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Subject: Re: newbie Date: 9/29/2003 10:22 AM
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Hi Dumbererr,

I'm a baby in this field. Currently reading Buffet, Motley Fool's Investment Guide, and the Intelligent Investor (Graham) simultaneously.

Since you are new to investing; definitely, the minimum $2,000.

It is far more important to contribute regularly. If you can after sending in your $2,000 to open an account send some monthly money up this would be the best way to go.

Be patient, read those books you mentioned and begin to form a system.

1. It is important before you invest that you have establish some way to value a company.

2. You need to be able to locate debt on the balance sheet as well as cash which is also located on the balance sheet of the companies' financial statements.

3. Find some good sources of information by checking out your local libray. They carry an archive of financial magazines as well as some heavy duty financial publications like Value Line.

4. Immediately start a notebook. Take notes on any investments that you make. Before investing a dime in a company, make sure you jotted down in that notebook why you invested in that particular company and what you reasonably expect as far as returns from that company and why.

5. Understand at least the basics facts that the income statement, balance sheet and cash flow statements are telling you about the companies you are investing in.

6. Continue to study as you invest; grow your knowledge along with your investments. Organize what you learn about investing and let your notebooks grow along with your investments. It will be fun to look back on your beginning notes 20 years from now.

7. Learn the difference between a falling stock price due to degrading company fundamentals and a falling stock price due to the general market going down.

8. Don't borrow to invest; don't go on margin

9. Never invest so much you cannot sleep at night. If you have invested wisely and slowly your investments will begin to grow faster than your monthly allotment to investing. Your portfolio will grow because the stocks you bought our appreciating in value not because you are adding more monthly money to your investments.

10. Don't invest money you will need in the short-term. In fact, ideally, you want to invest only the money you will never miss till your retire.

11. Don't worry about mistakes, if you are investing slowly through monthly contributions and diversifying wisely as you go, a few mistakes will not harm your portfolio.

12. Don't give up. Many people give up long before they have a chance to learn how to invest properly and benefit from the rewards of an appreciating portfolio.

13. Read these articles - The Motley Fool has provided many good articles on how to value a company

Inventory Ins and Outs by LouAnn Lofton TMF Bling – March 20, 2003

The Inventory Story by TMF Orangeblood Rex Moore – July 15, 2002

Investigating Inventory by Rex Moore TMF Orangeblood – July 8, 2002

Indecent Inventory Exposure by Mike Trigg TMF Tonto – March 14, 2001


The Value of Cash flow
By Vince Hanks – June 8, 2000

Lucent cash flow and calculating Lucent cash flow

The Motley Fool on valuation
Introduction to valuation

Earnings valuation

Sales valuation

Cash flow valuations

Equity-based valuations

Yield-based valuations

Member-based valuations

The following series was written by- Randy Befumo TMF Templr
How to read a balance sheet

Current Assets

Current liabilities

Debt and equity

Current and Quick ratio

Working Capital

Price to book - DSO and Turns

Beware the bloated balance sheet
By Bill Mann TMF Otter - August 16, 2000

Current assets on the balance sheet – Our likes and dislikes
By Phil Weiss TMF Grape – June 27, 2000

The Many Faces of Debt
By Phil Weiss TMF Grape – August 4, 1999

Beware of Inflated earnings
By Richard McCaffery TMF Gibson – August 17, 2000

Statement of Cash Flows
Vince Hanks – June 1, 2000

Series of articles by Vince Hanks 1-12
Intro to SEC forms By Vince Hanks (TMF Elwood) Jan 6, 2000
Back to basics Part 1

Concepts and Definitions by Vince Hanks
Back to Basics Part 2

The Balance sheet by Vince Hanks
Back to Basics Part 3

Non-Current Assets by Vince Hanks
Back to the Basics Part 4

Current Liabilities Explained by Vince Hanks – Feb 3, 2000
Back to Basics Part 5

Understanding Non-Current Liabilities by Vince Hanks – Feb 10, 2000
Back to Basics Part 6

Finishing the Balance Sheet by Vince Hanks – Feb 17, 2000
Back to Basics Part 7

Fun With Numbers by Vince Hanks – Feb 24, 2000
Back to Basics Part 8

Balance Sheet Finale by Vince Hanks March 2, 2000
Back to Basics Part 9

Introducing the Income Statement by Vince Hanks March 16, 2000
Back to Basics Part 10

Income Statement demystified by Vince hanks – April 6, 2000
Back to Basics Part 11

The Cost of Doing Business by Vince Hanks – April 13, 2000
Back to Basics Part 12

Income Statement Odds and Ends by Vince Hanks April 20, 2000
Back to Basics Part 13

Today's Buzzword EPS by Vince Hanks April 27, 2000
Back to Basic Part 14

Finding Financial Information by Matt Richey TMF Matt July 14, 1999

Cash Flow Headaches by Richard McCaffery TMF Gibson April 10, 2000

The Statement of Cash Flows by Matt Richey TMF Verve – Aug 23, 1999

Capital Assets – What are they Really? By Roy Lewis TMF Taxes

Dollar Machine Part 1 by Randy Befumo – June 20, 2000

Dollar Machine Part 2

Dollar Machine Part 3

Don't Forget Debt by Whitney Tilson Oct 16, 2001

Debt is not always Bad – Brian Graney TMF Panic April 23, 2001

Debt; The Good, The Bad and The Ugly- Phil Weiss TMF Grape
Part 1 Aug 31, 1999

Part 2 Debt; The Good, The Bad & The Ugly -
Return on Equity a Definition

Return on Equity – profit margin

Return on Equity – Asset Managemenet

Return On Equity Leverage

Return on Equity – An example

A Look at ROIC - introduction

A Look at Roic – Better than ROE by Dale Wettlaufer TMF Ralegh

A Look at ROIC An example by TMF Ralegh

A Look at ROIC True Performance TMF Ralegh

A Look at Roic – A declining ROIC TMF Ralegh

A Look at ROIC – Equity isn't free by TMF Ralegh

A Look at ROIC – Cash Role by Tmf Ralgh Dale Wettlaufer

Security Analysis – Introduction by Randy Befumo TMF Templr

Security Analysis – A crazy lil thing called stock by Randy befumo

Security Analysis – Valuation The price paid to the Cash Created

Security Analysis – Quality the Measure of Excellence

Security Analysis – Depth of Knowledge: The Circle of Competence

Security Analysis – Time the Ultimate Arbiter of Returns

Finding Information by Randy Befumo

Thinking of ROA by Paul Lawson June 21, 1999

The Uselessness of PSR by Paul Larson TMF Parlay Aug 1, 2000

P/E Is not a Magic Number Zeke Ashton TMF Centaur
Part 1 March 23, 2000

P/E Is not a Magic Number Part 2 TMF Centaur March 30, 20000

Calculating Cash Flow Ratios Phil Weiss TMF Grape July 7, 2000

Debt Beyond the Balance Sheet by Richard Mccaffery May 2, 2002 TMF Gibson


Dividend Discount Formula – John Del Vecchio TMF Fuz

Cash Flow and the Federal Reserve by TMF Otter Bill Mann


Return on (Marginal) Invested Capital by Bob Fredeen (TMF Bobdog)

14. If you do not understand them thoroughly ask someone from the boards to help you with what is not clear.


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