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How to be "One Up On Wall Street"?

Friday, August 2, 2013

Reading this book in its entirety has been on my list of things to do for quite a while. I have been introduced to parts of it before but I never did own a copy of the book. Well, I finally ordered a copy and it arrived today.


Peter Lynch on stocks to buy!
"Stocks are not lottery tickets!"

Peter Lynch liked Dunkin Donuts and AK likes Old Chang Kee.




The back of the book.

I couldn't wait and made use of my tea break and lunch hour to flip through the book very quickly. What do I think? It is very readable and totally absorbing! I felt like taking leave for the rest of the day to finish the book.



Instructional Chapter 8.

Sobering Chapter 9.
I feel that this is probably a book that will become a classic for investors, if it is not already one. If you have not read this book, go get it. It is a gem.

No prizes for guessing which book I am reading this weekend. ;)

One Up on Wall Street: How to Use What You Already Know to Make Money in the Market

One Up on Wall Street: How to Use What You Already Know to Make Money in the Market

12 copies left at US$6.98 each.
Free shipping worldwide.

Another book by Peter Lynch:
"Beating the Street" with value deals.

9 comments:

weekeng said...

This a very good book to read. This is the book that got me started on my investment journey!

Ong Seng Lee said...

Hi AK,

I tried to register an account with betterworldbooks with sg address but it says invalid state name and postal code.

Can i know how you key in the details for province and postal code?

Thanks

AK71 said...

Hi weekeng,

Strange I didn't pick up this book earlier. I was reading all the WB books.

I guess this is the power of the WB brand. :)

Anyway, better late than never. ;)

AK71 said...

Hi Seng Lee,

By default, the country is "USA". So, change the country to "Singapore" first. :)

MrNg said...

Haha,

I did a more cost saving method. I borrowed te book from the library!! Hahaha

AK71 said...

Hi Mike,

If the book is available in the local library, borrowing is a great idea!

I might take a long time to finish a book and might want to keep it as a reference. So, if I can get a copy cheap, I prefer to do that. :)

Song StoneCold said...

Bo jio ?!

AK71 said...

Hi StoneCold,

LOL. I think this was before you were following my blog. :)

AK71 said...

Categorizing a company, according to Lynch, can help you develop the "story" line, and thus come up with reasonable expectations. He suggests first categorizing a company by size. Large companies cannot be expected to grow as quickly as smaller companies.

Next, he suggests categorizing a company by "story" type, and he identifies six:

•Slow Growers: Large and aging companies expected to grow only slightly faster than the U.S. economy as a whole, but often paying large regular dividends. These are not among his favorites.

•Stalwarts: Large companies that are still able to grow, with annual earnings growth rates of around 10% to 12%; examples include Coca-Cola, Procter & Gamble, and Bristol-Myers. If purchased at a good price, Lynch says he expects good but not enormous returns--certainly no more than 50% in two years and possibly less. Lynch suggests rotating among the companies, selling when moderate gains are reached, and repeating the process with others that haven’t yet appreciated. These firms also offer downside protection during recessions.

•Fast-Growers: Small, aggressive new firms with annual earnings growth of 20% to 25% a year. These do not have to be in fast-growing industries, and in fact Lynch prefers those that are not. Fast-growers are among Lynch’s favorites, and he says that an investor’s biggest gains will come from this type of stock. However, they also carry considerable risk.

•Cyclicals: Companies in which sales and profits tend to rise and fall in somewhat predictable patterns based on the economic cycle; examples include companies in the auto industry, airlines and steel. Lynch warns that these firms can be mistaken for stalwarts by inexperienced investors, but share prices of cyclicals can drop dramatically during hard times. Thus, timing is crucial when investing in these firms, and Lynch says that investors must learn to detect the early signs that business is starting to turn down.

•Turnarounds: Companies that have been battered down or depressed--Lynch calls these "no-growers"; his examples include Chrysler, Penn Central and General Public Utilities (owner of Three Mile Island). The stocks of successful turnarounds can move back up quickly, and Lynch points out that of all the categories, these upturns are least related to the general market.

•Asset opportunities: Companies that have assets that Wall Street analysts and others have overlooked. Lynch points to several general areas where asset plays can often be found--metals and oil, newspapers and TV stations, and patented drugs. However, finding these hidden assets requires a real working knowledge of the company that owns the assets, and Lynch points out that within this category, the "local" edge--your own knowledge and experience--can be used to greatest advantage.

From an article by:
Maria Crawford Scott
AAII Journal - January 1997

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