book about investing

<p>My S the college graduate is beginning to play around with a small amount of money at a discount brokerage. Is there a good book out that will explain the basics and beyond? I used to work in the industry 25 yrs ago but I am extremly rusty and the world has changed since my day. I have been out of the market for years.
A friend just loaned him Rich Dad, Poor Dad. I want to find something more accurate for him.
He is ADD and has poor inpulse control so I would like him to know what he is doing before he acts too quickly. He is only playing with money he can afford to lose.</p>

<p>Most investing books ... the widely-respected ones anyway ... are designed for "normal" markets (whatever those are). There's generally a lot of "assuming 8% annual appreciation" and such nonsense. Finding a book that helps with "for the next ten years there will be no capital appreciation in stocks" is really difficult. (And yes, zero appreciation pretty well summarizes actual price history for the past decade.)</p>

<p>Certainly it's useful to understand that you can't grow money if you don't save it first. But making money in the market is largely dependent on knowing which way the market's headed. At the moment, it's headed whichever way traders are trading that day. </p>

<p>If he's interested in learning, I'd suggest having him trade a faux portfolio. When things go wrong, as they do for everyone, hopefully he'll be motivated to start reading to understand the failure. JMHO of course.</p>

<p>I'd suggest going through an accounting 101 textbook, a finance 101 textbook and a book on technical analysis (John Murphy's book is a good one to start with). He could probably use a book on trading in general but there isn't one that I'd recommend. BTW, did this with our son - gave him an accounting book and a quick two-hour overview of finance and he's placed conditional trades for me as well as his own trades in my accounts. Our daughter has placed a few trades too.</p>

<p>I would buy him a subscription to the Wall Street Journal, or if a daily paper is too much information, a journal such as Money or Forbes. These journals provide timely information on stocks or stock sectors and make the whole endeavor much more interesting.</p>

<p>Go to the library for some good book ideas. He should also stay current with the trends of the market by reading the paper daily (NYT, WSJ, The Economist). Then he should choose certain stcoks and follow them for awhile. Get lots of research about them (annual reports, stock history, company news, etc) before making any decisions. There are also good blogs to explore.</p>

<p>I encourage my soon-to-be college grad to listen to the American Public Media podcast Marketplace Money every week.</p>

<p>Is there anything better as an introduction than Burton Malkiel's "A Random Walk Down Wall Street"? He updates it periodically; I think the last edition was 2007. But I would take a version from the 70s if it was available.</p>

<p>"He is only playing with money he can afford to lose."</p>

<p>Some brokers are too quck to convert even a tiny cash account into a margin account, and that's when all hell can break loose! As long as he never uses margin to buy or short socks, he will be ok, since all he can lose is just the playing money.</p>

<p>Kaye Thomas is a former tax attorney with good background in accounting, and his book *Consider Your Options *was my life saver when I had to deal with ISOs for the first time in my life (what an eye opener and a crash course in AMT that had been!):</p>

<p>Books</a> from Fairmark Press</p>

<p>I see that his book on investing *That Thing Rich People Do *got mostly positive nods on Amazon, but I personally have not read it.</p>

<p>FYI: if your son is going to trade, he needs to familiarize himself with the infamous Schedule D.</p>

<p>I bought The Money Class by Suze Orman for my son when he was at that stage. I skimmed it myself. I'm not a huge Suze fan but it had sound advice and was easy reading. You should be able to preview chapters on Amazon. It isn't nuts and bolts about just investing but good financial advice.</p>

<p>BunsenBurner- I have already given him the grim news. Taxes, Taxes everywhere!
I have a meeting scheduled with him later this week. I want to give him some book suggestions.
I have already warned him of the perils of buying on margin or shorting stocks.</p>