One Up On Wall Street Summary – By Peter Lynch
Peter Lynch is one of the most successful investors and we are going the read the summary of his book One up on Wall Street.
In this article, we will discuss the essential lessons, so let’s start. There are six categories of stocks, and you should know how to identify the companies to create your portfolio.
Six Categories Of Stocks
- The first type of companies are slow growers, big in size and market, and low risk, but their growth is slow. It gives 2% to 7% of the profit. The author does not like this category because the growth rate is prolonged.
- The second type of stock is Stalwarts. It is also large and stable, the risk is low, and they still have more scope to grow, and it gives the profit of 10% to 12% per year. Peter Lynch does not have more interest in this type of company.
- The third type of stock is fast growers. The author likes this category. He identifies the company early and then holds the stock, and it gives profit in baggers.
- The Fourth type of stock is Cyclicals stocks. They depend on business and cyclical revenue. In this stock, high risk is involved, like the automobile industry.
- The fifth type of stock is turn around, which is already in loss if they get some support to turn around and perform well in the market, but high risk is involved, and the author does not like to invest in it like Vodafone idea in the current time.
- The sixth company is Asset Plays, which has many assets that other people do not see. Some of the investors like to invest in it.
How Can Individual Investors Beat The Market?
There are some reasons behind it. There are too many restrictions for fund managers. They must follow all mutual fund rules, investing mandates, security and exchange board regulations, and companies policies.
The second reason is every person has their opinion, so maybe the professional suggested some stock, but the boss does not like it.
The third one is that there are two types of funds in the market: new mutual funds and old mutual funds. People generally do not want to invest because people want a good track record. In a senior mutual fund, the professional wants a company with high profit, so continuously finding a high-profit company is very difficult.
Signs For Ten Multi-Bagger Stocks
The author says some businesses are boring businesses that people do not like to invest in, like waste management systems water management plants still, they gave profit like Fevicol. The name of the company fascinated the people like when the technology started people started investing in all .com name companies.
In some companies, people do not invest in cigarette alcohol, etc.
Some big companies cut out some of their factories and run them as individual businesses like reliance cut out Jio, and then Jio booms the market.
Institutes do not own it, and analysis does not follow it. The fund manager does not follow the company which is not correctly priced or underpriced, so individuals can purchase it because when the analyst starts following it, the stock price goes up very fast.
Industries in high demand and growing rapidly nowadays like medical pharma and social media companies, so their prices are already high. You can find multi-bagger in other fields with recurring revenue big investors find these types of companies.
Stocks to Avoid
Some of the stocks that we should avoid are very hot in the market. Everyone is talking about it like electric vehicles right now. Still, competition arises in the market due to high demand, and competition is not promising for-profit and the whispering stock that your friend advises.
When the company is diversifying, like when a company sells food products, and suddenly purchases a toy company, the so high chances are that they are losing their focus.
Whisper stocks are highly recommended by everyone when they are in demand, but you should not listen to them blindly. Firstly research on it then only purchase most of the time as they rise they lose the price at the same speed.
Things to do before investing
If you are investing in stocks and you need that money before 2 or 3 years so, do not invest it because no one knows in the short term how the market will react, but in the long term, it always reacts positively.
Always research the company before investing in the market.
Do not bother timing the market like the next crash? Interest rate? Because ‘time’ in the market beats ‘timing’ in the market.
That’s it with the summary of One up on Wall Street. If you liked the content, don’t forget to share it with your reader and investor friends. If you have any suggestions, let us know by commenting below.
Sourabh Sharma is a hobbyist book reader, Entrepreneur, and a literature student at Delhi University. A blog writer by day and a book reader by night, he is oathed to discuss himself in a third person but can be persuaded to do so from time to time.