INTELLIGENT INVESTING

Investor and tech-company founder Cousins breaks down the stock market to its core components for the uninitiated hoping to find success in investing.

“While investors beat the market, it’s certainly not easy,” the author tells readers toward the end of this book. As with any enterprise, one must first understand the details of stock investing in order to be able to do it well. In these pages, the author presents a brisk but highly comprehensive examination of many key elements of high finance and investment, and he tackles a wide range of common queries: What are a chief financial officer’s main concerns? What exactly does a financial statement reveal? Are there specific ways to best understand a company’s 10-K annual report? Cousins offers complete answers to these questions and a great many more. Before delving into the complexities of modern portfolio theory (also known as mean-variance analysis) and the best ways to diversity one’s portfolio, the author provides granular details on how companies operate. For newcomers to investing, he effectively demystifies what exactly constitutes a stock and how it functions in the real-world economy. As one might expect, billionaire investor Warren Buffett and his approaches to successful investing loom large in Cousins’ cleareyed analysis of the stock market; however, so does the author’s mother, whom he characterizes as a “skillful investor” who “managed her finances with care and foresight, shared her financial wisdom with me, and planted the seeds of curiosity and ambition.” The author’s knack for balancing the technical with the homespun makes for a highly readable exploration of often dense material. Diversification, for instance, is a lot easier for novices to understand when the explanation includes an umbrella company and a suntan lotion company (own shares in both, the author notes, and you’re covered). For every in-depth analysis of “acid-test ratios” and “beta coefficients,” the author includes well-grounded explanations, best summed up by age-old nostrums such as “not putting all your eggs in one basket.”

A comprehensive but easy-to-understand primer on investing for newcomers.