Who is the author of Outsmarting the Crowd?

The author of Outsmarting the Crowd is Bogumil K. Baranowski.

Money & Investments

Outsmarting the Crowd Book Summary - Outsmarting the Crowd Book explained in key points

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Outsmarting the Crowd summary

Name: Outsmarting the Crowd
Rating: 4.2 (124 reviews)
Author: Bogumil K. Baranowski

Bogumil K. Baranowski

A Value Investor’s Guide to Starting, Building, and Keeping a Family Fortune

4.2 (124 ratings)

17 mins

Brief summary

'Outsmarting the Crowd' by Bogumil K. Baranowski is a guide for investors looking to achieve superior returns by deviating from conventional wisdom. It presents a practical, data-driven approach to outperforming the market.

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Investments

Table of Contents

Outsmarting the Crowd
Summary of 8 key ideas

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Key idea 1 of 8

What’s in it for me? Find out what it takes to become a great investor.

There are countless books out there dishing up tips on how to become a successful investor. And the basic message of all these books is “buy low, sell high” – the buzzword of investing. But do you actually understand what it means?

No worries if you don’t because these blinks will clue you in on that and much more. They outline the way to a successful start in investing, explaining what company stocks are and what you need to invest in them.

You’ll also learn why successful investors are picky and never gamble with their money. And you’ll learn why investing won’t make you rich overnight.

You’ll also learn

why a dip in the value of your shares may be a golden opportunity;
why markets are like trains; and
why buying stocks is a bit like buying an umbrella.

To own stock is to own part of a business in exchange for funding its operations.

So, you’re ready to start investing in the stock market? Well, the most logical place to begin is by understanding what stocks are, because, despite what some might think, they’re not just pieces of paper with a price tag attached.

In fact, every stock represents part of a business, and when you buy stock you’re actually purchasing a share of the company. So in the same way that entrepreneurs can own a business outright or split ownership with other partners, as a stockholder, you can own shares of a company.

But while entrepreneurs and partners work day in, day out to manage their business, as a shareholder you don’t have any responsibility for managing the company and can sell your shares whenever you want.

So stocks are effectively pieces of a company, and many companies make their stock available to the public. This is a strategic decision that depends on the size and financial needs of a company. Every business relies on financing, but some entrepreneurs use their own savings while others come up with the initial capital by asking family and friends like the founders of Google did.

As a company grows, its funding often needs to grow with it. Eventually, the company can become so big that it only has two options for how to raise the massive amounts of capital needed to run its daily operations and make investments:

First, they can borrow money from a bank just like an average person would do to buy a car or a house. Naturally, this money, along with the interest it accumulates, needs to be repaid.

The second funding option is to go public. That means splitting ownership of the company into shares and selling them on the stock exchange. This option is different from a loan because the money never has to be repaid by the company. Instead, shareholders own stock as long as they want until they sell it to other investors, hopefully turning a profit and sometimes collecting dividends in the process.

Now that you know what stocks are, it’s time to learn how to analyze their value and become a successful investor.

Investing is about rationality and the right timing, so keep your emotions out of it.

If you’ve ever read the financial news, you’ve probably been bombarded with information, both enthusiastic and catastrophic. You see headlines like “Google shares hit record high” or “Oil prices collapse.” Some investors become quickly distressed trying to keep up with the media craze.

But sound investing is about rationality, not emotions. Say you own stock in Starbucks and read in the paper that the company’s valuation fell by 10 percent in just one day. Your emotions may urge you to sell your shares to avoid getting caught on a sinking ship, but don’t listen to them.

Successful investing is about discipline, patience and only using money you don’t need to spend.

You might have dreams of getting rich overnight, but even the most successful investors like Warren Buffett didn’t make their fortunes so quickly.

In fact, being a good investor is all about cultivating patience and discipline, so take it slow. Rushing investment decisions is a sure way to fail. The truth is, it often takes months, even years, for an investment to turn a profit.

Know your areas of expertise and deepen your knowledge continually.

Knowing when to break from the crowd is essential to good investing, and the most effective way to outsmart other investors is to build up your knowledge every day. But before you do that, you’ll need to know where your investing competencies lie.

Warren Buffett, one of the most successful investors on Wall Street, often cites the concept of a circle of competence. The idea is that it pays to know what you’re good at and to stick to it.

Sound investment decisions depend on simplicity and selectivity.

It might seem ingenious to come up with a complex investment strategy, but the truth is, real wisdom is about keeping things as simple as possible. So just focus on what really matters.

After all, there’s a nearly infinite number of criteria to consider when assessing a company: brand image, financial performance, the management team’s charisma – and the list goes on.

Carefully choose stocks in competitive companies that anticipate change.

There are literally thousands of companies whose stocks are traded on the market. To separate the winners from the losers, investors need to know how to ask the right questions.

When looking at a stock, it’s best to act like a five-year-old and never stop asking questions such as: Why do people like or need the company in their lives? Why do they consume its products? Is the company selling a revolutionary innovation or is it a trendy start-up that’s going to fade away?

Markets can plummet and soar on a dime so your best bet is to stay in for the long haul.

Today, financial markets are prone to drastic drops and spikes. These changes can be caused by mood swings prompted by the overexcitement and exaggerated disappointment of investors.

That’s because, today, investors are taking in too much information, gossip and rumors from the media. They overreact to this information overload by buying and selling too quickly. As a result, investors today hold on to their stocks for exceedingly short periods of time.

Smart investors put security first – so buy cheap, lower your expectations and diversify your stocks.

Investing might seem like it’s all about making more money, but the truth is, good investors make it their priority not to lose money. The best way to do this is to buy cheap.

When you buy a high-priced stock, you expose yourself to potentially huge losses if the price plummets. Obviously, this damage is reduced if you go with cheap stocks.

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What is Outsmarting the Crowd about?

Outsmarting the Crowd (2015) is a stellar beginner’s guide to investing. These blinks will give you all the knowledge you need to get started investing. Just don’t expect to get rich overnight: good investing is all about patience, discipline and rationality.

Outsmarting the Crowd Review

Outsmarting the Crowd (2019) by Bogumil K. Baranowski is a book that explores the ins and outs of investing and offers valuable strategies for beating the market. Here's why this book is a worthy read:

With its practical tips and techniques, the book empowers readers to make informed investment decisions and maximize their returns.
By combining real-life examples and insightful analysis, the author demystifies complex financial concepts, making the book accessible and engaging.
The book's fascinating insights into market psychology keep readers captivated and ensure it is anything but boring.

Best quote from Outsmarting the Crowd

The time to buy is when theres blood in the streets. – Baron Rothschild

—Bogumil K. Baranowski

Who should read Outsmarting the Crowd?

Students of business or finance
Anyone who wants a first glimpse into the world of investing
Anyone looking for a plan to grow their wealth

About the Author

Bogumil K. Baranowski is a New York investment professional who manages a private investment fund at Tocqueville Asset Management.

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