Sunday, September 12, 2010

peter lynch - beating the street

Beating the Street

the famous fidelity magellan fund manager peter lynch explains how 2 beat the street ... the wall street, of course :-)

there is soooo much interesting stuff abt investing, stockpicking, stockpicking by heart, hard work (= study the company esp. its balance sheet before u invest money in it!), fun, great advice, common sense, ignoring the herd, positive thinking, funny jokes/quotes, sense of responsibility, rules of thumb (e.g. a growth stock with higher growth rate than its P/E ratio is a BUY), experience, good vs. bad companies, good vs. bad management behaviour, ...

already the very 1st page in the preface chapter caught my attention cos ive found an issue whereabouts im really concerned myself and later on there were more passages where i saw that my attitude is somehow similar to peters ... just read these snippets from page #1:
when u remember 2,000 stock symbols but forget the childrens birthdays, there is a good chance youve become too wrapped up in your work ... u  start 2 recognize that youre only going 2 exists 4 a little while, whereas youre going 2 be dead 4 a long time ... nobody on his deathbed ever said: "i wish id spent more time @ the office." ...

well, there were also passages i didnt like sooo much (too boring for me, e.g. all the details abt the single S&L companies) and prolly were larry williams' or jim rogers' books even more fun, anyway IMHO is peter lynch is a MUST READ for investors! btw, traders will also find few smart / relevant issues i think :)

few more things before i put away this book in my bookshelf? hmmm, lets try 2 find one of the passages abt good vs. bad companies: ... the greatest companies (in lousy industries) share certain characteristics. they are low-cost operators, and penny-pinchers in the executive suite. they avoid going into debt. they reject the corporate caste system that creates white-collar brahmins and blue-collar untouchables ... pompous boardrooms, overblown executive salaries, demoralized rank and file, excessive indebtedness, and mediocre performance go hand in hand. this also works in reverse. modest boardrooms, reasonable executive salaries, a motivated rank and file, and small debt equals superior performance most of the time ... what abt the car industry?

my dear readers, last but not least, ive a special bonus 4 u! i hope u will like it ... why? well, it has cost me 3 €uros 2 bribe my youngest daughter 2 typewrite all  21 peter's principles (ehhhm, 2 motivate her, of course ... lets hope she improved both her school english and her investor's mind):

#1 when the operas outnumber the football games three to zero, you know there is something wrong with your life.

#2 gentleman who prefer bonds don’t know what they’re missing.

#3 never invest in any idea you can’t illustrate with a crayon.

#4 you can’t see the future through a rearview mirror.

#5 there’s no point paying yo-yo ma to play a radio. (~ dont overpay fund managers!)

#6 as long as you’re picking a fund, you might as well pick a good one.

#7 the extravagance of any corporate office is directly proportional to management’s reluctance to reward the shareholders. ... what abt my employer, BMW? a really nice head office, isnt it?

#8 when yields on long-term government bonds exceed the dividend yield  of the s&p 500 by 6 percent or more, sell your stocks and buy bonds.

#9 not all common stocks are equally common. 

#10 never look back when you’re driving on the autobahn.

#11 the best stocks to buy may be the one you already own. 

#12 a sure cure for taking a stock for granted is a big drop in the price. 

#13 never bet on a comeback while they’re playing “taps”. (~ dont keep adding 2 the losers as they are headed 4 chapter 11)

#14 if you like the store, chances are you’ll love the stock.

#15 when insider are buying, it’s a good sign – unless they happen to be new england bankers. 

#16 in business, competition is never as healthy as total domination.

#17 all else being equal, invest in the company with the fewest color photographs in the annual report. 

#18 when even the analysts are bored, it’s time to start buying.

#19 unless you’re a short seller or a poet looking for a wealthy spouse, it never pays to be pessimistic.

#20 corporations, like people, change their names for one of two reasons: either they've gotten married, or they’ve been involved in some fiasco that they hope the public will forget.

#21 whatever the queen is selling, buy it. 


wanna purchase peters book @ amazon? here we go: Beating the Street



Kovacka said...

i have no idea about stock markets but i like #3 in general :)

jaro gruber said...

hehee, the KISS principle? keep it simple, stupid :-)