Baranowski, Outsmarting The Crowd – Book Review

Retail investors have been fleeing U.S. stocks, in part I suspect because they don’t understand that over time, despite all its gyrations, the stock market has been the best place to “grow money.” And that with no work on their part, just buying an index fund and pretty much ignoring it.

Bogumil K. Baranowski (Tocqueville Asset Management) wants to convince people to do just a little bit of work and thereby make more money. In Outsmarting the Crowd: A Value Investor’s Guide to Starting, Building, and Keeping a Family Fortune he defines the three pillars of investing and explains how they should be understood—philosophy (think differently, be patient, embrace failure), path (learn, simplify and focus, earn, save, invest) and principles (stocks are business, moody Mr. Market, and margin of safety).

This book is written for people who are in the early stages of their investing career, people who are comfortable with index investing yet are willing to expand their horizons by buying individual stocks. Although it doesn’t break new ground, it offers a clear, easy to follow account of the merits of investing in general and the principles of value investing.

Along the way it echoes the kind of lifestyle advice we have heard from the likes of Warren Buffett and Charlie Munger. For instance, read. According to the Pew Research Center, 23% of Americans didn’t read a book in 2014, a figure that was only 8% in 1978. Now that’s a depressing trend. “If,” Baranowski advises, “you want to succeed as an investor, you need to stay curious and continue to learn.” (p. 82)

Baranowski, Outsmarting The Crowd – Description

Outsmarting the Crowd: A Value Investor’s Guide to Starting, Building, and Keeping a Family Fortune by Bogumil K. Baranowski

We are wired to fail with money and investing.

Do You Have $1 on You? BEFORE YOU START READING, please reach for your wallet. Take out a one-dollar bill. Do you have it? Look at it, hold it up, put it in front of you.

Now imagine you save $1 each month (which few do). Imagine that your $1 earns 7% annually on average over thirty years. At the end of the thirty years you will have almost $1,200.

Needless to say, if you put away $1,000 each month, you’d have almost $1.2 million in thirty years.

It’s secondary if you are just starting your family fortune–or if you already have it and want to keep it and grow it.

If you do nothing with that dollar, inflation will eat away at its value. It will be worth less than two quarters in twenty-five years and less than a single quarter in fifty years and a nickel in one hundred years.

Can you afford to do nothing? Do I have your attention?

Most books misinform, or intimidate the reader, and often are not backed by real life experience.

This book is a one of a kind, comprehensive, straightforward, and easy to follow guide to investing. It’s written by an experienced investor trained in the value investing, Buffett-Graham school of thought.

Like no other book, it covers both the intellectual and emotional discipline needed to be a successful investor. It provides the proper philosophy, shows the path, and emphasizes the principles required to keep and grow your wealth over a lifetime.

“Over more than a decade, Bogumil has assiduously assembled a set of rules from the writings and the speeches of the world’s most lastingly successful investors: these rules have become his chosen investment discipline. […] He has written a great road map for young investors as well as a thoughtful and very readable guide to spare older neophytes the most common investment mistakes.” — François D. Sicart, Founder and Chairman of Tocqueville Asset Management.

“Now comes his book. Obviously, Bogumil was augmenting what we were teaching him over the years about the investment process with extensive readings by the great thinkers on this subject. Unlike some of these tomes, however, Bogumil’s “Outsmarting the Crowd” is an easily digestible, common sense approach to a subject that is too often wrapped in jargon made to make it appear more difficult and less intuitive than it actually is.” — Robert W. Kleinschmidt, President, Chief Executive Officer and Chief Investment Officer of Tocqueville Asset Management.

Outsmarting the Crowd
Outsmarting the Crowd

Outsmarting the Crowd: A Value Investor’s Guide to Starting, Building, and Keeping a Family Fortune by Bogumil K. Baranowski

Baranowski, Outsmarting The Crowd by Brenda Jubin, Reading The Markets

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