Tuesday, January 03, 2006

Beating The Street (Peter Lynch) 0 comments

Yes, another Peter Lynch book. I chanced upon this at Borders several days back. Having read through it, I would say it is better than "Learn to Earn" but still lags behind "One Up on Wall Street", which I would regard as the classic.

The book essentially looks like, for a large part, a narrative of Peter Lynch's investing experience. Unlike "One Up", the focus is not on distilling his investing experience into a series of enlightening viewpoints and investing insights, but rather on how he came to invest in this or that stock. Thus it is that he focuses entire chapters on single stocks on single industries: one chapter on Supercut, one chapter on Allied (a department store), one on Fannie Mae (mortgage), one on CMS Energy (alternative energy), one on Body Shop (retail)... you get the picture. Of course, such a focus allows the reader to obtain a good picture of the industry in question, so it is probably a different approach to examining the central question of investing. To me at least, it is not such an engaging read (maybe if I had read this first instead of "One Up" I might have a different opinion).

One can tell this book's style was primarily driven by Peter Lynch (unlike Learn to Earn, at least that's my impression), for his humanity and enthusiasm for his stocks shine through. Nothing is worse than a writer who doesn't enjoy his subject matter; Peter Lynch certainly shows that he does, in spades.

One chapter, in particular, that any investor should read is Chapter 15 in the book, on cyclicals. Here Lynch espouses lucidly why low PEs are dangerous for cyclicals although positive for other stocks in general. If one had read it, he would have avoided the disaster of HG Metal and also the stagnancies of shipping stocks in the later part of 2005. If anything, buy/read the book for this chapter.




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