Starter kit for new investor

One of my friends showed me a website that claims to "discover micro-cap stocks and help you make over 50% profit in short term", and ask me whether it is a good approach to start learning and buying individual stocks.

While I don't know what is the best approach to learn equity investment, I do know the above approach doesn't work.

Here are my thoughts for new investor who wants to learn equity investment.

Financial Skills
Know how to read 3 major finance statements(Income, Balance and Cash Flow) and annual reports - it is much more important than analyst's report. One will find most of the term definitions in Investopedia, a good online financial dictionary.


Learn from great investors
Best way to formulate your own strategy is to understand other successful investor's strategy first. I learnt a lot from other successful investors and highly recommend following 3 books:

a. The Intelligent Investor by Ben Graham. Graham is often referred as "Father of Value Investing", and credited by Warren Buffet as the second most influential person in his life after his father.

b. One up on wall street by Peter Lynch. Lynch was a successful fund manager in charge of Fidelity Magellan Fund from 1977 to 1990, with an average return of 29% a year. The book is written for new investors - easy to read and key points are laid out very clearly.

c. Common stock and uncommon profits by Philip Fisher. A succesful advisor and professor - he provides in-depth analysis on how to measure and discover a company's value in the Book.


Get updated
Get updated of the latest financial news, industry trends. CNBC and Bloomberg online TV provides all day long program, and some online financial portals provides most updated information. Just name a few:
http://finance.yahoo.com/
http://www.marketwatch.com/