Mark Skousen, who has built his impressive reputation as one of the industrys best-known investment advisors, passes along his entire investment philosophy, based on his decades of experience, in a single, one-lesson book.
–This text refers to the
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From the Inside Flap
Why are the smartest, most successful professionals so often failures when it comes to investing? Can stock prices really be so illogical that even doctors and lawyer…
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As a financial journalist for 25 years, I’m constantly asked to review investment books. Due to time constraints, I generally don’t.
However, in the case of Mark Skousen’s Investing in One Lesson, I found it well worth the time to both read and report on his new work.
Throughout the book, Mark systematically eliminates all the “noise” that makes investing appear overly complex. By simplifying many concepts that investors often view as incomprehensible, he leaves readers with a clear understanding of the difference between price and value, a company and its stock, and a business venture from a publicly traded entity.
When he begins teaching his investment classes at Rollins College and Columbia University, Mark Skousen holds up two pieces of paper — a lottery ticket and a stock certificate. He asks, “Are these mostly the same, or are they mostly different.”
Knowing the answer to this seemingly simple question could be the difference between investment success and failure.
It’s a must read for the novice investor who frequently does not understand the counter-intuitive notions that a good company is not always a good stock or that good news does not necessarily spell higher prices for a company’s shares.
Even for the most experienced investor, he offers compelling insights into the “efficient” market, investor psychology, the real stories behind the 1987 crash and the Internet bubble, the pros and cons of technical analysis, the misconceptions of growth versus income, and an in-depth look into his unique brand of contrarian analysis.
Despite a world of increasingly “sophisticated” computer models and technical strategies, Mark’s exceptional new work helps remind us all that a combination of experience, knowledge and common sense remain the long-term investor’s most important ally.
Twenty years ago, economist and libertarian Henry Hazlitt did something no one had done before.
He took dreary subjects like wages, profits, savings, taxes, tariffs, unemployment, unions and monetary policy and discussed them in a short, highly-readable book that was easily accessible to the layman.
The book was “Economics In One Lesson.” And it remains a classic, one perhaps especially appreciated by those of us without the time or inclination to read a boring, stuffy economics text.
Now Mark Skousen has done the same thing for investors. It’s called “Investing In One Lesson.” It, too, is destined to become a classic. In fact, I can’t imagine an investor who wouldn’t benefit from reading it.
Why?
During my 16 years on Wall Street, I quickly learned that many investors have an implacable enemy standing between them and investment success: themselves.
They lack a thorough understanding of important investment principles. This causes them to cast about, trying (and abandoning) one investment system after another. Or buying hot tips from friends and colleagues. Or reacting emotionally – and usually regrettably – to rapid changes that regularly occur in financial markets.
Skousen’s new book provides a much-needed antidote.
In straightforward language – replete with stories from his own experience – he explains how you can use the stock market as a foundation for financial independence.
Especially important, he reveals why a company’s share price generally fluctuates much more dramatically than the prospects for the underlying business.
These fluctuations – often unjustified – create enormous opportunities. But you can’t capitalize on them if you don’t understand what’s happening… or why.
In “Investing In One Lesson,” Skousen makes it plain. Stock prices are determined at the margin.
What does this mean, exactly?
It means that on any given day, only a fraction of 1% of the shareholders of a company are actually selling their shares. Yet that tiny fraction determines the value of the entire company – at least temporarily.
A sudden imbalance in buy or sell orders can quickly push a stock dramatically higher of lower. Sometimes these changes are triggered by a change in the company’s fundamentals.
But more often, a company’s share price can skyrocket or collapse for reasons that have nothing to do with the outlook for the company… or for the economy.
Skousen correctly notes that stock prices can be pushed around by, for example, rumors, official buy or sell recommendations by major wire houses, short selling, computerized technical strategies, tax selling, good or bad publicity, insider buying or selling, fads, takeover speculation, bad news elsewhere in the sector, or a mindless herd mentality.
Short-term momentum traders often pile on too, creating even more havoc. But for investors who understand what is happening and why, tremendous opportunities are being created.
I’m talking about opportunities to buy at fire-sale prices – and opportunities to unload at extremely generous prices. Who can afford to pass on these?
It’s a shame, really, that you can graduate with honors from one of the nation’s top institutions of higher learning with only the foggiest understanding of what the stock market is, how it operates, or how you can use it to achieve financial freedom.
As a result, many potential investors shy away from the market, afraid that it is a massive casino and nothing more. (Those folks, especially, would benefit from reading his chapter on “Why Wall Street Is Not Las Vegas.”)
Others don’t realize that the stock market is the essence of capitalism, allowing even those of modest means to take an ownership stake in many of the world’s most profitable businesses.
(Compare those odds with the well-known fact that 4 out of 5 new businesses fail in the first five years.)
In short, “Investing In One Lesson” is written for:
* Investors who want a quick understanding of how Wall Street works, and a simple, successful formula to build wealth in the stock market.
* Businesspeople and other professionals who have been successful in their careers but need a solid foundation for investment success.
* Investors who are unhappy with the performance of their brokers and money managers and want to understand how Wall Street really works.
* Investors who are overwhelmed with too many investment choices and want an uncomplicated approach to the market.
If you want to become a better investor, pick up a copy of Mark’s new book “Investing In One Lesson.”
I have worked in the financial services industry for more than 30 years and have been astonished by the dearth of good, solid investment advice that is available for people trying to understand the vagaries of the stock market. Mark Skousen has filled that void with his new book, Investing in One Lesson, recently published by Regnery. Skousen takes a common sense approach to the equities market, stripping it of insider jargon and arcane concepts, and offers beginners and experienced investors alike a sound plan for buying stocks. He writes about this unnecessarily complicated subject in simple English. Too many so-called professionals have deliberately confused the investing public in an effort to enhance their own careers. Skousen lifts the fog of confusion surrounding equities and discusses the essentials in his straightforward style. If you are interested in establishing a core portfolio of sound stocks that will serve you well over time, you can do no better than to start with Dr. Skousen’s new book.
Jerome Tuccille
Vice President and author of
Trump, Rupert Murdoch, Alan Shrugged, and other books