A few months back I received a complimentary review copy of Mariusz Skonieczny's Why Are We So Clueless about the Stock Market? which claims to help you “[l]earn how to invest your money, how to pick stocks, and how to make money in the stock market.
This book was a very easy, quick read, and was very clear. Mr. Skonieczny is the founder and president of Classic Value Investors LLC, so from that one might expect that the strategies in his book would have an emphasis on value investing — finding stocks that the market has currently priced well below a fair value for a share of the company's earnings — and one would be correct.
He introduces key terms through the use of simple, familiar examples. Assets, liabilities, inventory, equipment, profit, loss, income, expenses, return on equity, etc., as well as the process of initial public offering, dividends, and retained earnings, are illustrated through simple lemonade-stand-type examples.
From there, he's in a position to discuss methods for researching companies in terms of their positioning relative to their competitors: who has the biggest moat? Building upon the terminology introduced earlier, he shows how to calculate predicted earnings based on some simple assumptions, and then uses that to determine whether a stock is currently trading at a discount to this value or not.
Throughout I felt like I was led through his examples easily, and the discussion never got complicated. This simplicity reminded me of Peter Lynch's thesis in One Up on Wall Street, which was that most people already knew enough from their day-to-day experience to choose good companies to invest in. It's not exactly Mr. Skonieczny's plan to “pick the next Microsoft” but given publicly available information it doesn't require much specialized training to determine whether a stock is currently trading at a bargain or not. The impression I got was that anyone could apply the analysis he was presenting. This suggests that the book is accessible to many.
I enjoyed the book. When I start checking out stocks again I'll be sure to re-read my copy of Why Are We So Clueless about the Stock Market? and try crunching the numbers on a few prospects.
(Thanks to Money Relationship for including this in the Carnival of Personal Finance!)
