Start with
Security Analysis by a Columbia University finance professor known as
Benjamin Graham. I was introduced to this book by an Army officer in 1982 while on a six month mission in the Sinai desert. Much of the material in the book still holds true today. Required reading at some finance schools, as it should.
After fully digesting Security Analysis, read another book by Mr. Graham written over 16 years later titled
The Intelligent Investor
Some basic don'ts and do's: Don't trust individual equities investment advice (ex: 'ABC' stock is hot right now) that you read on message boards. For if you do, then you belong in low-load, index mutual funds. Don't always trust analyst's recommendations regarding upgrades and downgrades, particularly from the big brokerage houses. Analysts are paid to make such announcements, which are usually in their employer's best interest (read: think downgrade=short). Don't think day traders self-destruct and either "go postal" at brokerages, or move back in with their parents for no apparent reason. About 1 in 10 turn a profit after trading fees, if that many. Small investors have neither the sophistication nor the financial backing to engage in momentum trading with consistent success. Don't invest on margin unless you are willing to lose it all. Margin investing has caused leaps from 10-story+ windows and suicide via self-inflicted gunshot wounds. Don't become so attached to a company that you won't trade it, even if the fundamentals deteriorate. Don't always think "buy-and-hold" is wrong.
Do remember that the stock market is an emotion-driven event. Pay attention to world, industry and company news. Do remember that a certain stock trades at the ridiculously cheap price of $2.17 per share for a reason. If it earns no profit, has never earned a profit for a certain period, the issue is thus speculative. Do consider those issues in the DJIA. Whenever you see something to the effect of "
the price of this company's stock is included in the Dow Jones Industrial Average", remember that these issues are the most watched, scrutinized, criticized and analyzed stocks on the planet, and not just a bunch of stuffy old blue-chips. Do keep foreign exposure with currency exchange rates in mind when investing in multnational corporations. MCD hasn't appreciated 19% over the past three weeks for no reason. Do reinvest dividends, and do establish an analytical rationale (set of fundamentals) for buying and holding shares of the company. Do keep good records and read shareholder reports.
Finally, don't invest in a company for the sole purpose of trading it. Think about how YOU, and not some blowhard analyst, would value the company if enough funds were available for purchase.
