One Up On Wall Street

Rating:
Summary: A Good Book to have.
Review: A Good book of investment for beginner as well as veteran.
I like the most about how he classified companies into six categories and talk about what you should reasonably do to make a profit out of them.

Also, the witty writing will give you a laught even if you are not interested in investment.

Rating:
Summary: A Capital Read!
Review: I borrowed my copy of "One Up On Wall Street" from a friend who is a longtime professional equities investor. He received this gift as recommended reading from a veteran investment analyst he knows. While Peter Lynch has written an easily comprehendible advice book on common stock investing - very much written in layman's terms and without emphasis on industry jargon - the principles he puts forth are fundamental and worth reviewing by anyone, amateur or pro.

Within the 300 pages of this book, Lynch outlines a useful rubric against which all stock selections might be measured. His stocks fall into six categories: Slow Growers, Stalwarts, Cyclicals, Fast Growers, Turnarounds and Asset Plays. Screening, buying and selling advice are outlined for each of these six flavors, although nothing revolutionary (eg., Sell a slow grower when the dividend is unattractive.) He delivers a wealth of the basic analytical tools (well, more like rules of thumb) for stock research, explaining price earnings ratios, the import of tax loss carry-forwards, goodwill accounting, inventories, and other basics of P&L statements and Balance Sheets. It's a pocket guide financial course for those who may have slept through Accounting 101.

Lynch urges stock pickers to do their homework, and suggests the regimen of a "Two Minute" drill, whereby an investor can recite a brief monologue of reasons for selecting a security: Reasons for selection, what the company needs to do to succeed, and pitfalls that stand in the way. Obviously, this is not a book for the technicians or chartists. Nor even speculators, as Lynch reminds the reader that his "ten-baggers" or "forty-baggers" all come as a result of having held at least three to four years.

Quite a bit of the book carries a populist bent. There is plenty of advice to pay more heed to what's happening in the local shopping mall than to investment brokers ("oxymorons"), and to avoid stocks with exotic names or that may have been whispered to be hot. Of course, we've all been aware of this, and we're all wealthy and drinking daiquiris on the beach now, right?

In sum, it is worth the investment of the few hours it takes to swallow this information. At worst, it is an entertaining look at some high-fliers the former Magellan manager scored with, but at the very least it serves as reminder that basics need to be followed, and nothing works as well as solid research, good discipline and old fashioned hard work.

Rating:
Summary: A Capital Read!
Review: I borrowed my copy of "One Up On Wall Street" from a friend who is a longtime professional equities investor. He received this gift as recommended reading from a veteran investment analyst he knows. While Peter Lynch has written an easily comprehendible advice book on common stock investing - very much written in layman's terms and without emphasis on industry jargon - the principles he puts forth are fundamental and worth reviewing by anyone, amateur or pro.

Within the 300 pages of this book, Lynch outlines a useful rubric against which all stock selections might be measured. His stocks fall into six categories: Slow Growers, Stalwarts, Cyclicals, Fast Growers, Turnarounds and Asset Plays. Screening, buying and selling advice are outlined for each of these six flavors, although nothing revolutionary (eg., Sell a slow grower when the dividend is unattractive.) He delivers a wealth of the basic analytical tools (well, more like rules of thumb) for stock research, explaining price earnings ratios, the import of tax loss carry-forwards, goodwill accounting, inventories, and other basics of P&L statements and Balance Sheets. It's a pocket guide financial course for those who may have slept through Accounting 101.

Lynch urges stock pickers to do their homework, and suggests the regimen of a "Two Minute" drill, whereby an investor can recite a brief monologue of reasons for selecting a security: Reasons for selection, what the company needs to do to succeed, and pitfalls that stand in the way. Obviously, this is not a book for the technicians or chartists. Nor even speculators, as Lynch reminds the reader that his "ten-baggers" or "forty-baggers" all come as a result of having held at least three to four years.

Quite a bit of the book carries a populist bent. There is plenty of advice to pay more heed to what's happening in the local shopping mall than to investment brokers ("oxymorons"), and to avoid stocks with exotic names or that may have been whispered to be hot. Of course, we've all been aware of this, and we're all wealthy and drinking daiquiris on the beach now, right?

In sum, it is worth the investment of the few hours it takes to swallow this information. At worst, it is an entertaining look at some high-fliers the former Magellan manager scored with, but at the very least it serves as reminder that basics need to be followed, and nothing works as well as solid research, good discipline and old fashioned hard work.

Rating:
Summary: For financial analysts to be!
Review: I first read this book as an "assignment" when I started working as a financial analyst in 2000. The book is well written, and offers a lot of insights and tips that are applicable to analyzing companies and stocks. Most of the stuff here are very applicable to my work, and even offers examples that can be emulated by any investor/analyst. To date, I still practice most of the philosophies and tips suggested here when it comes to analyzing companies. Amazingly, the book is not written in financial jargon but rather in a simple way that even novices would easily understand. i rate this book a "buy!"

Rating:
Summary: For financial analysts to be!
Review: I first read this book as an "assignment" when I started working as a financial analyst in 2000. The book is well written, and offers a lot of insights and tips that are applicable to analyzing companies and stocks. Most of the stuff here are very applicable to my work, and even offers examples that can be emulated by any investor/analyst. To date, I still practice most of the philosophies and tips suggested here when it comes to analyzing companies. Amazingly, the book is not written in financial jargon but rather in a simple way that even novices would easily understand. i rate this book a "buy!"

Rating:
Summary: An excellent little introduction for investing beginners
Review: I picked up a copy of this book in the middle of 2002 in the deep-discount bin at a major bookstore -- apparently retail investing had been suffering some in popularity at the time. What a difference it made: Peter Lynch's life story, free admission of his mistakes, explanation of successes and overall optimism pushed me toward investing. This was at a time when banks were advertising 1% or 2% interest rates for their savings accounts on the radio. Is a 2% rate of return ever something to brag about?

For anyone who lives in a free country and feels it necessary to have substantially more money in the future than at present, Lynch's short book serves as a excellent introduction to the market - enough information to decide whether investing is a practical undertaking or a giant loser's game.

My favorite chapter is the one which lists some of Lynch's missed opportunities, where equities that he considered but did not buy went up astronomically, to his dispair. Dealing with these missed chances is a vital emotional task for the beginning investor, who may be tempted to stray from investing in what he or she knows and start gambling. Most investment books that I've looked at do not approach this problem, which is understandable because presumably it goes away with experience (credible investment book authors are generally experienced).

This guide is easy to read, easy to find and is contrary to the spiel given by most mutual fund managers on TV (who would rather you pay them to pick stocks for you). There's really no excuse for the prospective investor (or even financial self-planner) not to read it.

Rating:
Summary: Good book for growth stock shoppers
Review: I think this book is a very good book for people that want to buy good growing companies that they might do business with, in fact in this book Mr. Lynch recommends buying stock in companies that you do business with. For instance if you drink a lot of Mountain Dew you might want to consider investing in Pepsi-Cola.

Peter Lynch was the manager of the world's largest mutual fund (Fidelity Magellan) also during his tenure that mutual fund was the best performing mutual fund in the world.

Mr. Lynch doesn't give you an exact formula but with careful reading I believe you can determine some of the criteria he used. He also goes into discussion of what criteria he uses to sell a stock. (hint it isn't the same for all stocks)

Here are a few things that Mr. Lynch thinks would make the perfect stock:

1. If it sounds dull or, even better, ridiculous
2. If it does something dull
3. It does something disagreeable
4. It's a spin off
5. The institutions don't own it and analysts don't follow it.
6. The rumors abound: It's involved with toxic waste or the mafia
7. There's something depressing about it
8. It's a no-growth industry
9. It's got a niche
10. People have to keep buying it
11. It's a user of technology
12. The insiders and buyers
13. The company is buying back shares

Overall I think this is a good way to learn about investing in growth stocks that aren't exactly CAN SLIM, and what to hold stocks for a year or longer. I'm not alone this book is ranked 4 and 1/2 out of 5 stars at amazon.com

Reed Floren

Rating:
Summary: Probably the best stock investment book ever
Review: If you are going to pick your own stocks (I buy individual stocks only with money I can afford to lose, the rest is in real estate, mutual funds, and bonds), this book, by one of the best stock pickers of all time, should be considered mandatory reading for you.

Peter Lynch does not give you a mechanical, step-by-step process to pick the winners, but his stories give you an insight into how he thinks, and learning to think like Peter Lynch is bound to help you become a better stock picker.

Mr. Lynch does not promise that you will get rich by picking a quick series of ten-baggers. He makes it clear, I think, that investing in individual stocks is not meant for those people who don't have a strong stomach and are not good at doing research.

Mr. Lynch recognizes that for many people their best investment, in the end, turns out to be their home. His view of the investment world is broader than that of many other stock market experts.

P.S. An additional caution of the risks involved in picking individual stocks to invest in: A long time after Peter Lynch wrote this book, I read that he lost a significant amount of money by investing in an upscale carpet business that did not pan out as anticipated. Even the greatest track record does not guarantee future results. So beware! No matter how good you are, and how strong your stomach is, you will have to absorb some big losses sooner or later. Peter Lynch did.

Rating:
Summary: An interesting Point about Consumer Edge
Review: In 1987, the market had lost 1000 points. People were fearing the possibility of another great depression, some remembering the crash of 1929. People warning, "Never get involved with the market". Lynch realized immediately that it is impossible to predict the direction of the market but he realized stocks were cheap, so he made some liquidations to cover costs of individuals bailing out and started buying. In 1980s, there was a strong distrust of the market: 14 percent unemployment and 20 percent interest rates. Suddenly, the market took off and everything was ok. Lynch may have been betting that the future was going to improve and the odds were in his favor, however, he claims his goal was to invest in good companies; these were companies that showed strong growth of 20 to 30 percent, strong consumer demand, slim inventories, and strong profit margins. Lynch bet was right and he bought numerous stock when they were cheap and reaped profits when they were expensive and eventually accumulated 1400 stocks in the Fidelity Magellan Fund. Lynch says, the freethinkers don't institutionally buy too save face by survival investing, instead, they buy to make money. Lynch says that stock yields outperform bond yields. Buying debt investments makes sense when interest rates are high. But since there's very little in the corporate bond business that its callable, you can't hope to make the interest profits long term during a correction. Lynch anchors to his belief that stocks generally have paid off fifteen time as well as corporate bonds. So one would be better off buying Merck, McDonalds, Wal-Mart, or Exxon rather that putting their money into a bank CD. What about risks? Lynch says that "there is no way to separate investing from gambling into those neat categories that are meant to assure us." Stock are most likely to be accepted as prudent at the moment they're not. Lynch future says, "To me, an investment is simply a gamble in which you've managed to tilt the odds in your favor." So how does on tilt the odds? Lynch says to start by asking so basic questions about the companies growth and prosperity. Lynch is looking for favorable odds of success not sure fire predictions. So the rule becomes "Six out of ten is all it takes to produce an enviable record on Wall street." I'm wondering how Lynch survived without getting an ulcer, perhaps it was he was right more time than he was wrong. Lynch rode the largest running Bull Market of the century and was right most of the time.

Lynch further instructs that picking the right stocks helps the market odds take care of themselves. Lynch made money even during bad times by picking winners like Coca Cola, Taco Time, Stop N Shop, Dunkin Donuts, The Limited, Subaru, Dreyfus, McDonalds, Tambrands, and Pep Boys. Lynch tells us to start looking around in our backyard for stocks that are trying to pick us. How do you pick a stock you know nothing about? Lynch looks to the professionals. A person with an edge is always in a position to outguess the without an edge. The professional's edge is helpful in knowing when and when not to buy shares in companies that have been around for awhile. The customer edge is the key for picking winner from the newer and smaller fast growing companies. Lynch likes to look for big payoff from small companies. Listening to the customer edge has helped him identify a number of winners. Lynch is somewhat cynical of his Wharton graduate school training in quantitative analysis, calculus, and market forecasting and praise customer edge as a way to determine emerging customer trends.

The two minute drill. The price to earning ratio tells you if the price is undervalued or overvalued. Price follows earnings. When prices gets to far ahead of earnings there is a financial disaster or market correction. The next step is too write the story. The story bring detail about the added prosperity, the growth spurt, or major events happening. The story identifies that something dynamic is happening to keeping earnings moving. Lynch likes to give a two minute monologue that covers the reasons he is interested in the stock (slow grower, stalwarts, fast grower, cyclical, asset plays, and turnarounds).


Rating:
Summary: Stop listening to professionals!
Review: Note: I assume you already know who Mr. Lynch is (a former fund manager), and what Mr. Lynch did (he consistently beat the market - "he has a proven track record" - for almost twenty years).

The book has a witty, easygoing style; it's entertaining and informative, and you'll pretty soon find the urge to read it all as soon as possible. Beware, it's not an easy book! To read this book is not a substitute for hard work. There are no magic formulae to apply. There are no shortcuts to riches, you have to do your homeworks anyway!

"One Up" is divided in three sections. The first deals with how to assess yourself as a stockpicker; the second deals with how to find the most promising opportunities, what to look for in a company and what to avoid, and what to make of the various numbers (p/e ratio, book value, cash flow, etc - explanations are clear, this is a book for everyone) that are often mentioned in technical evaluations of stocks. The third part basically is about everything else, including when to buy and when to sell.

Mr. Lynch opens the book with his rule number one, devoted to those believing that professionals will do better than individuals because professionals know more and have more skills (I'll extensively quote him): "Stop listening to professionals! Twenty years in this business convinces me that any normal person (...) can pick stocks just as well, if not better, than the average Wall Street expert". No wonder here and there we find 1-star, angry reviews of this book!

Here are, in my opinion, the basics of this book:

The Street Lag
"Under the current system, a stock isn't truly attractive until a number of large institutions have recognized its suitability and an equal number of respected Wall Street analysts (the researchers who track the various industries and companies) have put it o the recommended list. With so many people waiting for others to make the first move, it's amazing that anything gets bought."

A Good Market or a Bad Market
"Thousand of experts study overbought indicators, oversold indicators, head-and-shoulder patterns, put-call ratios, the Fed's policy on money supply, foreign investment, the movement of the constellations through the heavens, and the moss on oak trees, and they can't predict markets with any useful consistency." Is the current a good market? Please don't ask. Don't try to time the market.

The Perfect Stock
"Getting the story on a company is a lot easier if you understand the basic business. That's why I'd rather invest in panty hose than in communications satellites, or in motel chains than in fiber optics. The simpler it is, the better I like it. When somebody says, "Any idiot could run this joint," that's a plus as far as I'm concerned, because sooner or later any idiot probably is going to be running it."

How to find the tenbaggers
("In Wall Street parlance a "tenbagger" is a stock in which you've made ten times your money".)
Among other "qualities" to look for, explained by Mr. Lynch, the following are my favourites:
- Its name sounds dull - or, even better, ridiculous;
- It does something dull;
- The institutions don't own it, and the analysts don't follow it;
- It's got a niche;
- The insiders are buyers;
- The company is buying back shares.
Of course, Mr. Lynch describes in detail why he thinks you have to look for these aforementioned (and others) qualities in a stock to qualify it as a "buy"

The flaw in Book Value
"Book value gets a lot of attention these days - perhaps because it's such an easy number to find. You see it reported everywhere (...). People invest in these on the theory that if the book value is $20 a share and the stock sells for $10, they're getting something for half price. The flaw is that the stated book value often bears little relationship to the actual worth of the company. It often understates or overstates reality by a large margin. Penn Central had a book value of more than $60 a share when it went bankrupt!".

I can summarize the only weakness I found in this book after the following quotation:
"At one point I'd decided the motel industry was due for a cyclical turnaround. I'd already invested in United Inns, the largest franchiser of Holiday Inns, and I was keeping my ears open for other opportunities. During a telephone interview with a vice president at United Inns, I asked which company was Holiday Inn's most successful competitor.
"Asking about the competition is one of my favorite techniques for finding promising new stocks. Muckamucks speak negatively about the competition ninety-five percent of the time, and it doesn't mean much. But when an executive of one company admits he's impressed by another company, you can bet that company is doing something right. Nothing could be more bullish than a begrudging admiration from a rival.
"La Quinta Motors Inns", the vice president of United Inns enthused. They're doing a great job. They're killing us in Houston and in Dallas."
"He sounded very impressed, and so was I."

Well, I guess everybody out there can pick up the telephone and have a nice, revealing conversation about the competition with a big company's vice president, uh? Don't you believe this to likely happen to you as well, do you?
And just in case, SEC's Regulation Full Disclosure made it almost impossible anyway (God bless Arthur Levitt, former SEC chairman, who gave us the Reg FD - after Mr. Lynch wrote this book).

That aside, what a great book! I definitely recommend this timeless classic.