Baranowski, Outsmarting the Crowd

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)