Wednesday, June 08, 2005

One Up on Wall Street (Peter Lynch) 2 comments

One of the modern classics. For those who don't know Fidelity, it is the world's largest unit trust company, and Peter Lynch was the manager of its flagship Magellan Fund whose world-beating returns from the late 1970s to 1990 made Fidelity great. His fame as a stock investor is probably second only to that of Warren Buffett.

The book was written one year before Lynch retired, in 1989, but it is hardly a boring chronological description of Peter Lynch's investing life. Instead, it is a description of his investing philosophy, sprinkled with appropriate examples of stocks he had succeeded and failed with.

Perhaps the most well-known theme that is espoused in the book is that the small investor should pick stocks of companies which they are familiar with and know from personal experience to be doing well. Lynch himself has practised this theme throughout his investing career, observing consumer patterns while accompanying his wife to the mall. He also describes his preference for small caps, which he feels have more upside (higher risk, higher reward), and because they focus on a few products (due to their size), have greater leverage to any improvements in the particular product sectors. He also made famous in this book the term "ten-bagger" (meaning a stock which has risen 10 times its original price), which has been the dream of countless investors ever since. Lastly, his description of how he classifies different types of stocks (slow growers,stalwarts,cyclicals,fast growers,turnarounds,asset plays) is highly insightful.

Lynch writes with a lot of common sense, and makes things easy for the reader as he does not bring technical terms in. His often self-deprecating and humourous comments of himself, and his unmistakable enthusiasm for his craft, also bring a personal touch that draws the reader in further. You don't want to put the book down until you have done with it.




Blogger Craig is working on his first million said...

Awesome, awesome book. I read this during Camp Buckner at the academy, and have been a Peter Lynch/Warren Buffett disciple for years.

Really easy to understand, common sense type stuff.

6/14/2005 11:17 AM  
Blogger DanielXX said...

Yes he really injects enthusiasm into his writing as well. One of the rare investment books that is hard to put down once you start reading.

6/14/2005 5:00 PM  

Post a Comment

<< Home