Thoughts on Self Learning Financial Reports/Statements Analysis for Signs/Symptoms/Red Flags?

N

NightOwl

Hi guys,

The subject didn't allow me to type too long.

Basically I'm new to stock trading, and I was told that without attending a course, i would not be able to get the glimpse into financial reports to get hints and symptoms, or red flags on the stock I'm interested in, whether it's a good buy or not, and whether it has growth potential.

Or any red flags to stop you from considering buying in their shares. I was told that those figures that are used to calculate the ratios are very common and seen everyone on the internet via Google, but those essence on analysing the Financial reports (and/or other statements) would not be available online, it would be kept secret and only taught throughout the paid courses.

What are your views on these?

Thanks.

Regards,
Jenson
 
Several years of financial statements and ratios are available at www.morningstar.com.

Read Security Analysis by Benjamin Graham. I believe he recommends a basic accounting course as a prerequisite, not sure.

There are so many red flags. Whether it is actionable to trade is another thing.
 
Nightowl, I don't think you necessarily need to take an accounting class.
The best thing to do, imo, is read the quarterly financial statements, and go line by line using Investopedia as a reference for each accounting term. They do a good job of explaining things(accounting terms) in plain English. Thats what I did(do) at least.
And listen to conference calls too. They supply a vast amount of info and they are always on a company's website under "investors".

Good luck with your journey.
 
xandman said:
Several years of financial statements and ratios are available at www.morningstar.com.

Read Security Analysis by Benjamin Graham. I believe he recommends a basic accounting course as a prerequisite, not sure.

There are so many red flags. Whether it is actionable to trade is another thing.
More...

Hi xandman,

Great suggestion there, I should grab a copy of it to read. Currently, I was recommended to read on Intelligent Investor by Benjamin Graham first, and shun away from all Warren Buffett books as it's more for investors that have huge amount of cash.

Regarding red flags, yes, I'm actually trying to see if I can learn from anywhere to see those hints/clues/signals of red flags or green light, if there is any?

Though I'm not a believer of attending paid courses (including Value Investment courses available in the market) that usually cost you thousands of dollars, if I can't find useful information to equip myself with necessary knowledge, I will be plunging into those courses next time. I hope not.

I'm more into reading up books and to put into practice myself, though there's a camp of people who believe in getting a good mentor will make you a good investor/trader and shorten the learning path/curve.
 
vanzandt said:
Nightowl, I don't think you necessarily need to take an accounting class.
The best thing to do, imo, is read the quarterly financial statements, and go line by line using Investopedia as a reference for each accounting term. They do a good job of explaining things(accounting terms) in plain English. Thats what I did(do) at least.
And listen to conference calls too. They supply a vast amount of info and they are always on a company's website under "investors".

Good luck with your journey.
More...

Hmmm...glad to know that I can save my money from attending account classes.

I'm trying to read up books and to grab some quarterly statements and yearly statements to study on 1 or 2, or just a few of the companies of choice and see where am I heading.

Oh yeah, I do read up some tutorials on Investopedia, and I've yet to finish them, as the information up there is simply too much, I guess have to take one step at a time to digest and apply them.

I hope I can pick up what I need, and start investing in the market soon, I have been researching online for months now, for useful learning resources that I can put into practice.

Thanks for the best wishes on my investment journey, really need that! :)
 
NightOwl said:
Hi xandman,

Great suggestion there, I should grab a copy of it to read. Currently, I was recommended to read on Intelligent Investor by Benjamin Graham first, and shun away from all Warren Buffett books as it's more for investors that have huge amount of cash.

Regarding red flags, yes, I'm actually trying to see if I can learn from anywhere to see those hints/clues/signals of red flags or green light, if there is any?

Though I'm not a believer of attending paid courses (including Value Investment courses available in the market) that usually cost you thousands of dollars, if I can't find useful information to equip myself with necessary knowledge, I will be plunging into those courses next time. I hope not.

I'm more into reading up books and to put into practice myself, though there's a camp of people who believe in getting a good mentor will make you a good investor/trader and shorten the learning path/curve.
More...

If you read a Random Walk Down Wall Street, you might find that it is all just an incredible waste of time.:banghead:

It is very easy to downplay the enormity of the task in the age of google. I read about people in various domains of interest trying to build a formula one car in their garage. I am trying to build a few myself. A mentor/instructor would be beneficial. I hope Trump makes community colleges free for all.

The most common red flag is in cash flows, but you will often cross reference to the other financial statements and the management's discussion. Earnings are easily and often manipulated.
 
Ah, it does seems like a lot to learn and pick up, but I would say it is definitely worth the efforts? Though attending the courses might give you straightforward layman terms and elaboration with near real life examples to illustrate the theories and ideas? I don't know, as I haven't attended any of them yet. But I do believe if they can teach you, they definitely learn it somewhere, either books or mentors, and where did those mentors learn? Is it books? Or investment experiences?

Mentor is hard to come by, especially those asking nothing in return but more on sharing so that more people can benefit from there. But how many out there is willing to be mentor yet give out all he/she has willingly and unreserved?

But I believe there are still such mentors out there :rolleyes:
 
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