Michael on June 1st, 2010
Bookmark and Share

Mariusz Skonieczny is the founder and president of Classic Value Investors, LLC, an investment management company. He is also the author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market.

I recently had the opportunity to conduct an email interview with Mr. Skonieczny. Here is our discussion.

Michael:  In one paragraph, why are we so clueless about the stock market?

Mariusz Skonieczny: We are clueless about the stock market because too often, we view the stock market as a casino instead of a place where people buy and sell businesses Stocks are not just pieces of paper – they represent ownership interests in businesses.

Michael: Can you define what value investing is and compare it to growth investing?

Mariusz Skonieczny: You are either a value investor or you are a speculator. What I mean by that is that growth is a part of the value equation. The faster a company grows, the more it is worth. So, you are either getting a good deal by buying something for less than what it is worth or you are not getting a deal at all.

Michael: Do you believe in market timing? Why or why not?

Mariusz Skonieczny: People are obsessed with market timing. It is difficult to time the market because it requires you to forecast what other market participants are going to do. Because investors are driven by emotions, how can you forecast what people will do next? I can’t, and I don’t believe anyone else who says they can. Market timers use technical analysis, but the problem with that is that it only shows you what happened in the past; it doesn’t tell you anything about what will happen in the future.

Michael: How does an investor really gain an understanding of his/her true risk tolerance?

Mariusz Skonieczny: If you choose to invest in the stock market, you must take risks, but the question is whether the risk that you are taking is worth it. If it is not, then you should not be investing. However, people have a misconception of what risk is. The investment industry defines risk as volatility in prices which is nonsense. Risk is not knowing what one is doing, not doing sufficient research, and overpaying for investments.

Michael: Why did you write your book?

Mariusz Skonieczny: Since I began investing, I have read approximately 300 books, and I wanted to write something that brought together everything I wished I knew when I began investing in one book aimed at those beginning their journey into the stock market. I wanted this book to educate the general public about investing because I believe that the investment industry is taking advantage of their lack of knowledge.

Michael: Who’s your investing role model?

Mariusz Skonieczny: I was introduced to value investing by reading about Warren Buffett, Benjamin Graham, and Joel Greenblatt.

Michael: I see you’re from Chicago. Cubs or White Sox?

Mariusz Skonieczny: I will have to disappoint you because I am not a baseball fan.

Readers: What’s your take on Mr. Skonieczny’s take?

Bookmark and Share

2 Comments to “Value Investing”

  1. Nora says:

    Michael,

    Mr. Skonieczny sounds as though he understands people’s behaviour as well as the stock market. I agree that people are afraid of the market because they don’t understand it, but invest in it randomly because they think they should be part of it.

    I also believe that very few people have the time, education or energy to do their own investing. They may get really interested at one point, do alot of reading and investigating and buy some stocks and maybe bonds. Then they forget about it for a good long while until they hear about something happening in the market on TV. Then maybe they’ll sell some stocks or buy some other stocks or maybe feel too terrified to do anything. In any case, they can’t be consistent in maintaining their portfolio because their busy lives intervene. I have a great financial guy named Jack who takes care of my investing for me. He knows what my goals are and has much experience and many satisfied clients. It’s a great load off my mind to have him watching over my portfolio.

    Thanks for sharing this interview, Michael.

    P.S. I’ll bet Mr. Skonieczny is a secret Cubs fan! :>

  2. Michael says:

    @Nora: So true that our expectations about our ability to commit time and energy to things that are not core to our lives are often over-estimated. Being realistic is very challenging, particularly for a new habit. Thanks for the comment!

Leave a Reply

You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>