Does reading financial statements (quarterly or annual reports) really help investing?
Reading financial statements is important, in the sense that it gives you a picture of whether revenues and profits are growing or shrinking, and what management thinks the future will look like. The challenge is, there are firms that make computers read filings for them and inform their trading strategy. If the computer thinks the stock price is below the growth model, it's likely to bid the stock up. And since it's automated it's moving it faster than you can open your web browser. Does this mean you shouldn't read them? In a sense, no. The only sensible trading strategy is to assume you hold things for as long as their fundamentals exceed market value. Financial statements are where you find those fundamentals. So you should read them. But your question is, is it worth it for investors? My answer is no; the market generally factors information in quickly and efficiently. You're better off sticking to passive mutual funds than trying to trade. The better reason to learn to read these filings is to get a better sense of your employer, potential employers, competitors and even suppliers. Knowing what your margins are, what your suppliers margins and acquisitions are, and what they're planning can inform your own decision making. "Financial statements provide a large amount of specialized, complex, information about the company. If you know how to process the statements, and can place the info they provide in context with other significant information you have about the market, then you will likely be able to make better decisions about the company. If you don't know how to process them, you're much more likely to obtain incomplete or misleading information, and end up making worse decisions than you would have before you started reading. You might, for example, figure out that the company is gaining significant debt, but might be missing significant information about new regulations which caused a one time larger than normal tax payment for all companies in the industry you're investing in, matching the debt increase. Or you might see a large litigation related spending, without knowing that it's lower than usual for the industry. It's a chicken-and-egg problem - if you know how to process them, and how to use the information, then you already have the answer to your question. I'd say, the more important question to ask is: ""Do I have the time and resources necessary to learn enough about how businesses run, and about the market I'm investing in, so that financial statements become useful to me?"" If you do have the time, and resources, do it, it's worth the trouble. I'd advise in starting at the industry/business end of things, though, and only switching to obtaining information from the financial statements once you already have a good idea what you'll be using it for." "Wow,  I cannot believe this is a question.  Of course reading the 10Ks and 10Qs from the SEC are incredibly beneficial.  Especially if you are a follower of the investing gurus such as Warren Buffett, Peter Lynch, Shelby Davis.  Personally I only read the 10K's I copy the pertinent numbers over to my spreadsheets so I can compare multiple companies that I am invested in.  I'm sure there are easier ways to obtain the data.  I'm a particular user of the discounted free cash flow methodology and buying/selling in thirds. I feel like management that says what they are going to do and does it (over a period of years) is something that cannot be underestimated in investing.  yes, there are slipups, but those tend to be well documented in the 10Qs.  I totally disagree in the efficient market stuff.  I tend to love using methodologies like Hewitt Heisermans "" It's Earnings that Count"" you cannot do his power-staircase without digging into the 10Qs.  by using his methodology I have several 5 baggers over the last 5 years and I'm confident that I'll have more.  I think it is an interesting factoid as well that the books most recommended for investing in stocks on Amazon all advocate reading and getting information from 10Ks.   The other book to read is Peter Lynch's one-up-wall-street.  The fact is money manager's hands are tied when it comes to investing, especially in small companies and learning over the last 6 years how to invest on my own has given me that much more of my investing money back rather than paying it to some money manager doing more trades than they should to get commision fees." I agree with @STATMATT.  Financial statements are the only thing that Warren Buffett & Charlie Munger read. To answer your question though, really depends on what type of investor you are and what information are you trying to extract.   It is essential for the Buffett style (buy & hold).  But if you are a short term or technical investor then I don't see it being of much value. "Yes, especially if you are a value investor. The importance and relevance of financial statements depends on the company. IMO, the statements of a troubled ""too big to fail"" bank like Citibank or Bank of America are meaningless. In other industries, the statements will help you distinguish the best performers -- if you understand the industry. A great retail example was Bed, Bath and Beyond vs. Linens and Things. Externally, the stores appeared identical -- they carried the same product and even offered the same discounts. Looking at the books would have revealed that Linens and Things carried an enormous amount of debt that fueled rapid growth... debt that killed the company." Reading and analyzing financial statements is one of the most important tasks of Equity Analysts which look at a company from a fundamental perspective.  However, analyzing a company and its financial statements is much more than just reading the absolute dollar figures provided in financial statements: You need to calculate financial ratios which can be compared over multiple periods and companies to be able to gauge the development of a company over time and compare it to its competitors. For instance, for an Equity Analyst, the absolute dollar figures of a company's operating profit is less important than the ratio of the operating profit to revenue, which is called the operating margin.  Another very important figure is Free Cash Flow which can be set in relation to sales (= Free Cash Flow / Sales).  The following working capital related metrics can be used as a health check for a company and give you early warning signs when they deviate too much: You can either calculate those metrics yourself using a spreadsheet (e.g. Excel) or use a professional solution, e.g. Bloomberg Professional, Reuters Eikon or WorldCap.
"Between 1 and 2 G is actually pretty decent for a High School Student.  Your best bet in my opinion is to wait the next (small) stock market crash, and then invest in an index fund. A fund that tracks the SP500 or the Russel 2000 would be a good choice. By stock market crash, I'm talking about a 20% to 30% drop from the highest point. The stock market is at an all time high, but nobody knows if it's going to keep going.  I would avoid penny stocks, at least until you can read their annual report and understand most of what they're claiming, especially the cash flow statement. From the few that I've looked at, penny stock companies just keep issuing stock to raise money for their money loosing operations.  I'd also avoid individual stocks for now. You can setup a practice account somewhere online, and try trading. Your classmates probably brag about how much they've made, but they won't tell you how much they lost.  You are not misusing your money by ""not doing anything with it"". Your classmates are gambling with it, they might as well go to a casino.  Echoing what others have said, investing in yourself is your best option at this point. Try to get into the best school that you can. Anything that gives you an edge over other people in terms of experience or education is good. So try to get some leadership and team experience. , and some online classes in a field that interests you." I can't say specifically about charities to help Greece. If someone on here has specific knowledge, please chime in. The only shortcut I know to tell if a charity is legitimate is to consult one of the ratings/watchdog type groups that monitor charities. For example, for explicitly Christian charities, there's a group called the Evangelical Council for Financial Accountability. To be a member in good standing a charity has to meet a bunch of criteria, like having an independent board of directors, i.e. you can't start a charity, make yourself the president and your brother-in-law the vice president and you're not answerable to anyone else; their fund-raising and administrative costs can't be more than a certain percentage of total income, etc. There are similar groups with similar standards for more general charities. I'm not naming any of those groups because there's a potential catch: How reputable is the group that rates other people's reputations? And I don't want to recommend someone without knowing. Years ago I came across a news story about an organization that rated colleges, and that had given one particular college their top rating. But, the news story said, investigators found that that one college was the ONLY college they ever gave a rating to, and that their address was the same as the college's address. It turned out, of course, that the college was a scam. The other method is to take some time to investigate the charity.  For starters, get a copy of their annual report or their newsletter. If they're total frauds, often they don't have an annual report or a newsletter. Of course a fraud could make up beautiful flyers describing all the wonderful work they do, with pictures of people they helped and detailed case histories, and it's all complete fiction. But that's more work than most con men go to. I've gotten lots of pleas for contributions from people who call on the phone or come to my door or send an email. If the message does not have a logo, a mailing address and phone number, reasonably coherent English, and a fair amount of text describing what they do, I don't give them anything. They COULD be a new start up that hasn't had time to prepare these things. They COULD believe that pretty flyers are a waste of money and they want to put all their resources into helping the needy. But more likely it's a scam that somebody through together in his basement. Of course the best thing is if you personally know people who are officers in the organization. (Well, assuming you personally know them AND you know that they are honest people. If you know the president and you know he's a sleazy con man, you might want to stay away from that group.) See if you can find information about the charity in the news or on-line. If they're being investigated for fraud by the Justice Department, you might want to avoid them. Etc. Maybe you've thought this through, but you also might want to think about exactly who in Greece you want to help, and what your philosophy of charity is. Do you want to help people who lost their jobs because of the economic problems there and who are now unemployed? Do you want to donate to the government to help them balance the budget? Do you want to help support an orphanage or a homeless shelter, or give money directly to needy people? Etc. And one piece of unsolicited advice: Unless you have millions to give -- and I'm assuming you don't as you said your first gift would be $50 -- I'd pick one or two charities and give regularly to them. I think you can do more good by giving $X per month to a single charity than to give to a different charity every month. You make more difference. 10-Q is the quarterly report, and accordingly is filed quarterly. Similarly, 10-K is the annual report. 8-K is a general form for notification of material events. It is filed every time a material event is required to be reported to the shareholders. It may accompany the periodical reports, but doesn't have to. It can be filed on its own. If you're only interested in the financial statements, then you should be looking for the 10K/10Q forms. SEC will tell you when the forms were filed (dates), but it won't tell you what's more material and what's less. So you can plot a stock price graph on these dates, and see what was deemed more material by the investors based on the price fluctuations, but be prepared to find fluctuations that have no correlation to filings - because the market as a whole can drag the stock up or down. Also, some events may not be required to be reported to SEC, but may be deemed material by the investors. For example, a Cupertino town hall meeting discussing the zoning for the new AAPL HQ building may be deemed material by the investors, based on the sentiments, even if no decision was made to be reported to SEC. Wikipedia has a nice definition of financial literacy (emphasis below is mine): [...] refers to an   individual's ability to make informed   judgments and effective decisions   about the use and management of their   money. Raising interest in personal   finance is now a focus of state-run   programs in countries including   Australia, Japan, the United States   and the UK. [...]  As for how you can become financially literate, here are some suggestions: Learn about how basic financial products works: bank accounts, mortgages, credit cards, investment accounts, insurance (home, car, life, disability, medical.) Free printed & online materials should be available from your existing financial service providers to help you with your existing products.  In particular, learn about the fees, interest, or other charges you may incur with these products.  Becoming fee-aware is a step towards financial literacy, since financially literate people compare costs.  Seek out additional information on each type of product from unbiased sources (i.e. sources not trying to sell you something.) Get out of debt and stay out of debt. This may take a while. Focus on your highest-interest loans first. Learn the difference between good debt and bad debt.   Learn about compound interest.  Once you understand compound interest, you'll understand why being in debt is bad for your financial well-being. If you aren't already saving money for retirement, start now.  Investigate whether your employer offers an advantageous matched 401(k) plan (or group RRSP/DC plan for Canadians) or a pension plan.  If your employer offers a good plan, sign up.  If you get to choose your own investments, keep it simple and favor low-cost balanced index funds until you understand the different types of investments.  Read the material provided by the plan sponsor, try online tools provided, and seek out additional information from unbiased sources. If your employer doesn't offer an advantageous retirement plan, open an individual retirement account or IRA (or personal RRSP for Canadians.)  If your employer does offer a plan, you can set one of these up to save even more.  You could start with access to a family of low-cost mutual funds (examples: Vanguard for Americans, or TD eFunds for Canadians) or earn advanced credit by learning about discount brokers and self-directed accounts. Understand how income taxes and other taxes work.  If you have an accountant prepare your taxes, ask questions.  If you prepare your taxes yourself, understand what you're doing and don't file blind.  Seek help if necessary.  There are many good books on how income tax works.  Software packages that help you self-file often have online help worth reading – read it. Learn about life insurance, medical insurance, disability insurance, wills, living wills & powers of attorney, and estate planning.  Death and illness can derail your family's finances.  Learn how these things can help. Seek out and read key books on personal finance topics.  e.g. Your Money Or Your Life, Why Smart People Make Big Money Mistakes, The Four Pillars of Investing, The Random Walk Guide to Investing, and many more. Seek out and read good personal finance blogs.  There's a wealth of information available for free on the Internet, but do check facts and assumptions. Here are some suggested blogs for American readers and some suggested blogs for Canadian readers. Subscribe to a personal finance periodical and read it.  Good ones to start with are Kiplinger's Personal Finance Magazine in the U.S. and MoneySense Magazine in Canada.  The business section in your local newspaper may sometimes have personal finance articles worth reading, too. Shameless plug: Ask more questions on this site. The Personal Finance & Money Stack Exchange is here to help you learn about money & finance, so you can make better financial decisions.  We're all here to learn and help others learn about money. Keep learning! For mine, that info's in the quarterly reports... and in the prospectus, which you should be looking at before you put money into the fund. Yes, there are very lucrative opportunities available by using financial news releases. A lot of times other people just aren't looking in less popular markets, or you may observe the news source before other people realize it, or may interpret the news differently than the other market participants. There is also the buy the rumor, sell the news mantra - for positive expected information (opposite for negative expected news), which results in a counterintuitive trading pattern. "Yes - this is exactly what it means.  No losses (negative earnings).   With today's accounting methods, you might want to determine whether you view earnings including or excluding extraordinary items.   For example, a company might take a once-off charge to its earnings when revising the value of a major asset.  This would show in the ""including"" but not in the ""excluding"" figure.   The book actually has a nice discussion in Chapter 12 ""Things to Consider About Per-Share Earnings"" which considers several additional variables to consider here too. Note that this earnings metric is different from ""Stock Selection for the Defensive Investor"" which requires 10 years. PS - My edition (4th edition hardback) doesn't have 386 pages so your reference isn't correct for that edition.  I found it on page 209 in Chapter 15 ""Stock Selection for the Enterprising Investor""." "Having thought about it, I decided to start with another book by the same author : ""The Interpretation of Financial Statements"". I do not have a sufficiently strong basis to know what either ""The Intelligent Investor"" or ""Security Analysis"" are even about. Yeah, I might understand things, but I wouldn't grasp the essence, as I would be too busy figuring out what I didn't understand and miss the forest for the trees."