Rating: 
Summary: Yet Another Mis-Leading Exhortation to Buy Stocks
Review: This book, written in 1993, simultaneously comes at the end of Mr. Lynch's career in money management and the beginning of a long sprint in the broader stock market, largely fueled by tech/internet stocks. In any period, one can expect 1 of 100 money managers to far outperform both his or her peers and the broader market by chance. Mr. Lynch was that one money manager.Mr. Lynch starts the book by turning investing into a game. Although his method was subtle (using an example of grammar school kids picking stocks), the implications are profound. Investing does share some resemblance to many games we play in life, and one of the Great Money Masters, the fictitious 'Adam Smith' readily admits this in his classic book on investment, The Money Game. However, Mr. Lynch takes things one step beyond the game, and as the book's title hints, he turns all investment activities into a competition. In so doing, he pits the small investor against the institutional Players, and as a result, sets up the naive reader to walk a well-trodden path littered with sorrow and the bones of many foolish investors. Granted, 'Adam Smith' once said, "The Players aren't smarter than you. They just have more information", and there also is a certain level of truth to Lynch's assertion that the Little Guy can outperform the Big Boys. However, Lynch fails to disclose one important and critical difference. I believe it was Hemmingway who said, in response to Fitzgerald's observation that the rich were not like the ordinary schmuck, that "Yes, I know. They have more money." Something frightfully similar can be said of the key difference between the Little Guy and The Players, but with one critical insight: The Players do not merely have more money, they have a lot more of Other People's Money. That in essence is the fundamental difference between The Players and the Little Guy, who must wager his (or her) own hard-won funds in order to play the Grand Game- the stock market. Needless to say (but will be said anyway), the consequences of one's actions weigh heavily on one's shoulders when one's own money is at stake, but really aren't felt when Other People's Money is on the line. The Players play with Other People's Money, but you, dear investor, play with your own hard-won earnings. That said, the intelligent investor must ask herself, 'Do I really want to play with my money?'. Beating the Street rests heavily on this undisclosed truism and a host of faulty assumptions. The book really is a sales pitch to buy stocks and to participate as much as possible in stock mutual funds. To that end, Mr. Lynch places before the reader a number of questionable arguments. Here are just two: First, perhaps the most flawed argument of the book is that the small investor, upon retirement, will spend more than she earns in investment income. This is stated as a bona-fide fact when in reality, it is a generous assumption. From this assumption, Mr. Lynch then argues that one should invest in stocks and use some portion of the capital appreciation in addition to the dividend income for the purpose of meeting one's spending needs. He then fortifies his argument by citing inflation and emphasizing its ability to erode fixed income. The facts are 1) how much investment income you will need is determined by how much you plan to spend, 2) many people choose to work either part-time or full-time after retirement (either out of necessity or desire), and thus have some supplemental income, 3) though the general historical trend for stock prices has been 'up', there is nothing that says that stocks have to go up, and finally 4) inflation can adversely affect stock prices (and have actually done so in the past). Lynch invokes the inflation argument when trashing bonds, and abandons it when touting stocks, even though inflation acts on both. Nor does his idealized comparison of stocks vs. bonds on pages 52-56 take into account taxes and transaction costs incidentally. Second, on page 69, Mr. Lynch boldly says that, "If you plan to to stick with a fund for several years, the 2-5 percent you paid to get in will prove insignificant". This last statement may actually be worse than his first (of many) flawed arguments, for the following reason: the money lost to the load fails to compound at whatever investment rate of return, and over long periods of time, the difference between what you committed and what gets actually invested grows- and this is before we even consider the effect of annual expenses. These and other flawed but superficial arguments for stock investing make for very difficult reading. Apart from the gross argumentative errors, the book presents many of Mr. Lynch's reminiscences of a stock market long gone. However, there are some useful hints in the book, most likely put there by Mr. Rothchild, but they are far outnumbered and over-shadowed by Mr. Lynch's deceptive pitch to buy stocks.
Rating: 
Summary: Good text; too complacent about stock market
Review: This is not a stand-alone text: it must be read in conjunction with One Up on Wall Street. Lynch emphasizes the long-term-investment outlook, and exemplifies the danger of replacing one dogma with another. He throughout insists that people should not panic in market drops; he points to the success of Magellan (and the market) in rebounding after the crash of '87. But between the two books, he also shows clearly how he determined that stocks were overpriced in '72 and '92, just before they indeed fell. The same signs abounded in '87, but Lynch doesn't accept responsibility for $4 billion in fund losses: these things happen, we are told, and the market did bounce back; just keep your cool. This is the problem with the long-term, anti-market-timing dogma that has arisen in the last decade: it allows people to excuse their own errors in judgment. Given what happened in '87, Lynch is probably doing a net service by telling people not to panic during market downturns; but, given how widespread "buying on the dip," despite questionable fundamentals, has become, he may have actually talked people into speculating. If, as conventional wisdom holds, stocks are the best long-term investment, then people won't worry too much about currently inflated prices. We'll know in a few years whether Lynch has done more harm than good.
Rating: 
Summary: Beating the Street
Review: This is one of the "must read" books for anyone wanting to invest well, and gets 5 stars for that reason only. It is by and about Lynch and his legendary carreer @ Fidelity's Magellan Fund, and the period Lynch knocked the cover off the ball hitting home run after home run for a long string of years.
How did he do it? Well, several other reviews point out the difficulty of extracting Lynch's secret formula, and they rightly describe the lack of formulaic presentation. If there was a fabulous book on Lynch instead of this autobiographical one, I might put it on the "must read" list instead. There is not (yet, maybe Lowenstein will grace us with one?). However, too many fail in investing by looking for instant-coffee recipies that any boob can implement from the couch. If it was that simple, everyone would be rich. Success takes work and in-depth understanding of some, probably simple, strategies that ordinary investors can learn. In fact, investors who focus on fundamentals of the sort described by Lynch, & stay tuned out of the frenetic trading centers' "action," are likely to increase chances of success. The real beauty of Lynch's book is the myriad of different strategies, one or a few of which each of us can learn and implement as our investing "sweet spot."
Lynch covers a series of investment decisions in some detail. The detail is not uniform from company to company, position to position, making comparison of his formula difficult between investments. And he does not summarize his formula anywhere in the book. This oversight (which may be intentional to more quickly drop the instant-coffee addicts) leaves it up to the reader to digest the material and extract the essential focus of the master. I suggest a relaxed, 3 part method to do the extraction:
1) read the whole book (its easy reading), then set it down for a week or so.
2) read it a second time, pencil or highlighter in hand, and mark where you spot formulaic focus you can implement.
3) read it again in 6 months or a year, and repeat #2. This time around, with the aging of the first 2 readings, you will be surprised at how the formulae stand out. You will "see" more of what Lynch describes, and take your understanding of the master's strategic vision to a new and satisfying level. Not all examples will give the same level of insight to the master's strategies, so don't strain to make Lynch's magic stand out on every page. It is really only about what you can see & replicate. Even one good trick, well understood, will be worth the effort for your invesment results. If you can find 2 or 3 good tricks, like I did, you are on your way to richer success.
I have read this book at least 5 times (so far), and I get a firmer understanding of Lynch's myriad strategies each time. As a master of the game, and with a mountainous pile of cash demanding a high yield, Lynch needed many strategies to keep out-distancing all the averages. He did just that. Although a cookbook would be easier to put into use, it probably wouldn't work as well, as it wouldn't require depth of understanding. Patience is the key to implementing this important work.
Beating the Street stands among others on the "must-read" list:
~ The Intelligent Investor, Benjamin Graham (ignore the mathematical formula, but savor the stuff on perspective & margin of safety; another book that should be re-read periodically),
~ Common Stocks and Uncommon Profits, Phil Fisher (ditto on the re-reading),
~ Conservative Investors Sleep Well, also by Fisher; out of print so watch here on Amazon for a clean used copy,
~ Buffett, the Making of an American Capitalist, Roger Lowenstein
~ The essays of Warren Buffet: Lessons for Corporate America, Buffett & Cunningham (great compendium of Buffett's own analysis of corporate governance, accounting and other issues investors need to watch),
~ When Genius Failed, the Rise & Fall of Long Term Capital Management, Roger Lowenstein. This is the sort of post-mortem on investing mistakes that every investor needs to guard against, and all the more important because it was a cadre of smart guys who lost their butts,
~ academic papers of Terrance Odean & Brad Barber, finance professors @ UC Berkeley & UC Davis, respectively, see their websites for links to papers about investor mistakes to avoid.
Good Luck on the Street!
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