Mariusz Skonieczny's 'Why Are We So Clueless About the Stock Market?': A Great Primer for New Investors

Many people are clueless about the stock market. I was as well in the beginning. I didn’t know where or how to start.

Considering the amount of noise in the media and people flogging that you are not smart enough or good enough to know how to pick your own stocks, it’s no wonder people have a misconception about getting started in stock investing. Value investing is also another language to them at this point.

Why Are We So Clueless about the Stock Market? is a great little book on how to start investing in the stock market and a fine book for seasoned investors to organize their explanations and analogies when explaining supposedly simple concepts such as discount rates, growth rates, basic concepts of business, diversification and so on.

Easy to Read & Understand

The book is written in a very simple and clear manner. It makes reading very easy to follow and understand. So easy, in fact, that it would be a great first book for young budding investors.

Each chapter of the book is very concise and to the point with a short summary at the end of each chapter: A good way to maintain the flow of your reading and learning.

It’s probably on the same level as Greenblatt’s The Little Book That Beats the Market. The big difference is that there is more detail, and it covers a wider range of topics and answers many questions that new investors are sure to encounter.

What types of questions does it answer? Let’s see below.

What’s the Book About

Why Are We So Clueless about the Stock Market? follows on the old school investing concepts of Warren Buffett. That is, stocks are small pieces of businesses and we should approach picking and buying stocks as if we were purchasing a real business.

The book will help beginner investors to answer and guide them through questions such as,

• What is a good business?
• How do you identify a good business?
• When do you buy?
• How do you value a company? (note I didn’t say analyze)
• When do you sell?

I especially like the chapter that discussed the concept of using debt in a company. It’s definitely something that will help learning investors.

The book discusses other ideas such as how the economy affects the market, why investing in IPOs is a bad idea and offers 4 good case studies of Burlington Northern Santa Fe (BNI), Thor Industries (THOR), Wells Fargo (WFC) and Moody’s (MCO).

Personal Comments

The one big topic that I felt was missing was a discussion on margin of safety. Even though the author shows the reader how to value a company using the discounted cash flow method, there is no mention of the all important margin of safety.

Another point is that while there is a chapter dedicated to valuing companies, there isn’t one on how to analyze a company. I mention this because I know from first hand the dangers of just “knowing” how to value stocks without understanding or knowing how to analyze them.

Summary

Overall, the book is a superb primer for new investors and will help to open their eyes to the bigger picture of investing.

It’s also a great book if you’re a seasoned veteran but have trouble clearly explaining or teaching investing concepts.

Comments

[William M. Wright]

You might want to disclose that this is your book. Lots of great books on basic investing education. I would not have chosen a title that presumes "We Are Clueless". You said, "Many people are clueless about the stock market. I was as well in the beginning. I didn’t know where or how to start." Purhaps a book on all the great college courses available and books on investing education you have taken or read would be a better start for beginners. The materials and education provided by the CFA or CFP organization are excellent for those interested in more details.

The general public does like a simple to the point educational book on investing. Purhaps other posters could recommend their favorite too.

2009 Nov 21 09:33 AM

[BioGuy]

I'm confused- how is Jae Jun the author of a book written by Mariusz Skonieczny? Is he co-author?

On Nov 21 09:33 AM William M. Wright wrote:

> You might want to disclose that this is your book. Lots of great
> books on basic investing education. I would not have chosen a title
> that presumes "We Are Clueless". You said, "Many people are clueless
> about the stock market. I was as well in the beginning. I didn’t
> know where or how to start." Purhaps a book on all the great college
> courses available and books on investing education you have taken
> or read would be a better start for beginners. The materials and
> education provided by the CFA or CFP organization are excellent for
> those interested in more details.
>
> The general public does like a simple to the point educational book
> on investing. Purhaps other posters could recommend their favorite
> too.

2009 Nov 21 04:40 PM

[Options Trading]

will check it out. thanks for the rec.

2009 Nov 22 12:52 AM

[Jae Jun]

Um... just to clear up the confusion, Im not the author, co author or even a contributor. Just a guy who read it, found it useful enough to write a review on.

Wasn't paid to write it either.

The problem with trying to find a single book to help a beginner is virtually impossible as everyone needs to work their way up from the basics to the intermediate to the advanced.

This book will be a great start for the beginner.

2009 Nov 22 11:58 AM

[Hester]

Huh??


On Nov 21 09:33 AM William M. Wright wrote:

> You might want to disclose that this is your book.

2009 Nov 23 02:59 PM

[jup]

Jae but don't you make money from the books sales through that amazon affiliate link? It has oldschval in the link. That must be your affiliate code with Amazon. This looks very deceiving.

2009 Dec 10 11:08 PM

[jup]

Jae Don't you make money from the books sales through that amazon affiliate link? It has "oldschval" in the link code. It is pretty obvious. That must be your affiliate code with Amazon. You should disclose that.

2009 Dec 10 11:10 PM

[Jae Jun]

Hi jup

Sure I make a commission but I don't think it's something that has to be disclosed. I'm not doing it to make a business out of it and if I didn't want to make it obvious I could simply change the affiliate name.

Check any blog, article and you'll see amazon products and links. All affiliate of course.

2009 Dec 11 05:29 PM

[Jae Jun]

oh and seekingalpha scrapes all the content off my site, so my original audience are my readers who obviously know.

2009 Dec 11 05:31 PM

[bazooooka]

Jup, If you still want the book and don't want Jae to make 50 cents then don't use the link. I for one think his value is exponentially greater then that.


Thanks Jae

2009 Dec 11 06:03 PM

[Value Investor Today]

Ignore Jup, he works for Timothy Sykes who advertises himself to be an investor but in fact the majority of his earnings comes from DVD sales. One of the biggest con artists I've ever ran across.


On Dec 11 05:31 PM Jae Jun wrote:

> oh and seekingalpha scrapes all the content off my site, so my original
> audience are my readers who obviously know.

2009 Dec 28 12:51 PM