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One Up On Wall Street: How to Use What You Already Know to Make Money in the Market
More than one million copies have been sold of this seminal book on investing in which legendary mutual-fund manager Peter Lynch explains the advantages that average investors have over professionals and how they can use these advantages to achieve financial success.
America’s most successful money manager tells how average investors can beat the pros by using what they know. According to Lynch, investment opportunities are everywhere. From the supermarket to the workplace, we encounter products and services all day long. By paying attention to the best ones, we can find companies in which to invest before the professional analysts discover them. When investors get in early, they can find the “tenbaggers,” the stocks that appreciate tenfold from the initial investment. A few tenbaggers will turn an average stock portfolio into a star performer.
Lynch offers easy-to-follow advice for sorting out the long shots from the no-shots by reviewing a company’s financial statements and knowing which numbers really count. He offers guidelines for investing in cyclical, turnaround, and fast-growing companies.
As long as you invest for the long term, Lynch says, your portfolio can reward you. This timeless advice has made One Up on Wall Street a #1 bestseller and a classic book of investment know-how.
America’s most successful money manager tells how average investors can beat the pros by using what they know. According to Lynch, investment opportunities are everywhere. From the supermarket to the workplace, we encounter products and services all day long. By paying attention to the best ones, we can find companies in which to invest before the professional analysts discover them. When investors get in early, they can find the “tenbaggers,” the stocks that appreciate tenfold from the initial investment. A few tenbaggers will turn an average stock portfolio into a star performer.
Lynch offers easy-to-follow advice for sorting out the long shots from the no-shots by reviewing a company’s financial statements and knowing which numbers really count. He offers guidelines for investing in cyclical, turnaround, and fast-growing companies.
As long as you invest for the long term, Lynch says, your portfolio can reward you. This timeless advice has made One Up on Wall Street a #1 bestseller and a classic book of investment know-how.
304 pages, Paperback
First published November 30, 1988
About the author
Peter Lynch
51 books854 followersPeter Lynch is an American businessman and stock investor. Lynch graduated from Boston College in 1965 and earned a Master of Business Administration from the Wharton School of the University of Pennsylvania in 1968.
Lynch worked at Fidelity Investments where named head of the then obscure Magellan Fund which had $18 million in assets. By the time Lynch resigned as a fund manager in 1990, the fund had grown to more than $14 billion in assets with more than 1,000 individual stock positions. From 1977 until 1990, the Magellan fund averaged a 29.2% return and as of 2003 had the best 20-year return of any mutual fund ever.
Though he continues to work part-time as vice chairman of Fidelity Management & Research Co., the investment adviser arm of Fidelity Investments, spending most of his time mentoring young analysts, Peter Lynch focuses a great deal of time on philanthropy. He said he views philanthropy as a form of investment. He said he prefers to give money to support ideas that he thinks can spread.
Lynch worked at Fidelity Investments where named head of the then obscure Magellan Fund which had $18 million in assets. By the time Lynch resigned as a fund manager in 1990, the fund had grown to more than $14 billion in assets with more than 1,000 individual stock positions. From 1977 until 1990, the Magellan fund averaged a 29.2% return and as of 2003 had the best 20-year return of any mutual fund ever.
Though he continues to work part-time as vice chairman of Fidelity Management & Research Co., the investment adviser arm of Fidelity Investments, spending most of his time mentoring young analysts, Peter Lynch focuses a great deal of time on philanthropy. He said he views philanthropy as a form of investment. He said he prefers to give money to support ideas that he thinks can spread.
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Displaying 1 - 30 of 1,597 reviews
January 5, 2016
While this is a good read, it's specific to Peter Lynch's personal investing style and dated enough that it's not entirely applicable anymore, so it is better read as a history or biography of Lynch's investing style than a guide on how to make personal investment decisions today. There's a forward written in 2000 in which Lynch provides one update to his material, but there should have been many more (such as noting what kinds of company information is no longer allowed to be provided only to individuals). In addition, Lynch's poor grasp of basic computer knowledge is embarrassing, even for 2000. Although you can get extremely similar advice from other sources (Lynch is a value investor straight out of The Intelligent Investor, much like Warren Buffett), the advice is still good where you get it:
1) When you buy stock, you are purchasing part ownership in a company and your investing decisions should be made with a focus solely on the value of the company and its business, and not on the movement or price of its stock.
2) That said, you should only buy stock when the price is supported by the value of the company behind it.
3) (Lynch's personal touch) The everyday experiences you have with a company should inform your investing decisions. When you like a company's products and everyone else seems to also, that company makes a good target for investigation for *possible* investment.. AFTER you have verified the value of the underlying business. Conversely, if a business that seems to be doing great but you don't like its products or services and many others agree with you, maybe you should avoid it -- the business may be about to tank.
I still remember reading a blurb from this book in a magazine when I was 12, about how Lynch should have invested in Hanes when his wife came home from the grocery store having bought the new L'Eggs hose because the quality of the product was good and the delivery mechanism (a grocery store) was way better than the traditional department store. I've always wondered where that blurb came from, and now I've finally read it from the source. That's one more childhood memory reconciled with the larger world!
1) When you buy stock, you are purchasing part ownership in a company and your investing decisions should be made with a focus solely on the value of the company and its business, and not on the movement or price of its stock.
2) That said, you should only buy stock when the price is supported by the value of the company behind it.
3) (Lynch's personal touch) The everyday experiences you have with a company should inform your investing decisions. When you like a company's products and everyone else seems to also, that company makes a good target for investigation for *possible* investment.. AFTER you have verified the value of the underlying business. Conversely, if a business that seems to be doing great but you don't like its products or services and many others agree with you, maybe you should avoid it -- the business may be about to tank.
I still remember reading a blurb from this book in a magazine when I was 12, about how Lynch should have invested in Hanes when his wife came home from the grocery store having bought the new L'Eggs hose because the quality of the product was good and the delivery mechanism (a grocery store) was way better than the traditional department store. I've always wondered where that blurb came from, and now I've finally read it from the source. That's one more childhood memory reconciled with the larger world!
May 25, 2022
I like his quote “But rule one, in my book, is: Stop listening to professionals!
The early Greeks used to sit around for days and debate how many teeth a horse has. They thought they could figure it out by just sitting there, instead of checking the horse.
In centuries past, people hearing the rooster crow as the sun came up decided that the crowing caused the sunrise.
Just because the price goes up doesn’t mean you’re right. Just because the price goes down doesn’t mean you’re wrong.
I finally read 2 of the best investment books in the same period including “The Intelligent Investor by Benjamin Graham”.
I will re-read these book from time to time.
The early Greeks used to sit around for days and debate how many teeth a horse has. They thought they could figure it out by just sitting there, instead of checking the horse.
In centuries past, people hearing the rooster crow as the sun came up decided that the crowing caused the sunrise.
Just because the price goes up doesn’t mean you’re right. Just because the price goes down doesn’t mean you’re wrong.
I finally read 2 of the best investment books in the same period including “The Intelligent Investor by Benjamin Graham”.
I will re-read these book from time to time.
September 12, 2007
dear reader,
well, hello! do you like my suit? i like yours! where'd you get it?! well, today i am dressed up like a business man because we are going to be reviewing a real business man's book! yep, you guessed it, you wily little bitch, that business man is the great peter lynch, not to be confused with the act of lynching which was a form of extreme racism that took place throughout the south during the early years of the civil rights movement! lol! ok let's go!
REVIEW:
main position:
many people think that it's impossible for an average individual to compete on wall street against huge and infinitely resourced companies.
lynch rejects this assumption, and posits the opposite: the average person actually has an advantage, since it is she who is in constant contact with the everyday representation of a stock's products.
examples: lynch took a large long position in the Gap after his wife and all her girlfriends fell in love with it. made a fortune. also took a large long position in hanes, the company behind L'eggs, again on his wife's advance, made money.
examples abound in this book: la quinta motor inns, taco bell, philip morris, etc. all companies that would have led to a 10, sometimes 20 fold return on your initial investment.
his advice: invest fundamentally, due diligence, invest in what you know, don't invest in what's hot, don't believe the professionals, get over your emotions, invest for the long-term.
VERDICT:
man the 80's were FUCKING CRAZY
well, hello! do you like my suit? i like yours! where'd you get it?! well, today i am dressed up like a business man because we are going to be reviewing a real business man's book! yep, you guessed it, you wily little bitch, that business man is the great peter lynch, not to be confused with the act of lynching which was a form of extreme racism that took place throughout the south during the early years of the civil rights movement! lol! ok let's go!
REVIEW:
main position:
many people think that it's impossible for an average individual to compete on wall street against huge and infinitely resourced companies.
lynch rejects this assumption, and posits the opposite: the average person actually has an advantage, since it is she who is in constant contact with the everyday representation of a stock's products.
examples: lynch took a large long position in the Gap after his wife and all her girlfriends fell in love with it. made a fortune. also took a large long position in hanes, the company behind L'eggs, again on his wife's advance, made money.
examples abound in this book: la quinta motor inns, taco bell, philip morris, etc. all companies that would have led to a 10, sometimes 20 fold return on your initial investment.
his advice: invest fundamentally, due diligence, invest in what you know, don't invest in what's hot, don't believe the professionals, get over your emotions, invest for the long-term.
VERDICT:
man the 80's were FUCKING CRAZY
March 16, 2016
A very helpful book for those who want to gain some basic knowledge about how stocks work in the financial market and how to select the best portfolio of securities. Lynch shared his experiences and told us how he felt or how he dealt with losses and success when investing. I personally liked this book and he made these seemingly difficult concepts so much easier!
October 19, 2018
One of the most interesting books about long-term investing I've found so far.
My favorite quote is "when someone says that 'A' is the new 'B', it usually means that 'A' and 'B' are going down".
My favorite quote is "when someone says that 'A' is the new 'B', it usually means that 'A' and 'B' are going down".
September 2, 2018
SECTION 1: PREPARING TO INVEST
- The average person is exposed to interesting local companies and products years before the professionals.
- Look for opportunities that haven't yet been discovered and certified by Wall Street - companies that are "off the radar scope." Remember the Street Lag.
- Predicting the economy or the short-term direction of the stock market is futile.
- Invest in companies, not in the stock market.
The market ought to be irrelevant. If I could convince you of this one thing, I'd feel this book had done its job. And if you don't believe me, believe Warren Buffett. "As far as I'm concerned," Buffet has written, "the stock market doesn't exist. It is there only as a reference to see if anybody is offering to do anything foolish."
- The long-term returns from stocks are both relatively predictable and also far superior to the long-term returns from bonds. In stocks you've got the company's growth on your side. In bonds, the best you can hope for is to get it back, plus interest.
SECTION 2: PICKING WINNERS
THE TWO-MINUTE DRILL
1. Identify whether you're dealing with a slow grower, a stalwart, a fast grower, a turnaround, an asset play, or a cyclical. By putting your stocks into categories you'll have a better idea of what to expect from them.
2. The p/e ratio will give you a rough idea of whether the stock is undervalued or overvalued relative to its immediate prospects.
3. Next you need to develop the "story". Lynch gives himself a two-minute monologue that covers the reasons he's interested in it, what has to happen for the company to succeed, and the pitfalls that stand in its path.
THREE PHASES TO A GROWTH COMPANY'S LIFE
1. Start-up phase: riskiest for most investors as success isn't yet established
2. The rapid expansion phase: SAFEST AND WHERE THE MOST MONEY IS MADE, because the company is growing simply by DUPLICATING ITS SUCCESSFUL FORMULA.
3. The mature phase: most problematic as the company runs into its limitations.
The Slow Growers:
1. Initially fast grower (fast-growing industry), but has turned mature. For example, Electric utilities, Railroads
2. Growth is slightly faster than Gross National Product
3. Chart is more or less flat
4. Generally pay generous and regular dividend because they can't expand the business anymore.
-Check if dividends have always been paid and wether they are routinely raised.
-The percentage of the earnings paid out as dividends. If it's a low percentage, then the company has a cushion in hard times. Otherwise, the dividend is riskier.
Selling signs:
-30-50 percent appreciation
-Fundamentals have deteriorated
-Lost market share for 2 consecutive years and is hiring another advertising agency
-No new products being developed, spending on research and development is curtailed, i.e. the company is resting on its laurels.
-Two recent acquisitions of unrelated businesses look like diworseifications, and the company is still looking for further "at the leading edge of technology" acquisitions.
-Overpaid for acquisitions, making its balance sheet deteriorate. No surplus funds to buy back shares, even if price falls sharply
-Even at lower price, the dividend yield is not high enough to attract much interest from investors.
The Stalwarts:
1. 10-12 percent annual growth in earnings.
2. Most are huge companies like Kellogg, Hershey's, Coca-Cocla, P&G which probably at best give 50% in a year or two, then probably you would want to begin to think about selling
3. Lynch generally buys for 30% to 50% gain, then sells and repeats the process with similar issues that haven't yet appreciated.
4. Lynch always keeps some stalwarts in portfolio as they offer good protection during hard times. People still eat cornflakes and people don't buy less dog food during recessions. Soon they will be reassessed and their value will be restored.
-These are big companies that aren't likely to go out of business. Key issue is price, p/e ratio will tell if you are paying too much.
-Check for diworseifications that may reduce earnings in the future
-Check the company's long-term growth rate, if it has kept up the same momentum in recent years.
-If you plan to hold the stock forever, see how the company has fared during previous recessions and market drops.
Selling signs:
-If stock price gets above the earnings line, i.e. if pe strays too far beyond normal range
-New products introduced in the last two years have had mixed results, others still in testing stage are a year away from the marketplace.
-Has p/e of 15, while other similar quality companies in the same industry has p/e's of 11-12
-No insider bought shares in the last year
-A major division that contributes 25 percent of earnings is vulnerable to an economic slump that's taking place (housing, oil drilling, etc)
-Company's growth rate has been slowing down even though it's been maintaining profits by cutting costs, future cost-cutting opportunities are limited.
The Fast Growers:
1. Small, aggressive new enterprises that grow 20% to 25% a year
2. Doesn't have to belong to fast-growing industry. In fact, Lynch rather it doesn't. All it needs is the room to expand within a slow-growing industry. E.g. Beer is a slow-growing industry, but Anheuser-Busch has been a fast grower by taking over market share, and enticing drinkers of rival brands to switch to theirs. The hotel business grows at only 2 percernt a year, but Marriott was able to grow 20 percent by capturing a larger segment of that market over the last decade.
-It's better to miss the first move in a stock and wait to see if a company's plans are working out.
-Look for small companies that are already profitable and have proven that their concept can be replicated
3. One risk is that small fast grower tend to be overzealous and underfinanced, so look for healthy balance sheet and substantial profitability.
4. The trick is to know when it will stop growing & how much to pay for the growth. (high p/e isn't always bad)
-Investigate the product is a major part of the company's business
-What the growth rate in earnings has been in recent years. Is it slowing down (5 new motels last year and 3 this year) or speeding up (3 last year and 5 this year)?
-The company has duplicated its successes in more than one city or town, to prove that expansion will work.
-The company still has room to grow.
Selling signs:
-The main thing to watch for is the end of the second phase or rapid growth.
-If 40 Wall Street analysts are giving their highest recommendation, 60% of the shares are held by institutions, 3 national magazines have fawned over the CEO, it's time considering selling.
-Unlike cyclicals, growth company's p/e usually gets bigger near the end of rapid growth.
-When you saw a Holiday Inn franchies every twenty miles, it had to be time to worry, where else could they expand?
-Same store sale are down 3 percent in the last quarter.
-New store results are disappointing
-2 top executives and several key employees leave to join a rival firm.
-The company's telling positive story to institutional investors in 12 cities in two weeks.
-Selling at p/e 30, while the most optimistic projections of earnings growth are 15-20 percent for the next two years.
The Cyclicals:
1. Sales and profits rise and fall in regular if not completely predictable fashion. For example, automobile, airlines, tire, steel, chemical, etc
2. Contrary to growth stocks which keep expanding, cyclicals expand and contract, then expand and contract again
3. Coming out of a recession into a vigorous economy, cyclicals outperform stalwarts, and vice versa
4. Do not confuse cyclicals with stalwarts just because major cyclicals are large and well-known companies.If stalwarts like Bristol-Myers can lose half of its value, then cyclicals like Ford can lose 80% in downturn
5. Timing is everything to detect early signs of business falling off or picking up. If you work in some profession that's connected to steel, alumninum, airlines, automobiles, etc., then you've got your edge.
6. You can easily lose more than 50 perent of your investment very quickly if you buy in the wrong part of the cycle, and it may be years before you'll see another upswing..
-Keep a close watch on inventories, and the supply-demand relationship. Watch for new entrants into the market, which is usually a dangerous development
-Anticipate a shrinking p/e multiple over time as business recovers and investors look ahead to the end of the cycle, when peak earnings are achieved.
-If you know your cyclical, you have an advantage in figuring out the cycles. E.g. everyone knows there are cycles in the auto industry. Cars get older and they have to be replaced. People can put off replacing cars for a year or two longer than expected, but sooner or later they are back in the dealerships.
-The worse the slump in the auto industry, the better the recovery.
Selling signs:
-Sometimes the knowledgeable vanguard begins to sell a year before there's a single sign of companiy's decline to avoid the rush. Hence the stock price starts to fall for apparently no earthly reason.
-Other than at the end of cycle, best time to sell is when something has actually started to go wrong.
1. Costs have started to rise
2. Existing plants are operating at full capacity, the company begins to spend money to add to capacity.
-One obvious sell signal is that inventories are building up, and the company can't get rid of them
-Falling commodity prices, usually prices of oil, steel, etc., will turn down several months before the troubles show up in the earnings.
-Future price of commodity is lower than the current, or spot price.
-Two key union contracts expire in the next 12 months, and labor leaders are asking for a full restoration of the wages and benefits they gave up in the last contracts.
-Final demand for the product is slowing down.
-Company has doubled its capital spending budget to build a fancy new plant, as opposed to modernizing the old plants at low cost.
-Company has tried to cut costs but still can't compete with foreign producers.
-p/e ratio gets smaller near the end
Turnarounds
1. These aren't slow growers; these are no growers
2. A poorly managed cyclical is always a potential candidate for turnaround.
3. Turnaround stocks make up lost ground very quickly.
4. The best thing about investing in successful turnarounds is that of all the categories of stocks, their ups and downs are least related to the general market.
-Can the company survive a raid by its creditors? What is the debt structure?
-How is the company supposed to be turning around? Has it rid itself of unprofitable divisions? This can make a big difference in earnings.
When to sell turnaround
-Best time to sell turnaround is after it's turned around.
-If the turnaround has been successful, you have to reclassify the stock.
E.g. Chrysler was a turnaround play at $2 a share, but not at $48. By when the debt was paid and the rot was cleaned out, and Chrysler was back to being a solid, cyclical auto company. It has to be judged the same way General Motors, Ford are judged.
-Debt, which has declined for five straight quarters, just rose by $25 million in the latest quarterly report.
-Inventories are rising at twice the rate of sales growth.
-The p/e is inflated relative to earnings prospects.
-The company's strongest division sells 50 percent of its output ot one leading customer, and that leading customer is suffering from a slowdown in its own sales.
The Asset Plays
1. The asset may be as simple as a pile of cash. Sometimes it's real estate.
-What's the value of the assets? Are there any hidden assets?
FAVOURITE ATTRIBUTES OF A PERFECT COMPANY:
1) It sounds dull – or even better, ridiculous
2) It does something dull
3) It does something disagreeable
4) It’s a spinoff
5) The institutions don’t own it and the analysts don’t follow it
-The last analyst showed up at the company three years ago
-Once-popular stocks which the professionals have abandoned.
6) Rumors abound: it’s involved with toxic waste and/or the mafia
7) There’s something depressing about it, e.g. mortality, funeral services
8) It’s in a no growth industry
-In no-growth industries like bottle caps, coupon-clipping services, oil-drum retrieval, or motel chains, especially one that's boring and upsets people, there's no problem with competition.
9) It’s got a niche
-Warren Buffett on newspapers and TV stations that dominated major markets, beginning with the Washington Post.
-Drug companies and chemical companies have niches - products that no one else is allowed to make, i.e. patent.
10) People have to keep buying it
-Drugs, soft drinks, razer blades, cigarettes. Why take chances on fickle purchases when there's so much steady business around?
11) It’s a user of technology
-Instead of investing in computer companies that struggle to survive in an endless price war, why not invest in a company that benefits from the price war - such as Automatic Data Processing? As computers get cheaper, Automatic Data can do its job cheaper and thus increase its own profits.
12) Insiders are buyers
-When management owns stocks, then rewarding the shareholders becomes a first priority, whereas when management simply collects a paycheck, then increasing salaries becomes a first priority.
-It's more significant when employees at the lower echelons add to their positions. If you see someone with a $45,000 annual salary buying $10,000 worth of stock, you can be sure it's a meaningul vote of confidence. That's why I'd rather find seven vice presidents bying 1,000 share apiece than the president buying 5,000.
-It's even better when several individuals are buying at once.
-In normal situation, insider selling usually means nothing and it's silly to react to it (if it's not majority of their shares). There are many reasons that officers might sell, e.g. pay children's tuition, buy a new house, satisfy a debt. But there's only one reason insiders buy: they think the stock price is undervalued and will eventually go up!
13) The company is buying back shares
-If a company buys back half its shares and its overall earnings stay the same, the earnings per share have just doubled.
STOCKS HE'D AVOID:
1. Hottest stock in the hottest industry due to fierce competition.
2. Beware the NEXT SOMETHING,
-e.g. stock touted as the next IBM, the next McDonald's, or the next Disney, etc
3. Avoid Diworseifications
-Diversification only makes sense when there's synergy, for example since Marriott already operates hotels and restaurants, it make senses for them to acquire the Big Boy resturant chain, and also to acquire the subsidiary that provides meal service to prisons and colleges.
READING THE REPORTS
Percent of Sales
When I'm interested in a company because of a particular product, the first thing I want to know is what the product means to the company in question. What percent of sales does it represent? Pampers was more profitable than L'eggs, but it didn't mean as much to the huge P&G.
P/E Ratio
Avoid stocks with excessively high p/e's because they must have incredible earnings growth to justify. Buying all low PE companies doesn't make sense because different types of stocks command different kinds of p/e.
The p/e ratio of any company that's fairly priced will equal its growth.
Divide long-term growth rate by p/e ratio. Less than a 1 is poor, and 1.5 is okay, look for a 2 or better.
The Cash Position
Ford's "net cash" position in 1987 annual report:
= $5.672 billion in cash and cash items + $4.424 billion in marketable securities -$1.75 billion long-term debt
= $8.35 billion ($16 a share is the floor on the stock, unlikely to drop below that.)
The Debt Factor
debt-to-equity ratio
Book Value
The flaw is that the stated book value often bears little relationship to the actual worth of the company. If often understates or overstates reality by a large margin.
Unwritten rule here: The closer you get to a finished product, the less predictable the resales value. You know how much cotton is worth, but who can be sure about an orrage cotton shirt? You know what you can get for a bar of metal, but what is it worth as a floor lamp?
More Hidden Assets
-Assets which have appreciated in values but their values recorded on the books are the original paid prices.
-Brand names, patented drugs, cable franchises, TV and radio stations.
-Sometimes there are inefficiencies in the holdings relationships. e.g. A holds 25% of B, but B's value alone is more than A market cap, then you can buy A.
Cash Flow
If a company is earning $100 million and has to spend $80 million to keep the machineries up-to-date, then it's bad, the first year it doesn't do so, it loses business to more efficient competitors. Modest earnings can be great investment because of free cash flow. E.g. a company with a huge depreciation allowance for old equipment that doesn't need to be replaced in the immediate future.
Inventories
With a manufacturer or a retailer, an inventory buildup is usually a bad sign. When inventories grow faster than sales, it's a red flag.
On the bright side, if a company has been depressed and the inventories are beginning to be depleted, it's the first evidence that things have turned around.
Growth Rate
"Growth" isn't synonymous with "expansion", the is a misconception. E.g. Philip Morris in a cigarette consumption in U.S. is growing at about -2% a year. Philip Morris managed to increase earnings by lowering costs and especially by raising prices. That's the only growth rate that really counts: earnings.
If you find a business that can get away with raising prices year after year without losing customers (an addictive product such as cigarettes fills the bill), you've got a terrific investment.
All else being equal, a 20-percent grower selling at a p/e of 20 is a much better buy than a 10-percent grower selling at a p/e of 10.
Future Earnings
You can't predict future earnings, but you can find out how a company plans to increase its earnings. There are five basic ways to increase earnings:
1. reduce costs
2. raise prices
3. expand into new markets
4. sell more in the old markets
5. revitalize, close or dispose of a losing operation.
SECTION 3: THE LONG-TERM VIEW
Lynch doesn't go into cash it would mean getting out of market, he wants to stay in the market forever, and to rotate stocks depending on the fundamental situations. E.g. sell the overpriced stalwart which has gone up 40 percent - which is what he expected to get out of it (nothing wonder has happened with the company to make him think there're pleasant surprises ahead) - and replace it with another stalwarts which is attractively priced.
If you can't convince yourself "When I'm down 25 percent, I'm a buyer" and banish forever the fatal thought "When I'm down 25 percent, I'm a seller," then you'll never make a decent profit in stocks.
Don't get faked out by macro events such as M1-money supply, oil prices, dollar index, etc. Lynch pays no attention to external economic conditions, except in the few obvious instances when he's sure that a specific business will be affected in a specific way.
1. When oil prices go down, it obviously has an effect on oil-service companies, but not on ethical drug companies
2. 1986-87, he sold his Jaguar, Honda, Subaru, and Volvo holdings because he was convinced that the failling dollar would hurt the earnings of foreign automakers that sell a high percentage of their cars in the U.S.
- The average person is exposed to interesting local companies and products years before the professionals.
- Look for opportunities that haven't yet been discovered and certified by Wall Street - companies that are "off the radar scope." Remember the Street Lag.
- Predicting the economy or the short-term direction of the stock market is futile.
- Invest in companies, not in the stock market.
The market ought to be irrelevant. If I could convince you of this one thing, I'd feel this book had done its job. And if you don't believe me, believe Warren Buffett. "As far as I'm concerned," Buffet has written, "the stock market doesn't exist. It is there only as a reference to see if anybody is offering to do anything foolish."
- The long-term returns from stocks are both relatively predictable and also far superior to the long-term returns from bonds. In stocks you've got the company's growth on your side. In bonds, the best you can hope for is to get it back, plus interest.
SECTION 2: PICKING WINNERS
THE TWO-MINUTE DRILL
1. Identify whether you're dealing with a slow grower, a stalwart, a fast grower, a turnaround, an asset play, or a cyclical. By putting your stocks into categories you'll have a better idea of what to expect from them.
2. The p/e ratio will give you a rough idea of whether the stock is undervalued or overvalued relative to its immediate prospects.
3. Next you need to develop the "story". Lynch gives himself a two-minute monologue that covers the reasons he's interested in it, what has to happen for the company to succeed, and the pitfalls that stand in its path.
THREE PHASES TO A GROWTH COMPANY'S LIFE
1. Start-up phase: riskiest for most investors as success isn't yet established
2. The rapid expansion phase: SAFEST AND WHERE THE MOST MONEY IS MADE, because the company is growing simply by DUPLICATING ITS SUCCESSFUL FORMULA.
3. The mature phase: most problematic as the company runs into its limitations.
The Slow Growers:
1. Initially fast grower (fast-growing industry), but has turned mature. For example, Electric utilities, Railroads
2. Growth is slightly faster than Gross National Product
3. Chart is more or less flat
4. Generally pay generous and regular dividend because they can't expand the business anymore.
-Check if dividends have always been paid and wether they are routinely raised.
-The percentage of the earnings paid out as dividends. If it's a low percentage, then the company has a cushion in hard times. Otherwise, the dividend is riskier.
Selling signs:
-30-50 percent appreciation
-Fundamentals have deteriorated
-Lost market share for 2 consecutive years and is hiring another advertising agency
-No new products being developed, spending on research and development is curtailed, i.e. the company is resting on its laurels.
-Two recent acquisitions of unrelated businesses look like diworseifications, and the company is still looking for further "at the leading edge of technology" acquisitions.
-Overpaid for acquisitions, making its balance sheet deteriorate. No surplus funds to buy back shares, even if price falls sharply
-Even at lower price, the dividend yield is not high enough to attract much interest from investors.
The Stalwarts:
1. 10-12 percent annual growth in earnings.
2. Most are huge companies like Kellogg, Hershey's, Coca-Cocla, P&G which probably at best give 50% in a year or two, then probably you would want to begin to think about selling
3. Lynch generally buys for 30% to 50% gain, then sells and repeats the process with similar issues that haven't yet appreciated.
4. Lynch always keeps some stalwarts in portfolio as they offer good protection during hard times. People still eat cornflakes and people don't buy less dog food during recessions. Soon they will be reassessed and their value will be restored.
-These are big companies that aren't likely to go out of business. Key issue is price, p/e ratio will tell if you are paying too much.
-Check for diworseifications that may reduce earnings in the future
-Check the company's long-term growth rate, if it has kept up the same momentum in recent years.
-If you plan to hold the stock forever, see how the company has fared during previous recessions and market drops.
Selling signs:
-If stock price gets above the earnings line, i.e. if pe strays too far beyond normal range
-New products introduced in the last two years have had mixed results, others still in testing stage are a year away from the marketplace.
-Has p/e of 15, while other similar quality companies in the same industry has p/e's of 11-12
-No insider bought shares in the last year
-A major division that contributes 25 percent of earnings is vulnerable to an economic slump that's taking place (housing, oil drilling, etc)
-Company's growth rate has been slowing down even though it's been maintaining profits by cutting costs, future cost-cutting opportunities are limited.
The Fast Growers:
1. Small, aggressive new enterprises that grow 20% to 25% a year
2. Doesn't have to belong to fast-growing industry. In fact, Lynch rather it doesn't. All it needs is the room to expand within a slow-growing industry. E.g. Beer is a slow-growing industry, but Anheuser-Busch has been a fast grower by taking over market share, and enticing drinkers of rival brands to switch to theirs. The hotel business grows at only 2 percernt a year, but Marriott was able to grow 20 percent by capturing a larger segment of that market over the last decade.
-It's better to miss the first move in a stock and wait to see if a company's plans are working out.
-Look for small companies that are already profitable and have proven that their concept can be replicated
3. One risk is that small fast grower tend to be overzealous and underfinanced, so look for healthy balance sheet and substantial profitability.
4. The trick is to know when it will stop growing & how much to pay for the growth. (high p/e isn't always bad)
-Investigate the product is a major part of the company's business
-What the growth rate in earnings has been in recent years. Is it slowing down (5 new motels last year and 3 this year) or speeding up (3 last year and 5 this year)?
-The company has duplicated its successes in more than one city or town, to prove that expansion will work.
-The company still has room to grow.
Selling signs:
-The main thing to watch for is the end of the second phase or rapid growth.
-If 40 Wall Street analysts are giving their highest recommendation, 60% of the shares are held by institutions, 3 national magazines have fawned over the CEO, it's time considering selling.
-Unlike cyclicals, growth company's p/e usually gets bigger near the end of rapid growth.
-When you saw a Holiday Inn franchies every twenty miles, it had to be time to worry, where else could they expand?
-Same store sale are down 3 percent in the last quarter.
-New store results are disappointing
-2 top executives and several key employees leave to join a rival firm.
-The company's telling positive story to institutional investors in 12 cities in two weeks.
-Selling at p/e 30, while the most optimistic projections of earnings growth are 15-20 percent for the next two years.
The Cyclicals:
1. Sales and profits rise and fall in regular if not completely predictable fashion. For example, automobile, airlines, tire, steel, chemical, etc
2. Contrary to growth stocks which keep expanding, cyclicals expand and contract, then expand and contract again
3. Coming out of a recession into a vigorous economy, cyclicals outperform stalwarts, and vice versa
4. Do not confuse cyclicals with stalwarts just because major cyclicals are large and well-known companies.If stalwarts like Bristol-Myers can lose half of its value, then cyclicals like Ford can lose 80% in downturn
5. Timing is everything to detect early signs of business falling off or picking up. If you work in some profession that's connected to steel, alumninum, airlines, automobiles, etc., then you've got your edge.
6. You can easily lose more than 50 perent of your investment very quickly if you buy in the wrong part of the cycle, and it may be years before you'll see another upswing..
-Keep a close watch on inventories, and the supply-demand relationship. Watch for new entrants into the market, which is usually a dangerous development
-Anticipate a shrinking p/e multiple over time as business recovers and investors look ahead to the end of the cycle, when peak earnings are achieved.
-If you know your cyclical, you have an advantage in figuring out the cycles. E.g. everyone knows there are cycles in the auto industry. Cars get older and they have to be replaced. People can put off replacing cars for a year or two longer than expected, but sooner or later they are back in the dealerships.
-The worse the slump in the auto industry, the better the recovery.
Selling signs:
-Sometimes the knowledgeable vanguard begins to sell a year before there's a single sign of companiy's decline to avoid the rush. Hence the stock price starts to fall for apparently no earthly reason.
-Other than at the end of cycle, best time to sell is when something has actually started to go wrong.
1. Costs have started to rise
2. Existing plants are operating at full capacity, the company begins to spend money to add to capacity.
-One obvious sell signal is that inventories are building up, and the company can't get rid of them
-Falling commodity prices, usually prices of oil, steel, etc., will turn down several months before the troubles show up in the earnings.
-Future price of commodity is lower than the current, or spot price.
-Two key union contracts expire in the next 12 months, and labor leaders are asking for a full restoration of the wages and benefits they gave up in the last contracts.
-Final demand for the product is slowing down.
-Company has doubled its capital spending budget to build a fancy new plant, as opposed to modernizing the old plants at low cost.
-Company has tried to cut costs but still can't compete with foreign producers.
-p/e ratio gets smaller near the end
Turnarounds
1. These aren't slow growers; these are no growers
2. A poorly managed cyclical is always a potential candidate for turnaround.
3. Turnaround stocks make up lost ground very quickly.
4. The best thing about investing in successful turnarounds is that of all the categories of stocks, their ups and downs are least related to the general market.
-Can the company survive a raid by its creditors? What is the debt structure?
-How is the company supposed to be turning around? Has it rid itself of unprofitable divisions? This can make a big difference in earnings.
When to sell turnaround
-Best time to sell turnaround is after it's turned around.
-If the turnaround has been successful, you have to reclassify the stock.
E.g. Chrysler was a turnaround play at $2 a share, but not at $48. By when the debt was paid and the rot was cleaned out, and Chrysler was back to being a solid, cyclical auto company. It has to be judged the same way General Motors, Ford are judged.
-Debt, which has declined for five straight quarters, just rose by $25 million in the latest quarterly report.
-Inventories are rising at twice the rate of sales growth.
-The p/e is inflated relative to earnings prospects.
-The company's strongest division sells 50 percent of its output ot one leading customer, and that leading customer is suffering from a slowdown in its own sales.
The Asset Plays
1. The asset may be as simple as a pile of cash. Sometimes it's real estate.
-What's the value of the assets? Are there any hidden assets?
FAVOURITE ATTRIBUTES OF A PERFECT COMPANY:
1) It sounds dull – or even better, ridiculous
2) It does something dull
3) It does something disagreeable
4) It’s a spinoff
5) The institutions don’t own it and the analysts don’t follow it
-The last analyst showed up at the company three years ago
-Once-popular stocks which the professionals have abandoned.
6) Rumors abound: it’s involved with toxic waste and/or the mafia
7) There’s something depressing about it, e.g. mortality, funeral services
8) It’s in a no growth industry
-In no-growth industries like bottle caps, coupon-clipping services, oil-drum retrieval, or motel chains, especially one that's boring and upsets people, there's no problem with competition.
9) It’s got a niche
-Warren Buffett on newspapers and TV stations that dominated major markets, beginning with the Washington Post.
-Drug companies and chemical companies have niches - products that no one else is allowed to make, i.e. patent.
10) People have to keep buying it
-Drugs, soft drinks, razer blades, cigarettes. Why take chances on fickle purchases when there's so much steady business around?
11) It’s a user of technology
-Instead of investing in computer companies that struggle to survive in an endless price war, why not invest in a company that benefits from the price war - such as Automatic Data Processing? As computers get cheaper, Automatic Data can do its job cheaper and thus increase its own profits.
12) Insiders are buyers
-When management owns stocks, then rewarding the shareholders becomes a first priority, whereas when management simply collects a paycheck, then increasing salaries becomes a first priority.
-It's more significant when employees at the lower echelons add to their positions. If you see someone with a $45,000 annual salary buying $10,000 worth of stock, you can be sure it's a meaningul vote of confidence. That's why I'd rather find seven vice presidents bying 1,000 share apiece than the president buying 5,000.
-It's even better when several individuals are buying at once.
-In normal situation, insider selling usually means nothing and it's silly to react to it (if it's not majority of their shares). There are many reasons that officers might sell, e.g. pay children's tuition, buy a new house, satisfy a debt. But there's only one reason insiders buy: they think the stock price is undervalued and will eventually go up!
13) The company is buying back shares
-If a company buys back half its shares and its overall earnings stay the same, the earnings per share have just doubled.
STOCKS HE'D AVOID:
1. Hottest stock in the hottest industry due to fierce competition.
2. Beware the NEXT SOMETHING,
-e.g. stock touted as the next IBM, the next McDonald's, or the next Disney, etc
3. Avoid Diworseifications
-Diversification only makes sense when there's synergy, for example since Marriott already operates hotels and restaurants, it make senses for them to acquire the Big Boy resturant chain, and also to acquire the subsidiary that provides meal service to prisons and colleges.
READING THE REPORTS
Percent of Sales
When I'm interested in a company because of a particular product, the first thing I want to know is what the product means to the company in question. What percent of sales does it represent? Pampers was more profitable than L'eggs, but it didn't mean as much to the huge P&G.
P/E Ratio
Avoid stocks with excessively high p/e's because they must have incredible earnings growth to justify. Buying all low PE companies doesn't make sense because different types of stocks command different kinds of p/e.
The p/e ratio of any company that's fairly priced will equal its growth.
Divide long-term growth rate by p/e ratio. Less than a 1 is poor, and 1.5 is okay, look for a 2 or better.
The Cash Position
Ford's "net cash" position in 1987 annual report:
= $5.672 billion in cash and cash items + $4.424 billion in marketable securities -$1.75 billion long-term debt
= $8.35 billion ($16 a share is the floor on the stock, unlikely to drop below that.)
The Debt Factor
debt-to-equity ratio
Book Value
The flaw is that the stated book value often bears little relationship to the actual worth of the company. If often understates or overstates reality by a large margin.
Unwritten rule here: The closer you get to a finished product, the less predictable the resales value. You know how much cotton is worth, but who can be sure about an orrage cotton shirt? You know what you can get for a bar of metal, but what is it worth as a floor lamp?
More Hidden Assets
-Assets which have appreciated in values but their values recorded on the books are the original paid prices.
-Brand names, patented drugs, cable franchises, TV and radio stations.
-Sometimes there are inefficiencies in the holdings relationships. e.g. A holds 25% of B, but B's value alone is more than A market cap, then you can buy A.
Cash Flow
If a company is earning $100 million and has to spend $80 million to keep the machineries up-to-date, then it's bad, the first year it doesn't do so, it loses business to more efficient competitors. Modest earnings can be great investment because of free cash flow. E.g. a company with a huge depreciation allowance for old equipment that doesn't need to be replaced in the immediate future.
Inventories
With a manufacturer or a retailer, an inventory buildup is usually a bad sign. When inventories grow faster than sales, it's a red flag.
On the bright side, if a company has been depressed and the inventories are beginning to be depleted, it's the first evidence that things have turned around.
Growth Rate
"Growth" isn't synonymous with "expansion", the is a misconception. E.g. Philip Morris in a cigarette consumption in U.S. is growing at about -2% a year. Philip Morris managed to increase earnings by lowering costs and especially by raising prices. That's the only growth rate that really counts: earnings.
If you find a business that can get away with raising prices year after year without losing customers (an addictive product such as cigarettes fills the bill), you've got a terrific investment.
All else being equal, a 20-percent grower selling at a p/e of 20 is a much better buy than a 10-percent grower selling at a p/e of 10.
Future Earnings
You can't predict future earnings, but you can find out how a company plans to increase its earnings. There are five basic ways to increase earnings:
1. reduce costs
2. raise prices
3. expand into new markets
4. sell more in the old markets
5. revitalize, close or dispose of a losing operation.
SECTION 3: THE LONG-TERM VIEW
Lynch doesn't go into cash it would mean getting out of market, he wants to stay in the market forever, and to rotate stocks depending on the fundamental situations. E.g. sell the overpriced stalwart which has gone up 40 percent - which is what he expected to get out of it (nothing wonder has happened with the company to make him think there're pleasant surprises ahead) - and replace it with another stalwarts which is attractively priced.
If you can't convince yourself "When I'm down 25 percent, I'm a buyer" and banish forever the fatal thought "When I'm down 25 percent, I'm a seller," then you'll never make a decent profit in stocks.
Don't get faked out by macro events such as M1-money supply, oil prices, dollar index, etc. Lynch pays no attention to external economic conditions, except in the few obvious instances when he's sure that a specific business will be affected in a specific way.
1. When oil prices go down, it obviously has an effect on oil-service companies, but not on ethical drug companies
2. 1986-87, he sold his Jaguar, Honda, Subaru, and Volvo holdings because he was convinced that the failling dollar would hurt the earnings of foreign automakers that sell a high percentage of their cars in the U.S.
This entire review has been hidden because of spoilers.
July 16, 2016
Regular re-read (every 5-10 years) of one of my two favorite investment books. (The other one is by the same author.).
Peter Lynch was the greatest mutual fund investor of all time growing his Magellan fund to over $1 billion. His investment style is a combination of growth and value investing, so called GARP--growth at a reasonable price.
While he made most of the money in big cap stocks like Wal-Mart or turnarounds like Volvo, Ford and Chrysler, he loved investing in small caps. This book covers it all. It's the most practical book on investing and the smartest. (His initial advice, by the way, is: before investing in stocks, buy a house. Why? You'll see.)
Whether you like growth or value, small or big caps, this book will be useful.
Peter Lynch was the greatest mutual fund investor of all time growing his Magellan fund to over $1 billion. His investment style is a combination of growth and value investing, so called GARP--growth at a reasonable price.
While he made most of the money in big cap stocks like Wal-Mart or turnarounds like Volvo, Ford and Chrysler, he loved investing in small caps. This book covers it all. It's the most practical book on investing and the smartest. (His initial advice, by the way, is: before investing in stocks, buy a house. Why? You'll see.)
Whether you like growth or value, small or big caps, this book will be useful.
July 13, 2021
Need to read this again for better absorption. Still, a decent book. A little heavy, though.
April 18, 2020
I'm currently working my way through the equity investing classics. One Up On Wall Street is among the best I've read. I decided to pick it up after watching a few talks by Peter Lynch and have not been disappointed – it is both informative and hilarious.
The central theme is that if you want to be successful in stocks, you have to find your edge. This is a point that many other classics skip over, instead jumping straight into the analytical techniques. Lynch continually emphasises the importance of thinking for yourself, preferring stocks that have very little analyst coverage from Wall Street or economists:
It's a very refreshing framework for thinking about stocks, and the book is packed with tips and things to look for when you're examining a company.
In summary, there's a huge amount to be learnt from Peter Lynch and his writing style makes this a very painless process.
The central theme is that if you want to be successful in stocks, you have to find your edge. This is a point that many other classics skip over, instead jumping straight into the analytical techniques. Lynch continually emphasises the importance of thinking for yourself, preferring stocks that have very little analyst coverage from Wall Street or economists:
As some perceptive person once said, if all the economists of the world were laid end to end, it wouldn’t be a bad thing.
It's a very refreshing framework for thinking about stocks, and the book is packed with tips and things to look for when you're examining a company.
When somebody says, “Any idiot could run this joint,” that’s a plus as far as I’m concerned, because sooner or later any idiot probably is going to be running it.
In summary, there's a huge amount to be learnt from Peter Lynch and his writing style makes this a very painless process.
August 31, 2015
A must read for novice stock investors , oversimplified but drives home important concepts.
December 30, 2020
This is the friendliest and most approachable book on investing I've read. It's a mix of general investing philosophy, personal anecdotes and specific strategies for choosing, buying and selling stocks. He writes about his frequent missteps with regret but also the humor and perspective of one who has learned from his mistakes. Many investing books are written by authors who present themselves as ingenious laser-visioned mavericks who have reduced investing to a perfect science. Lynch, on the other hand, makes it clear that he's a rather normal person for the most part, and fully capable of misjudgment. He never tries to sell you on an 'infallible method' (How to Make Money in Stocks), something too easy to be true (Rule #1), nor overly simplistic (Millionaire Teacher, which can be summed up as 'just buy index funds'). Instead, he has a common-sense perspective, and rattles off wonderful gems like these:
•'In my experience, six out of ten winners in a portfolio can produce a satisfying result.'
•'Frankly, there is no way to separate investing from gambling into those neat categories that are meant to reassure us.'
•'All the major advances and declines have been surprises to me.'
•'Remember, things are never clear until it's too late.'
•'The size of a company has a lot to do with what you can expect to get out of the stock.'
•'If you can follow only one bit of data, follow the earnings.'
•'The bearish argument always sounds more intelligent.'
•'That's not to say there's no such thing as an overvalued market, but there's no point worrying about it.'
•When you sell in desperation, you always sell cheap.'
Lynch doesn't talk about 'stocks' in general but organizes them into five categories – the stalwarts, fast growers, slow growers, turnarounds, and cyclicals. Each has their own characteristics and reasons to buy. He also talks about the three phases in a growth company's life: the start-up phase, rapid expansion phase and the mature phase. Depending on the type of company and the current stage of its growth cycle, you need to use a different investing technique, he argues. This way of thinking is a breath of fresh air compared to that offered by most investing books, which treat stocks as simply 'stocks.'
He also dives into the emotional and psychological aspect of investing, writing about the personal qualities needed (tolerance for pain, open-mindedness, detachment, persistence, the ability to ignore general panic), and the 'three emotional states' that every 'unwary investor' passes through: 'concern, complacency, and capitulation.' He discourages you from beating yourself up when you miss an opportunity, like a stock on your watchlist that you chose not to buy, only to afterwards watch it do well: 'Regarding somebody else's gains as your own personal losses is not a productive attitude for investing in the stock market.'
Finally, in addition to his broader ideas and suggestions, Lynch gives super concrete advice that can easily be put into action. When choosing stocks, he recommends focusing on basic elements like the importance of earnings and assets, free cash flow, pretax profit margin, the PE ratio being half vs twice the growth rate of the company, and the amount of debt the company is carrying (80 percent debt and 20 percent equity is bad). These are practical tips you can put into practice right away.
All in all this is the best investing book I've yet read, and perhaps the only one where, if you followed most of his advice, you'd almost certainly do well. Like most investing books, it suffers from two problems: it can get repetitive: sometimes after making a point, he'll offer more and more (interesting) examples to make the same point. Second, since it was written in 1999, some of the examples can feel jarringly dated. It would be fantastic if authors like Lynch could update their classic books every ten years or so, with new examples and insight. Other than that, however, this is an excellent investing guidebook, for beginners and more advanced investors alike.
•'In my experience, six out of ten winners in a portfolio can produce a satisfying result.'
•'Frankly, there is no way to separate investing from gambling into those neat categories that are meant to reassure us.'
•'All the major advances and declines have been surprises to me.'
•'Remember, things are never clear until it's too late.'
•'The size of a company has a lot to do with what you can expect to get out of the stock.'
•'If you can follow only one bit of data, follow the earnings.'
•'The bearish argument always sounds more intelligent.'
•'That's not to say there's no such thing as an overvalued market, but there's no point worrying about it.'
•When you sell in desperation, you always sell cheap.'
Lynch doesn't talk about 'stocks' in general but organizes them into five categories – the stalwarts, fast growers, slow growers, turnarounds, and cyclicals. Each has their own characteristics and reasons to buy. He also talks about the three phases in a growth company's life: the start-up phase, rapid expansion phase and the mature phase. Depending on the type of company and the current stage of its growth cycle, you need to use a different investing technique, he argues. This way of thinking is a breath of fresh air compared to that offered by most investing books, which treat stocks as simply 'stocks.'
He also dives into the emotional and psychological aspect of investing, writing about the personal qualities needed (tolerance for pain, open-mindedness, detachment, persistence, the ability to ignore general panic), and the 'three emotional states' that every 'unwary investor' passes through: 'concern, complacency, and capitulation.' He discourages you from beating yourself up when you miss an opportunity, like a stock on your watchlist that you chose not to buy, only to afterwards watch it do well: 'Regarding somebody else's gains as your own personal losses is not a productive attitude for investing in the stock market.'
Finally, in addition to his broader ideas and suggestions, Lynch gives super concrete advice that can easily be put into action. When choosing stocks, he recommends focusing on basic elements like the importance of earnings and assets, free cash flow, pretax profit margin, the PE ratio being half vs twice the growth rate of the company, and the amount of debt the company is carrying (80 percent debt and 20 percent equity is bad). These are practical tips you can put into practice right away.
All in all this is the best investing book I've yet read, and perhaps the only one where, if you followed most of his advice, you'd almost certainly do well. Like most investing books, it suffers from two problems: it can get repetitive: sometimes after making a point, he'll offer more and more (interesting) examples to make the same point. Second, since it was written in 1999, some of the examples can feel jarringly dated. It would be fantastic if authors like Lynch could update their classic books every ten years or so, with new examples and insight. Other than that, however, this is an excellent investing guidebook, for beginners and more advanced investors alike.
May 26, 2010
This is a short book, but long on advice even, and especially, after the financial meltodown. It took me about 40 - 45 minutes to go through the book, but I'll read it again tomorrow and maybe again next week allowing the content to set in.
The book is a fun read and gives novices, such as myself, some basic fundamentals and concepts before we rush in (again) to lose our money (again) while the big boys rake all the profits (again) in the casino we all know as the stock market. There is no specific advice in this book other than to spend as much time researching a stock as you would buying a new refrigerator; however I found the general concepts interesting and informative.
But reader beware, even though the book is short Lynch does get the point across that choosing your own stocks is and making money is a combination of perspiration and luck. I've made the mistake of rushing in to buy a certain stock that was "hot", sometimes it worked out but mostly I lost money.
The book is a fun read and gives novices, such as myself, some basic fundamentals and concepts before we rush in (again) to lose our money (again) while the big boys rake all the profits (again) in the casino we all know as the stock market. There is no specific advice in this book other than to spend as much time researching a stock as you would buying a new refrigerator; however I found the general concepts interesting and informative.
But reader beware, even though the book is short Lynch does get the point across that choosing your own stocks is and making money is a combination of perspiration and luck. I've made the mistake of rushing in to buy a certain stock that was "hot", sometimes it worked out but mostly I lost money.
March 17, 2020
สนุกกว่าที่คิดเยอะเลย ตัวอย่างกิจการที่ยกอาจจะเน้นอเมริกาและเก่าไปหน่อยเพราะเขียนตั้งแต่เกิดต้มยำกุ้งด้วยซ้ำ แต่แนวคิดหลักๆ ยังใช้ได้อยู่แบบข้ามกาลเวลา หนึ่งใน the must สำหรับคนที่อยากเข้าใจโลกการเงิน
December 17, 2022
A complete guide on how to do fundamental analysis (stepwise) and how to pick a stock is well illustrated.
Even though it was written in 2000
I think it's still relevant in today's market.
Even though it was written in 2000
I think it's still relevant in today's market.
April 2, 2021
I have the impression that books about investing are generally awful—greedy, crass, self-promoting, illogical, and mediocre. It must have something to do with money. This one, written in the late 1980s, and published in this edition in 2000, is none of those things. It's just out of date.
Peter Lynch is a nice guy who talks in a relaxed way about picking stocks, providing numerous examples of his investments that failed as well as the occasional "multibagger" successes that returned ten times or more of the original investment. They enabled him to establish a stellar reputation as the young manager of the Fidelity Magellan Fund who maintained average returns of around 25 percent over a long period. Most of the companies mentioned have long since disappeared, and the stock price charts look like ancient Babylonian scrolls, but Lynch found enough good performers (out of portfolios of 1200 to 15oo stocks) to set himself apart in a financial industry that is notorious for disappointing performance.
I read the book aloud to my wife, who is not a native English speaker, and despite skipping over ancient anecdotes, golf talk, cigarette companies, brokerage businesses that long preexisted modern online brokerage firms, and portrayals of the 1960s man that make me feel as outmoded as polyester leisure suits and white shoe/belt combos, we felt that we distilled out enough really valuable advice to make it worthwhile. I tried to find a summary PDF that gathered those points together, but all of the ones I looked at were just very poorly written excuses to gather contact information from hapless investors who were foolish enough to download them.
Money is a dirty game, but we (my wife and I) still love investing because we learned to avoid "financial advisers", like Ebola or the Black Plague, thus making a little money.
Peter Lynch is a nice guy who talks in a relaxed way about picking stocks, providing numerous examples of his investments that failed as well as the occasional "multibagger" successes that returned ten times or more of the original investment. They enabled him to establish a stellar reputation as the young manager of the Fidelity Magellan Fund who maintained average returns of around 25 percent over a long period. Most of the companies mentioned have long since disappeared, and the stock price charts look like ancient Babylonian scrolls, but Lynch found enough good performers (out of portfolios of 1200 to 15oo stocks) to set himself apart in a financial industry that is notorious for disappointing performance.
I read the book aloud to my wife, who is not a native English speaker, and despite skipping over ancient anecdotes, golf talk, cigarette companies, brokerage businesses that long preexisted modern online brokerage firms, and portrayals of the 1960s man that make me feel as outmoded as polyester leisure suits and white shoe/belt combos, we felt that we distilled out enough really valuable advice to make it worthwhile. I tried to find a summary PDF that gathered those points together, but all of the ones I looked at were just very poorly written excuses to gather contact information from hapless investors who were foolish enough to download them.
Money is a dirty game, but we (my wife and I) still love investing because we learned to avoid "financial advisers", like Ebola or the Black Plague, thus making a little money.
Read
December 18, 2014 I originally picked this book because after I read a lot about Warren Buffett's investing I decided to see other people's style. This was a good read but it was specific to Lynch's style so it was not applicable to today's investment decisions. Peter describes how he came about developing his strategy for success. He talks about his past, his victories, and some of his failures. He describes everything that happened in an easy way to read. Anyone, including non-financial folks, can understand this.
The book emphasizes through numerous examples the importance of understanding the companies you invest in, picking winners, and collecting the important facts. Although some of the companies mentioned are no longer in existence, the reasoning and the thought process is as valuable as it was when the book was written.I particularly liked the list of questions to ask before buying a stock and for identifying suitable times to buy or sell a stock. "Not all common stocks are common"(Lynch 36).
In the end this was a good read but many of the topics are outdated. This book is significant to people staring on investment because it teaches you that the average investor can get rich.
The book emphasizes through numerous examples the importance of understanding the companies you invest in, picking winners, and collecting the important facts. Although some of the companies mentioned are no longer in existence, the reasoning and the thought process is as valuable as it was when the book was written.I particularly liked the list of questions to ask before buying a stock and for identifying suitable times to buy or sell a stock. "Not all common stocks are common"(Lynch 36).
In the end this was a good read but many of the topics are outdated. This book is significant to people staring on investment because it teaches you that the average investor can get rich.
November 24, 2019
By far the best book i've read on investing so far.While there are a dozen books that cover the basics and and tell you what to look for when choosing stocks, this is the first one that tells me as a novice why a particular value on the financial statements matters.
Peter Lynch does an awesome job in splitting stocks into 6 categories (slow ,fast growers, stalwarts, cyclicals,turnarounds and asset plays).
After separating them , he goes on explaining what to expect from that category and what indices really matter on the financial statements.
On top of that he provides real decisions that he has made during his career as director of Magellan Fidelity investment fund.
There's one thing to read in a random book about the balance sheet and there's another to read on how he bought Ford stock in 1987 based on analysing Cash vs Long term Debt.
These examples are abundand and are godly for the novice investor to get the nuts and.bolts on how the stock market works.
Terrific read , i reccomend it wholeheartedly !
Peter Lynch does an awesome job in splitting stocks into 6 categories (slow ,fast growers, stalwarts, cyclicals,turnarounds and asset plays).
After separating them , he goes on explaining what to expect from that category and what indices really matter on the financial statements.
On top of that he provides real decisions that he has made during his career as director of Magellan Fidelity investment fund.
There's one thing to read in a random book about the balance sheet and there's another to read on how he bought Ford stock in 1987 based on analysing Cash vs Long term Debt.
These examples are abundand and are godly for the novice investor to get the nuts and.bolts on how the stock market works.
Terrific read , i reccomend it wholeheartedly !
June 20, 2019
Kindle Unlimited...so why not? Yup, I am old enough to remember Lynch's status in the world of stock pickers. I was not lucky enough to have a wad of money to invest in his fund early on, but those who did must continue to sing his praises.
I didn't read this when it first came out, but now with updated prologue it does provide some amusing tidbits. This man still uses the phrase dot com. Goodness me! I really have no idea how he has managed to avoid the internet all these decades, but that seems to be what he is telling us. It does seem he prefers golf.
Anecdotally interesting with stories of stock selection, but this is not a primer. It does present the argument for doing your earnings homework before you hit the "buy" button. Just common sense, then, with some amusing personal stories that I did enjoy.
I didn't read this when it first came out, but now with updated prologue it does provide some amusing tidbits. This man still uses the phrase dot com. Goodness me! I really have no idea how he has managed to avoid the internet all these decades, but that seems to be what he is telling us. It does seem he prefers golf.
Anecdotally interesting with stories of stock selection, but this is not a primer. It does present the argument for doing your earnings homework before you hit the "buy" button. Just common sense, then, with some amusing personal stories that I did enjoy.
September 2, 2019
For the folks gearing up to the world of stock market, this book is a must read.
It sets up your mind regarding how to choose companies that have the potential to become great.
It gives a good introduction on reading the balance sheets and you don't need any prior knowledge for understanding the views. But more than balance sheets it suggests us to pay attention to the world around to find the right stocks
It sets up your mind regarding how to choose companies that have the potential to become great.
It gives a good introduction on reading the balance sheets and you don't need any prior knowledge for understanding the views. But more than balance sheets it suggests us to pay attention to the world around to find the right stocks
August 18, 2021
Although outdated, the book helps develop the right mentality for investing in wall street. Without going deep into technicalities of the process, it definitely provides some key pointers to look into before trading. Lynch ensures to back his theories using facts and examples making it easier to grasp and remember. Overall 4.5/5. Definitely worth a read.
November 20, 2008
First book I haven't been able to finish in a while. It was outdated before the current financial collapse, now it's just stupid to read. Plus Peter Lynch likes himself way too much. Pass on this one and bury your money in the backyard.
January 21, 2021
Glad I didn’t read this five years ago or I would’ve been screwed - some borderline dangerous advice in here if placed in the wrong hands/minds (like mine)
September 4, 2022
Kitabı yazdığı seksenli yıllarda 9 milyar dolara çıkmış bir fonu yönetmiş Peter Lynch, döneminin en çok kazandıran fonlarından birinin yöneticisi olmuş. Tecrübelerini sokaktaki adama bu işin kumar olmad��ğını ve nasıl bir strateji izlenirse başarılı olabileceğini, özellikle kişinin kendi çalıştığı ya da her gün nasıl iş yapıldığını gözlemle fırsatı bulduğu sektörleri seçmesinin yaratacağı avantajlarla birlikte anlatıyor. Genelde çok daha bilinmeyen, moda, son teknolojik, eğlenceli işlere yatırım yapma eğilimi var. Kendimden biliyorum. :) Bunlar yorum kabiliyetini de kısıtlıyor. Zaten -diyelim- bilmiyorsun sektörü, nereye gidecek, ne olacak. Bunun yerine kendin yorumlayabileceğin mümkünse sıkıcı sektörlere bir yönlendirme...
Büyük ihtimalle daha az hata yapılacak olan sektörler çünkü bunlar. Kitapta bolca yaptığı hatalara değiniyor Lynch. Özeleştirilerinden dersler çıkarmamızı istediğini düşünüyorum. (Bir de bu işin doğasında bu hatalar var. Onun için çeşitlendirme, yumurtaları aynı kaba koymama elzem.) Bu dersleri özetler halinde tekrar sunduğu kısımları arada gözden geçirmekte fayda var. Şirketleri ayırdığı kategoriler bile çok şey söylüyor. Benim ağır tempolu - döngüsel şirketle ne işim var bunu niye aldım derken bulabiliyorsunuz kendinizi?
Bahsettiği konularda Buffett ve Fisher okurken de denk geldiğim birçok kısım oldu. Aklın yolu bir diyeceğim ama yazar özellikle zekanın bu iş için önemsiz olduğunu vurguluyor. Buffett’ın stratejisi de benzer şekilde yöntemlerinin ne kadar basit olduğunu gözünüze sokuyordu. Bu noktada bunlara hakim olduktan sonra sanırım işin psikolojik boyutu - irade önem kazanıyor. Yavaştan listemizdeki bu kitaplara doğru kaymakta fayda var. :)
Ders niteliğindeki alıntılarım,
Büyük ihtimalle daha az hata yapılacak olan sektörler çünkü bunlar. Kitapta bolca yaptığı hatalara değiniyor Lynch. Özeleştirilerinden dersler çıkarmamızı istediğini düşünüyorum. (Bir de bu işin doğasında bu hatalar var. Onun için çeşitlendirme, yumurtaları aynı kaba koymama elzem.) Bu dersleri özetler halinde tekrar sunduğu kısımları arada gözden geçirmekte fayda var. Şirketleri ayırdığı kategoriler bile çok şey söylüyor. Benim ağır tempolu - döngüsel şirketle ne işim var bunu niye aldım derken bulabiliyorsunuz kendinizi?
Bahsettiği konularda Buffett ve Fisher okurken de denk geldiğim birçok kısım oldu. Aklın yolu bir diyeceğim ama yazar özellikle zekanın bu iş için önemsiz olduğunu vurguluyor. Buffett’ın stratejisi de benzer şekilde yöntemlerinin ne kadar basit olduğunu gözünüze sokuyordu. Bu noktada bunlara hakim olduktan sonra sanırım işin psikolojik boyutu - irade önem kazanıyor. Yavaştan listemizdeki bu kitaplara doğru kaymakta fayda var. :)
Ders niteliğindeki alıntılarım,
"On kişi bir borsacıyla hisse senetleri hakkında konuşmaktan kaçınıp dişçilerle diş taşından söz ediyorsa bilin ki borsa yakında yükselecektir. (96)
...Dördüncü aşamada yine etrafımdaki kalabalık eksilmekte ama bu kez bana hangi hisse senetlerini almam gerektiğini söylüyorlardır. Dişçinin bile aklında birkaç tüyo vardır ve partiyi izleyen günlerde gazeteye bakınca bana önerdiği hisselerin hepsinin değer kazanmış olduğunu görürüm. Tanıdıklarım borsa hakkında, üstelik haklı tavsiyelerde bulunmaya başlayınca artık borsa en yüksek noktasına çıkmış, düşmeye hazırlanıyordur." (96)
"Deneyimli ve disiplinli bir müşterek bahisçi için atlar üzerine bahse girmek gayet güvenli bir uzun vadeli yatırım olabilir. Bu, o kişi için yatırım fonlarına para yatırmak ya da General Electric hisse senetleri almak gibi bir şeydir. Öte yandan her duyduğu tüyoya atılan, gömlek değiştirir gibi portföy değiştiren dikkatsiz ve dağınık bir borsa yatırımcısının” en güzel yeleli ata yada mor pantolonlu jokeye bütün maaşını yatıran bir bahisçiden farkı yoktur." (76)
"İşte en önemli soru bu! Borsada başarılı olmak için gerekli özelliklerin başında sabır, özgüven, sağduyu, dayanıklılık, açık fikirli olmak, bağımsızlık, sebat, alçak gönüllülük, esneklik, araştırmacı bir ruh, hataları kabul edebilme ve kolay kolay paniğe kapılmama becerisi gelir. Zekâ puanına gelince, bence en iyi yatırımcılar en alt yüzde on ile en üst yüzde üç arasındaki gruptan çıkar. Dâhiler teorik düşüncelere kendilerini kaptırdıkları için aslında son derece basit olan hisse senedi hareketlerini bir türlü anlayamazlar."
"Bilgisayarlarla ilgili bir işte çalışmıyorsanız brokerlarınızın size Wang hakkında verdiği tüyoyu bir kenara itin. Wang hakkında başkalarının bilmediği ama sizin bildiğiniz ne olabilir? Bu sorunun yanıtı 'hiçbir şey' ise hiçbir şansınız yok demektir. Ama eğer lastik imal ediyorsanız, dağıtımını ya da satışını yapıyorsanız o zaman Goodyear hisselerini alırken avantajlısınız demektir. İmalat ve satış işinde çalışan kişiler çeşit çeşit hisselerle karşılaşırlar." (113)
"Sıkıcı bir iş yapan bir şirket en az sıkıcı isimli bir şirket kadar iyidir. Hatta bu ikisi bir araya gelirse sonuç muhteşem olur. Hem adı hem de yaptığı iş sıkıcı olan bir şirket, borsa uzmanlarını gerçek değeri anlaşılana kadar kendisinden uzak tutacak, böylece hisselerinin fiyatı sürekli yükselecektir. Eğer kazancı yüksek, bilançosu sağlam bir şirketin yaptığı iş sıkıcıysa önünüzde hisseleri düşük fiyattan almak için bol bol zaman var demektir. Derken şirket değer kazanıp moda olunca elinizdeki hisseleri ancak borsadaki genel eğilime göre alım satım yapan aptal yatırımcılara satabilirsiniz." (157)
"Eminim şimdi unuttuğum buna benzer birçok aptallık daha yapmışımdır. Ama bir hissenin fiyatı yükseldikten sonra onu satmamak gerçekten zordur. Eğer etrafınızda hisselerinizi satmanızı öğütleyen kişiler varsa önce hisseleri ilk başta niçin almıştınız, onu düşünün, ona göre karar verin." (326)
August 20, 2022
One Up on Wall Street is loaded with specific examples and useful criteria to apply in determining when to buy, hold or sell specific types of stocks. One particularly useful albeit common sense bit of advice: When anticipating a recession, review how each of your holdings has done in prior recessions to determine whether to hold or sell them.
I borrowed the ebook from the library but wound up buying it so I could use it as an ongoing reference.
I borrowed the ebook from the library but wound up buying it so I could use it as an ongoing reference.
March 27, 2020
EXTREMELY DANGEROUS BOOK - DIY INVESTORS SHOULD AVOID IT LIKE THE PLAGUE
Full disclosure:
I am myself a retired portfolio manager.
I happen to belong to the opposite school to Mr. Lynch in terms of portfolio concentration, I prefer a few stocks vs. 20 (and definitely vs. 1,400), and I have done very well with this strategy (which happens to be much closer to Warren Buffett's strategy)
Review:
First off, had this been written by anyone else, it would have deserved in my opinion one star, as I indicate, however considering this is from Mr. Lynch, it frankly deserves much less.
It is very difficult for me to describe how bad I found this book, but here is a try...
The few places where it shines
- there are a few helpful beginner lessons/explanations for DIY investors
- there are a few helpful warnings for beginner DIY investors
The major problems
A-
Fundamentally dangerous 'lessons'
I fell off my chair when I read the below passage from Chapter 12:
Reading Balance Sheet in Ford 1987 Annual Report
‘(You may have noticed Ford’s short-term debt of $1.8bn. I ignore short-term debt in my calculations. The purists can fret all they want about this, but why complicate matters unnecessarily? I simply assume that the company’s other assets [inventories and so forth] are valuable enough to cover the short-term debt, and I leave it at that.)’
Ignoring short-term debt? Short-term debt must be the main reason for the bankruptcy of 50%+ of companies out there... and you want to ignore it? Really? 'Purists'? It gets worse... by Mr. Lynch's own admission, Ford (at the time and still does) has a financial services division, which any bank analyst will tell you makes the true 'debt' or 'cash' position of an industrial business hard to ascertain, but at the very least requires more adjustments than can be described in ONE paragraph like Mr. Lynch does... This is shameful really, as it can only lead to retail investors losing money... I can't believe that at the very least this has not been corrected in subsequent editions, especially when one considers what happened in the 2008-2009 debacle... Please go and explain to ex-shareholders of Northern Rock, a defunct UK bank, that short-term debt should be ignored, and see what reaction you get
B-
It really is unbelievable at some point, notably on the research level. With 1,400 positions, Mr. Lynch recommends doing due diligence by trying the company's products and services? Really, how can one find the time? See if he OWNS 1,400 stocks, he needs to follow typically at least 3x as many (assuming that he does not just buy EVERYTHING that crosses his desk), so that means more than 4,000 companies!!!!
It just simply does not add up, it is physically impossible and even, EVEN if it was possible for him... there is no way anyone can do something even remotely close from home, with zero analyst support
C-
The lessons presented in the book often are not applicable or basically dangerous for anyone with a standard sub-30 stock portfolio. For instance, turnaround situations are notoriously difficult to get right. Yes, when they work, they are lucrative, but how many of the ones Mr. Lynch picked failed? Well, he does not tell us really, but to get a corporate turnaround correctly more often than not, by reading a 300-page book (especially THIS 300-page book).... It's not going to happen... especially, when the amount of content relevant to turnarounds, is probably less than 5 pages... This is really irresponsible
D-
I read this book hoping for an answer to the elephant in the room as far as Mr. Lynch's career is concerned... How and why own so many stocks? 100, ok, 200, ok that's a stretch... 500, mmm, there are 500 names in the S&P 500, are you not just owning the entire index? 1,400!!!!!!! Now you are insane... but ok.... I will listen, please explain...
But here is the thing... NO EXPLANATION... By his own admission, he has 500 names that represent about 1% of his portfolio... Yes, you read right, 1%!!! so that is 0.002% on average for each of those 500 more minor stocks.... WHY OH GOD WHY would you own 0.002% of anything? Why not just own 1% of cash, and save you the trouble of research, commissions, etc... that 1% needs to do A LOT to make a difference for you....
This is Insanity and really I expected to get some intelligent answer to this in the book, but sadly there is none.
The more minor problems
Really too many for my limited time, but let's just mention one: it's terribly written, terrible, the humor either has not aged well, or... full of pointless examples, where there is no meant but... for instance... "Company A was trading at [$X] when I bought it and then I sold it at [$Y], look how stupid or smart I am" it's really really really pointless, there is no business intelligence here
Full disclosure:
I am myself a retired portfolio manager.
I happen to belong to the opposite school to Mr. Lynch in terms of portfolio concentration, I prefer a few stocks vs. 20 (and definitely vs. 1,400), and I have done very well with this strategy (which happens to be much closer to Warren Buffett's strategy)
Review:
First off, had this been written by anyone else, it would have deserved in my opinion one star, as I indicate, however considering this is from Mr. Lynch, it frankly deserves much less.
It is very difficult for me to describe how bad I found this book, but here is a try...
The few places where it shines
- there are a few helpful beginner lessons/explanations for DIY investors
- there are a few helpful warnings for beginner DIY investors
The major problems
A-
Fundamentally dangerous 'lessons'
I fell off my chair when I read the below passage from Chapter 12:
Reading Balance Sheet in Ford 1987 Annual Report
‘(You may have noticed Ford’s short-term debt of $1.8bn. I ignore short-term debt in my calculations. The purists can fret all they want about this, but why complicate matters unnecessarily? I simply assume that the company’s other assets [inventories and so forth] are valuable enough to cover the short-term debt, and I leave it at that.)’
Ignoring short-term debt? Short-term debt must be the main reason for the bankruptcy of 50%+ of companies out there... and you want to ignore it? Really? 'Purists'? It gets worse... by Mr. Lynch's own admission, Ford (at the time and still does) has a financial services division, which any bank analyst will tell you makes the true 'debt' or 'cash' position of an industrial business hard to ascertain, but at the very least requires more adjustments than can be described in ONE paragraph like Mr. Lynch does... This is shameful really, as it can only lead to retail investors losing money... I can't believe that at the very least this has not been corrected in subsequent editions, especially when one considers what happened in the 2008-2009 debacle... Please go and explain to ex-shareholders of Northern Rock, a defunct UK bank, that short-term debt should be ignored, and see what reaction you get
B-
It really is unbelievable at some point, notably on the research level. With 1,400 positions, Mr. Lynch recommends doing due diligence by trying the company's products and services? Really, how can one find the time? See if he OWNS 1,400 stocks, he needs to follow typically at least 3x as many (assuming that he does not just buy EVERYTHING that crosses his desk), so that means more than 4,000 companies!!!!
It just simply does not add up, it is physically impossible and even, EVEN if it was possible for him... there is no way anyone can do something even remotely close from home, with zero analyst support
C-
The lessons presented in the book often are not applicable or basically dangerous for anyone with a standard sub-30 stock portfolio. For instance, turnaround situations are notoriously difficult to get right. Yes, when they work, they are lucrative, but how many of the ones Mr. Lynch picked failed? Well, he does not tell us really, but to get a corporate turnaround correctly more often than not, by reading a 300-page book (especially THIS 300-page book).... It's not going to happen... especially, when the amount of content relevant to turnarounds, is probably less than 5 pages... This is really irresponsible
D-
I read this book hoping for an answer to the elephant in the room as far as Mr. Lynch's career is concerned... How and why own so many stocks? 100, ok, 200, ok that's a stretch... 500, mmm, there are 500 names in the S&P 500, are you not just owning the entire index? 1,400!!!!!!! Now you are insane... but ok.... I will listen, please explain...
But here is the thing... NO EXPLANATION... By his own admission, he has 500 names that represent about 1% of his portfolio... Yes, you read right, 1%!!! so that is 0.002% on average for each of those 500 more minor stocks.... WHY OH GOD WHY would you own 0.002% of anything? Why not just own 1% of cash, and save you the trouble of research, commissions, etc... that 1% needs to do A LOT to make a difference for you....
This is Insanity and really I expected to get some intelligent answer to this in the book, but sadly there is none.
The more minor problems
Really too many for my limited time, but let's just mention one: it's terribly written, terrible, the humor either has not aged well, or... full of pointless examples, where there is no meant but... for instance... "Company A was trading at [$X] when I bought it and then I sold it at [$Y], look how stupid or smart I am" it's really really really pointless, there is no business intelligence here
March 8, 2021
A very good book reinforcing the mantras of good long term investing.
September 12, 2014
This is one of my favorite financial advice books ever.
Peter Lynch was a genius of his time. His detractors can argue the reasons WHY he was successful (luck, timing, etc.) but it is hard to argue with the fact that he was immensely successful.
In this now famous book, Peter describes how he came about developing his strategy for success. He talks about his past, his victories, and some of his failures. He describes everything that happened in an easy to read, colloquial sort of way. Anyone, including non-financially literate folks, can understand this.
My background is not in financial services. Unlike some other books, which I found difficult to follow (ex. The Intelligent Investor), this book talks about finance in a simple but erudite fashion. That way you are not bogged down by the complex verbiage. You can get the concept faster.
I am still applying the tips I found in here.
PROS:
* Very well written and easy for any lay person to understand
* Reads like a story, goes over some of Peter's personal successes
* Gives specific examples based on Peter's life experience
* Describes also his failures, so it gives a balanced view
* Uses common sense and explains things in ways that are logical. (For example: He points out many investors try to time the market, instead of focusing on researching companies or using knowledge that they have which gives them a personal edge.)
* Timeless. There is a reason this book is consistently rated 4+ on Good Reads, Amazon, and other book reviewing sites. It's one for the masses.
CONS:
* Some of the tips do require you to actually have some financial networks or resources to apply. (Nonetheless, I think this is a small issue because there is still a lot you can get out of this book from the things ordinary people could apply. If you are resourceful, you can think of ways to apply his concepts without being the VP or CEO of some financial company.)
Of course, any book will only be as valuable as what you personally take out of it. If you are already a savvy financial guru, then maybe you don't need to read this. If you have read 10000 financial books, maybe this is too easy or basic for you. If you are intimately connected with the financial sector, again, why are you reading books that are intended for the ordinary masses?
This book is stellar!
Peter Lynch was a genius of his time. His detractors can argue the reasons WHY he was successful (luck, timing, etc.) but it is hard to argue with the fact that he was immensely successful.
In this now famous book, Peter describes how he came about developing his strategy for success. He talks about his past, his victories, and some of his failures. He describes everything that happened in an easy to read, colloquial sort of way. Anyone, including non-financially literate folks, can understand this.
My background is not in financial services. Unlike some other books, which I found difficult to follow (ex. The Intelligent Investor), this book talks about finance in a simple but erudite fashion. That way you are not bogged down by the complex verbiage. You can get the concept faster.
I am still applying the tips I found in here.
PROS:
* Very well written and easy for any lay person to understand
* Reads like a story, goes over some of Peter's personal successes
* Gives specific examples based on Peter's life experience
* Describes also his failures, so it gives a balanced view
* Uses common sense and explains things in ways that are logical. (For example: He points out many investors try to time the market, instead of focusing on researching companies or using knowledge that they have which gives them a personal edge.)
* Timeless. There is a reason this book is consistently rated 4+ on Good Reads, Amazon, and other book reviewing sites. It's one for the masses.
CONS:
* Some of the tips do require you to actually have some financial networks or resources to apply. (Nonetheless, I think this is a small issue because there is still a lot you can get out of this book from the things ordinary people could apply. If you are resourceful, you can think of ways to apply his concepts without being the VP or CEO of some financial company.)
Of course, any book will only be as valuable as what you personally take out of it. If you are already a savvy financial guru, then maybe you don't need to read this. If you have read 10000 financial books, maybe this is too easy or basic for you. If you are intimately connected with the financial sector, again, why are you reading books that are intended for the ordinary masses?
This book is stellar!
December 7, 2023
A few important points from this book:
• Individual investors have an advantage over professional investors.
• Stock prices follow company earnings.
• You don't need to be right on every investment that you make.
• Market crashes are normal
• Stock picking is an art which anyone can learn.
• Stay away from 'hot picks'.
Types of companies according to Peter Lynch:
• The slow growers: These are companies that have matured but pay regular dividend.
• The stalwarts typically show 10-12 percent annual growth in earnings.
• The fast growers are aggressive new companies that grow at 20-25 percent annually.
• The cyclical companies sales and profits rise and fall in regular time intervals.
• The turnarounds are struggling companies with low or no earnings.
• The asset plays have a valuable asset, which most investors have overlooked.
His message is that if you want to create wealth then it is important to invest for the long-term and focus on the business performance and dividends of the companies you own rather than the changing stock price.
• Individual investors have an advantage over professional investors.
• Stock prices follow company earnings.
• You don't need to be right on every investment that you make.
• Market crashes are normal
• Stock picking is an art which anyone can learn.
• Stay away from 'hot picks'.
Types of companies according to Peter Lynch:
• The slow growers: These are companies that have matured but pay regular dividend.
• The stalwarts typically show 10-12 percent annual growth in earnings.
• The fast growers are aggressive new companies that grow at 20-25 percent annually.
• The cyclical companies sales and profits rise and fall in regular time intervals.
• The turnarounds are struggling companies with low or no earnings.
• The asset plays have a valuable asset, which most investors have overlooked.
His message is that if you want to create wealth then it is important to invest for the long-term and focus on the business performance and dividends of the companies you own rather than the changing stock price.
January 14, 2024
Trodde dette var lydboka, men det var visst en totimers forkortet utgave. Første jeg har hørt/lest direkte fra legenden, så det var jo på tide. Noe var datert – for eksempel er det nok blitt vanskeligere å sitte på info ikke alle har tilgjengelig enn det var på 80-tallet, men interessant var det likevel. Kjøp selskaper med latterlige navn som selger kjedelige produkter folk må fortsette å kjøpe, er vel essensen. Er det ugne rykter om dem i tillegg, begynner vi virkelig å snakke.
Noen gode påminnelser også, som at ingen selskaper er så bra at du kan tillate deg å slutte å følge med på dem om du eier dem.
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30. april 2023
Ok, nå har jeg lest boka i tillegg og jekker’n opp til en sterk firer. Der tusen bøker om aksjer er generelle, er Peter god til å brukte faktiske eksempler fra egen karriere, gjerne handler som gikk i dass. Det er ærlig og mer lærerikt. Artig å høre hvordan livet med aksjer fortonte seg på åttitallet. Virker som kursene fløy veggimellom mer enn i dag.
Noen gode påminnelser også, som at ingen selskaper er så bra at du kan tillate deg å slutte å følge med på dem om du eier dem.
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30. april 2023
Ok, nå har jeg lest boka i tillegg og jekker’n opp til en sterk firer. Der tusen bøker om aksjer er generelle, er Peter god til å brukte faktiske eksempler fra egen karriere, gjerne handler som gikk i dass. Det er ærlig og mer lærerikt. Artig å høre hvordan livet med aksjer fortonte seg på åttitallet. Virker som kursene fløy veggimellom mer enn i dag.
February 14, 2021
This was so good, it made so much sense. Thanks Milan for recommending this!
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