I just finished reading the book One Up On Wall Street by Peter Lynch and John Rothchild. This book is one where Peter, one of America’s number one money manager shares his investment wisdom learned while running Fidelity’s Magellan Fund. His advice for the most part call for a return to the basics, and aims at demystifying investing in stocks for the layman. He ensures to explain each concept in plain language, and avoids getting too technical or using a lot of jargon (unless explicitly explained). The book is divided into three sections: the first one entitled “Preparing to Invest” serves as a general introduction to the dynamics of the investment world. The second section focuses on “Picking Winners”. This section is all about identifying winning stocks and the required associated homework. Finally the last section is entitled “Long-Term View” and focuses on portfolio management. This section is all about how to build a portfolio, when to buy, when to sell etc.
Some of the key learnings are that winner stocks are all around us, and sometimes as amateurs it is easier for us to locate them. In addition, the basic classification of companies and their respective stocks into 5 categories: Slow growers, stalwarts, cyclicals, fast growers, turnarounds. This classification helps us determine how we valuate these stocks. Finally once the valuation is made, the key is to ignore short-term fluctuation and stick with the stock as long as the fundamentals aka “the story” is intact. On the criticism side, the book was originally written in the late 80s so the x
A very educative read in the area of investment. For more details on Peter’s investing strategy, here is a great article: http://www.investopedia.com/articles/stocks/06/PeterLynch.asp . A further book recommendation in this area is Jason Kelly’s The Neatest Little Guide To Stock Market Investing.