“Growth for the sake of growth is the ideology of the cancer cell,” goes a famous saying. Be suspicious of companies with growth rates of 50-100% a year. If it does not contribute meaningfully to the company’s sales and profits, it can’t be the core reason for buying that stock.ģ. See, companies selling products or services that everyone love or is talking about is worthy of “considering” as a potential investment.īut, as an investor, the greater task for you is to know how much of that great product or service means to the company. Let me ask you, “Great! But what if Maggi is just 1% of Nestle’s total sales, and the products that contribute the remaining 99% aren’t that great? Does Nestle still sound like a great investment just on the basis of one great product that contributes just 1% of its sales?” You might say, “I love Maggi! In fact, everyone loves Maggi. Consider the size of a company if you expect it to profit from a specific product. And then you must have specific reasons to buy and hold the stock (again, reasons that have less to do with how the stock price is doing and more to do with how the business is doing).Ģ. So it’s important to understand what is the kind of “business” that you are getting into. But in the long run, this basis of buying stocks is going to suck you into a never ending whirlpool of losses.Ī stock is just a share in a business. You might buy a stock that is going up in price, and you might make some money in the short run. This reasoning of buying stocks has never worked in the long run.
Understand the nature of the companies you own and the specific reasons for holding the stock.Ī lot of people buy stocks with the mentality – “This stock is really going up!” I hope these also add to your investment arsenal. I have in fact benefited from incorporating each of these lessons in my personal investment philosophy. While there are numerous lessons that Lynch dispels through this book, here are my personal “Top 10” that really stand out. Lynch helps you discover that he is a normal guy (like you and me) who thinks rationally, believes in doing his own independent research on companies, asks plenty of questions, and gets caught off guard by the market at times, just like anyone else.Īnyone thinking about buying individual stocks must read this book before they ever make their first stock purchase. One Up On Wall Street offers insight into the mind of one of the greatest money managers of all times.
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Moreover, readers are given a clear picture on how to get off to a good start in the stock market. The best part about this book is that it’s low on number crunching but high on anecdotal stories. The easy-going and simplistic stock picking style discussed in this book brought Lynch great success in his profession as a fund manager at the US mutual fund company, Fidelity.
I was re-reading Lynch’s book and thought of re-publishing these amazing lessons again.Īpart from Benjamin Graham’s The Intelligent Investor, there is no better book to get started for beginners than Peter Lynch’s One Up On Wall Street. This article was originally published in June 2012.
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