Title: Why Are We So Clueless about the Stock Market?
Author: Mariusz Skonieczny
Publisher: Investment Publishing
Category: Personal Finance
This book provides readers with an overview of the fundamentals regarding investing in the stock market. Included is information about the difference between stocks and business, what factors determine whether a business is good, when to purchase and sell stocks, and how to value stocks. Also included are four case studies and an overview of the good and bad of investing in real estate versus the stock market.
The overall message of this book is that just because people experience success in their careers does not mean they will be successful when it comes to investing. Certain skills are required to be a good doctor and different skills are required to be a good investor. Successful investors do not need an advanced education in the field, nor do they necessarily need to be extremely intelligent. What they do need is money to invest and the ability to recognize a good company that is also undervalued.
This book educates investors on how to recognize these good companies and evaluate their worth. Doing so decreases the chances that poor investment decisions will be made. It also allows individuals to take advantage of the short-sighted view of Wall Street to build their wealth through stock market investments.
Mariusz Skonieczny is the founder and president of Classic Value Investors LLC and uses his firm’s focus on value investing as the underlying emphasis in this book. He provides familiar examples to explain key terms and explains how to research companies to determine their position in relation to the competition. Readers are shown how to calculate a company’s predicted earnings based on a few simple assumptions. This information is then used to determine whether the company stock is trading at a discount to this figure.
This book is easy to read and provides information in a clear fashion. Mr. Skonieczny leads readers through examples that are simple to understand. Despite how complex the stock market and investing can be, the content of this book never gets complicated. Readers are reminded that they may already have enough knowledge from their daily experience to select good, undervalued companies in which to invest. They just need to translate that knowledge into practice rather than getting distracted by the latest hot stocks. Nearly every reader can apply the information and calculations being presented.
Key concepts covered include risk versus reward, when to buy, and when to sell. Technical analysis is discarded in favor of calculating the company’s objective value based on projected earnings relative to stock price. In general, the author takes more of a conservative and fundamentalist approach to the market than a gambling perspective. Even investors not of a like mind will find this an excellent guide regarding the basics. Taking calculated risks requires an understanding of the fundamentals. The content of this book is particularly relevant to our current economy because there are many undervalued companies trading stock.