The Five Rules for Successful Stock Investing: Morningstar′s Guide to Building Wealth and Winning in the Market

Must read book for who love investing. 👏👏👏.

Praticamente, uno dei pochi libri su gli investimenti che insegna, in maniera accurata, le fondamenta per la ricerca di ottime aziende che hanno un vantaggio competitivo rispetto alle altre. Grande libro, peccato che è aggiornato al 2001/2002!

Have been meaning to put in a good word for this book for a long time. It's a gem. I've read an embarrassingly large number of introductions to investing in equities and this is probably the best. Other books purport to tell you how to identify hot stocks; Dorsey shows how to value companies. This isn't just a matter of understanding PE ratios and other traditional metrics, which most books explain more or less adequately. Instead, it means analyzing balance sheets and cash flow and income statements. _Five Rules_ provides as reader-friendly an introduction to assessing a company's financial statements as I've come across, with plenty of real-world examples. The object in the end is to determine the present value of a company's future cash flows, and Dorsey's explanation of a simplified version of Fisher's and William's discounted cash flow model is lucid and lively. Clorox is the company evaluated in this chapter, and en route there are instructive comparisons of HP and Dell, Best Buy and Circuit City, and, finally, AMD and Biomet. Chapter 8, Avoiding Financial Fakery, is particularly helpful. Obviously, having read this book and nothing else, you're not going to be able to spot something fishy in the footnotes to Microsoft's income statement that has escaped the attention of all the analysts. But for someone without a background in accounting, _Five Rules_ is a godsend. Dorsey then conducts a very informative tour d'horizon of 13 industries. It should go without saying that before you invest in a company, you'd want to find out something about the economics of its industry, so you can compare apples with apples. The chapter on health care is especially good, but I found them all excellent. In an Ameritrade ad that aired this week, a teenager asks her dad for $80 for a pair of jeans. The dad is nonplused, but the girl assures him that everyone is buying these jeans. He asks her who the manufacturer is, promptly logs onto Ameritrade, checks a chart, and buys the company's stock. The guy then gives his daughter the $80, a reward for the hot tip, presumably. He might do OK this time, but you have to figure he'd be a lot better off in the long run investing a fraction of that $80 in _Five Rules_. Bottom line: there are a ton of books on trading strategies, but if you're looking for a practical book on value investing, this is the best.

This book is basically split into two parts. The first part teaches us how to read financial statements. I must admit that it can get quite dry but I'll have to say these knowledge are compulsory if you are determined to be an investor. And although reading numbers is never fun, I must say that he does a good job in his explanation. I don't see everyday people can read through this book once and digest everything well. It's a book that will require to read again and take down notes after that. The second part will go through all the different industries in the stock market that we can invest in. Great book!

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It really helps understand financial statements and how to value and pick stocks. It gives usefull advices and provides deep analysis about the typical sectors on which you can invest.