start with Real Money. This is the best stock market 101 book I've come across. It teaches you how the stock market works, how stocks are priced, how to invest intelligently, and the mindset you should use when approaching investing.

Follow that up with Stay Mad for Life. This is more about how to use various American investment accounts like 401k's and IRA's.
posted by nazca at 9:55 AM on September 28, 2008

Watch CNBC as much as possible. That was my crash course.
posted by iguanapolitico at 10:00 AM on September 28, 2008

MoneyChimp.com is an informative site that covers stock valuation and other fundamentals.
posted by Andy's Gross Wart at 10:18 AM on September 28, 2008

You can try investing with fake money for a while until you get the hang of it.
posted by salvia at 10:33 AM on September 28, 2008

I also agree that Cramer's Real Money is the best "intro to the market book for the regular guy" that I've ever read. Peter Lynch's Beating the Street and One Up on Wall Street are also excellent.
posted by ikkyu2 at 10:53 AM on September 28, 2008

Oh, and as for Fannie Mae stock, is there any reason to believe that its eventual value will not be zero? Peter Lynch likes to say that the one saving grace of stocks is that their value can only go to zero - he says he's held some stinkers that deserved to go much lower. But right at this point Fannie looks like one of those stinkers that will go to zero.

See, Fannie is bankrupt. It would have been liquidated except that the government bailed it. Fannie's debt-holders are first in line to receive whatever's left of Fannie - common equity (stock) holders are last. There's still squabbling about how the bailout is going to be accomplished but no one seems to think that the common stockholders are going to be anything but wiped out.
posted by ikkyu2 at 10:56 AM on September 28, 2008

When I turned 21, my stockbroker gave me a copy of How to Buy Stocks by Louis Engel. It is a good starting point.
posted by charlesv at 2:25 PM on September 28, 2008

I've always liked Investor Business Daily's Guide to the Markets as an introduction. The only thing it might be a bit weak on is ETFs, as those were rather new when the latest edition was prepared.

Also, A Random Walk Down Wall Street will tell you why trying to pick stocks is a bad idea for most people.
posted by kindall at 3:26 PM on September 28, 2008

I am currently taking a securities and investing course at a local community college. The one thing our instructor repeats is "invest in what you know." So pick one thing (i.e. bonds), study it, learn it, and go from there. good luck!
posted by killy willy at 4:59 PM on September 28, 2008

There's a lot of bad stock advice on the Net. Part of it is the overwhelming focus on "buy this stock, it'll make money". That's where most novices start out and it's a big mistake.

It takes years to become a good stock market investor if you're picking individual stocks. The bad news is that most stock pickers, even most mutual fund managers who supposedly do this for a living do worse than the market average.

If you want to learn more about what really matters in stock market investing, check out "The Four Pillars of Investing" and also Malkiel's Random Walk Down Wall Street as kindall suggests.
posted by storybored at 7:44 PM on September 28, 2008

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