The Five Rules for Successful Stock Investing by Pat Dorsey
The Five Rules for Successful Stock Investing by Pat Dorsey
I hear all the time buying stock from a company without researching it first is just the same as gambling. Okay, I can believe it. It makes sense because if you don’t know anything about a company how can you be sure how well it’s going to do?
Easier said then done.
I was determined to find information on exactly how to do this, research a company. I would read, “look at the P/E ratio”, but what is a good P/E ratio. Or, “read the annual report”, but what exactly am I looking for.
While browsing through books, I came across The Five Rules for Successful Stock Investing by Pat Dorsey. This book goes beyond just advising you to buy mutual funds. I wanted to pick my own stocks, and I finally found out how to go about it.
After the introduction, it begins by going through each of the five rules. At the end of each chapter, it gives a checklist to recap what was discussed.
I got a lot out of chapter three which went into specifics. It even gives you specific equations to help you evaluate profitability.
There is a whole chapter which explains financial statements. Unless you an accountant, this will be very useful information. In analyzing a company- the basics, it talks about what basic areas to look at including growth, profitability, and financial health. After this it goes through analyzing management, which is also very important.
It is quite a large book with a lot of good information. It also includes a discussion on valuation, a guided tour of the market, consumer and business services, asset management and insurance, and a lot more.
It may take you a while to read, but it includes a lot of good headings and title. This way, you can sift through what you really want to read. Already know a lot about banks? No need to waste you time, just skip chapter 17.
This title is well written and gives a lot of examples. It’s not a completely dry read, so you shouldn’t get bored too quickly, but it’s also not written for entertainment, so you probably couldn’t finish it in one sitting.
I’m sure I will probably refer back to this book often as it contains a lot of valuable information and is a good overall introduction without being too basic.
