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One Up On Wall Street is a book written by a professional Fund Manager, whose “invest in what you know” strategy has made him a household name with investors both big and small.
His credentials? A legend at Fidelity Investments, famous for managing the Magellan Fund at Fidelity Investments between 1977 and 1990, that averaged a return of 26.4%, which is double that of the S&P 500 at 13% per annum! His name is Peter Lynch.
This book is a real gem, both for the new and seasoned investor. Lynch teaches in this book that no one in the world is born with an inherent ability to pick stocks, and that one must be prepared to do the homework to understand the financial condition, current earnings and future potential, competitive landscape, and future expansion plans of the company before investing. This might sound like a daunting task to most people, but it is the secret ingredient behind making a successful stock investment.
Personally, I was intrigued by Lynch’s qualitative approach towards investing, which is on top of simply plucking key numbers off a company’s financial reports. Simply by starting from items that we utilise daily, one can identify companies who are likely to become the next “multibagger” as Lynch calls it.
One of the many important points that is mentioned in this book includes a section on the 6 categories of companies, which Lynch uses to classify a stock that he has identified with investment potential. Here's a sneak preview:
One Up On Wall Street is a book written by a professional Fund Manager, whose “invest in what you know” strategy has made him a household name with investors both big and small.
His credentials? A legend at Fidelity Investments, famous for managing the Magellan Fund at Fidelity Investments between 1977 and 1990, that averaged a return of 26.4%, which is double that of the S&P 500 at 13% per annum! His name is Peter Lynch.
This book is a real gem, both for the new and seasoned investor. Lynch teaches in this book that no one in the world is born with an inherent ability to pick stocks, and that one must be prepared to do the homework to understand the financial condition, current earnings and future potential, competitive landscape, and future expansion plans of the company before investing. This might sound like a daunting task to most people, but it is the secret ingredient behind making a successful stock investment.
Personally, I was intrigued by Lynch’s qualitative approach towards investing, which is on top of simply plucking key numbers off a company’s financial reports. Simply by starting from items that we utilise daily, one can identify companies who are likely to become the next “multibagger” as Lynch calls it.
One of the many important points that is mentioned in this book includes a section on the 6 categories of companies, which Lynch uses to classify a stock that he has identified with investment potential. Here's a sneak preview:
- Fast Grower Grows at 20-25% per year. Usually smaller enterprises that are aggressive in expansion.
- Stalwart Growing not as fast as a Fast Grower but at a faster rate than the Slow Grower, they usually hold out well during a recession.
- Slow Grower As the name suggests, these are companies that grow really slowly, because they have already reached a size that expansion is difficult, though not impossible. They usually give out generous and regular dividends because they just can't think of how else they can use the money to expand anymore.
- Cyclical Companies whose earnings expands and contracts in a regular but unpredictable fashion. You can easily earn more than 50% if you buy at the right part of the cycle, you could also just as easily lose the same percentage if you buy at the wrong part of the cycle!
- Asset Play Companies that has assets that has yet to be noticed by the professional fund managers.
- Turnaround Like a wounded giant, usually a company that is going through a period of tough challenges. One could be greatly rewarded if the giant is healed. Of course, there is always a danger that the giant never recovers, so invest wisely!
