Ten Investing Gems from Peter Lynch’s One Up on Wall Street by Vishal Khandelwal, Safal niveshak
This article was originally published in June 2012. I was re-reading Lynch’s book and thought of re-publishing these amazing lessons again.
The easy-going and simplistic stock picking style discussed in this book brought Lynch great success in his profession as a fund manager at the US mutual fund company, Fidelity.
With the S&P 500 falling a double-digit percentage in the first half, most equity hedge fund managers struggled to keep their heads above water. The performance of the equity hedge fund sector stands in stark contrast to macro hedge funds, which are enjoying one of the best runs of good performance since the financial crisis. Read More
The best part about this book is that it’s low on number crunching but high on anecdotal stories. Moreover, readers are given a clear picture on how to get off to a good start in the stock market.
One Up On Wall Street offers insight into the mind of one of the greatest money managers of all times.
Lynch helps you discover that he is a normal guy (like you and me) who thinks rationally, believes in doing his own independent research on companies, asks plenty of questions, and gets caught off guard by the market at times, just like anyone else.
Anyone thinking about buying individual stocks must read this book before they ever make their first stock purchase.
While there are numerous lessons that Lynch dispels through this book, here are my personal “Top 10? that really stand out. I have in fact benefited from incorporating each of these lessons in my personal investment philosophy.
I hope these also add to your investment arsenal. So let’s start right here.
Peter Lynch’s 10 investing gems
2. Consider the size of a company if you expect it to profit from a specific product.
3. Be suspicious of companies with growth rates of 50-100% a year.
4. Distrust diversifications, which usually turn out to be diworsefications.
5. People get incredibly valuable fundamental information from their jobs that may not reach the professionals for months or even years.
6. Separate all stock tips from the tipper, even if the tipper is very smart, very rich and his or her last tip went up.
7. Invest in simple companies that appear dull, mundane, out of favour, and haven’t caught the street.
8. Companies that have no debt can’t go bankrupt.
9. Devote at least an hour a week to investment research. Adding up your dividends and figuring your gains and losses doesn’t count.
10. When in doubt, tune in later.
As Peter Lynch says, “The key organ for investing is the stomach, not the brain.”
The 15-20 days after I complete my analysis on a stock help me know whether my stomach is ready to digest the stock even when the mind answers in the affirmative.
What do you say?
If you have read One Up On Wall Street, which are the other key lessons from Lynch you learned from this book?
Full article here – Safal niveshak