The first chapter discusses the authors' overall views of the market, and their intent with the book. The authors disagree with the way stocks are traditionally analyzed, whereby cookie cutter formulas are applied to securities of all types. Depending on the situation, different approaches should be utilized, and the book will attempt to discuss such approaches.
Furthermore, the authors dispute the accepted notion that risk reduction results in lower returns. The opposite view is taken. That is, minimizing downside risk actually tends to increase return.
The book is aimed at outside investors, i.e. those without access to more than public information and those who exert no influence or control over the company's operation. The authors stress the importance of understanding the business. That is, investors should be able to grasp the business' opportunities and potential pitfalls. That is not to say that investors need to understand the source of security price fluctuations and predict near-term macroeconomic activity; the authors believe there is very little predictive power in these pursuits.
The book is appropriate for the analysis of special situations as well as cash-return investing.