The Craft of Investing

...it is also elegantly written, and often quite witty...

...He brands most investment newsletter writers charlatans, guffaws at the prophecies of economists, and scorns exotic investment products: straddles, options, CMOs, junk bonds...

...Tobacco, the leading maker of moist snuff, as an example...

...What does Train think of other types of investments...

...He believes that everyone should own the house he lives in, but vehemently dislikes bonds, precious metals, and most collectibles...

...As he explains in his introduction: "I do not discuss modern portfolio theory, the use of derivatives, and mathematical models because I observe that great investors don't use them, the private sector doesn't need them, and they do not in fact improve performance...

...It is as lucid and succinct an introduction to investing as any book to be found anywhere...

...outstanding companies in dull, glamour-less industries, but avoid initial public offerings because it is foolish to invest in a company until it has a track record, i.e., earnings...

...Cl THE CRAFT OF INVESTING John Train HarperBusiness / 313 pages / $22 reviewed by JOE QUEENAN The American Spectator February 1995 69...

...Mind you, The Money Masters and The New Money Masters are essentially repositories of other people's wisdom, the fruits of Train's interviews with legendary money managers ranging from Warren Buffett and John Templeton (the old guard) to Peter Lynch and Jimmy Rogers (the young blood...

...We shall see.w hen it suits his purposes, the normally civil Train can be quite acerbic...

...0 ne of Train's virtues is his refusal to lie about how difficult wealth-building is...

...Since the investor never has to act, he should focus on not making avoidable mistakes," writes Train...

...Actually, not owning this book could...

...Remember, there are far more ways to lose than to win, and what you don't own can't hurt you...

...But he also argues that investors must stay in the market even during downswings...

...All good investors are contrarians," notes Train, meaning that successful investors invariably buy stocks when other investors are selling them...

...Investors should concentrate on Joe Queenan, a frequent contributor to Barron's, is the author of If You're Talking to Me, Your Career Must Be In Trouble (Hyperion...

...To put it simply, Train believes that the wise investor will buy growth stocks during market troughs, when such stocks are cheap, and then flesh out his portfolio with positions in "conventional companies" when they are undervalued because of bad news, rumors, impending war, government meddling, or poor market conditions...

...In fact, you should only buy what you would be happy to own in the absence of any market...

...One of the few collectible themes Train endorses is purchasing expatriated art or furniture from emerging countries, because, as he puts it, "When a country gets rich, it buys back its own history...

...They seem instead to flatten performance at some cost...

...Train dismisses technical analysis—the study of market movement, momentum, and volume, as opposed to the analysis of individual companies—as "tea-leaf reading...

...Still, original works or not, they are masterpieces...

...Not much...

...Producing a chart of all the long-forgotten artistic nonentities who won the coveted French Prix de Rome between 1870 and 1900—a bunch of Charles Moulins and Victor Blavettes, but nary a Claude Monet—Train cautions against buying the works of hot young artists in the expectation that they will ever be famous...

...The greatest moments are usually the violent rebounds from a bottom," he writes...

...In his new book, The Craft of Investing, Train sums up everything he has learned in or around Wall Street over the years...

...And he says that investors should always be on the lookout for good buys in despised industries, serving up U.S...

...In his view, if you are not the sort of person who is prepared to claw his way through Forbes and Barron's—most particularly those Sahara-sized "Roundtable" discussions with money managers that run in Barron's every January—you probably shouldn't be in the stock market...

...T here is nothing the slightest bit earthshaking in The Craft of Investing...

...It is one of only two books I've reviewed this year that I would actually buy with my own money...

...This being the case, he says that investing in Cuban art could pay off a few years down the road when Fidel Castro finally passes from the scene and an economic revival takes place in Cuba...

...The result is a compact synthesis of Train's own ideas, along with thoughts he has gleaned from the likes of Buffett and Lynch...

...But market timers are usually out of stocks at a bottom, and if you miss the best month or so in each decade, you cut your return by about half...

...And if you are in the market, never buy on margin...

...You also shouldn't be in the stock market if you don't understand the concept of free cash flow and the significance of the price-sales ratio...

...Train's forte is in making his case, restating his case, and then restating it once again...

...Echoing Peter Lynch, the most successful mutual fund manager of all time, he suggests that spending more than fifteen minutes a year studying the direction of the economy is a waste of time...

...Investing is like football: the team that makes the fewest mistakes usually wins...

...Rather than anguishing over short-term trends in the market or the economy generally, Train believes that the secret to success in the stock market is to "buy a share of a company the way you buy a house: because you know all about it, and want to own it for a long time at that price...

...There are no gimmicks, no tricks...