Although this post is fully prose, please read it before you start investing. After reading it, you will be smarter than 95% of all investors. However, it is also my (albeit selfish) hope that after reading this, you should have no more need to want to read stock analysis and wanting to pick stocks. Let's start. Liabilities and equities When we invest, we are either investing into debt or equity. The accounting equation sums it up: Assets = liabilities + equity What this means is that whenever a company buys or owns something (an asset), it has to be funded by either borrowings and debt (liabilities) or by their owners (equity). Let me give you an example. Suppose today you want to set up a durian wholesale business, you would start off by putting $20,000 into the business. This $20,000 would be used to buy $10,000 worth of durians, and ......