One Up On Wall Street
One Up On Wall Street: Book Review
One Up on Wall Street by Peter Lynch is a genius book for the average investor to understand the working of the stock market and the elements that govern the same. You will understand how a genius investor approaches when picking a stock and how you, as an ordinary investor, can use this to your advantage.
Peter Lynch has outstanding performance in market returns, and learning the fundamentals from him is quite a learning curve. His 13-year career in Fidelity is proof of his expertise. But that was not all a smooth journey. Peter had his fair share of upsets and teachings in the stock market, and he has used the same experiences and simplified them in uncomplicated language so that we can learn from his mistake and make fewer errors.
But I should add that this simplicity should not be taken for granted as this may sometimes make you more prone to a big blunder. Though Peter has put his mistakes in comfortable language for all of us to learn, it is not always easy to mention every element of the incident, and it might let you execute careless decisions.
One Up On Wall Street is a supply of vast knowledge on asking the right questions and doing sufficient research for making a story. The most valuable idea I ever received from reading such books is building a narrative around a stock. When deciding on a stock to buy or not, Peter recommends building a narrative of what the company is doing.
What has been performance, and how are they implementing its decisions? Then look for the profits and revenues and many other elements which you’ll find in the book. The most significant benefit of this narrative is when the stock price plunges, and if the same story applies, it is a great time to buy more. As it means you are getting it at a cheaper rate or if the story changes, you can exit and minimize your losses.
One Up On Wall Street also provides other elements which I found highly beneficial, such as learning the story behind the numbers on a balance sheet and cash flows. It also comes in handy while picking the right stock. One Up On Wall Street also has some other great advice for you to become a better investor, and I am purposefully not writing or mentioning them here because I want that you pick up this book and learn them yourself.
One Up On Wall Street: Book Summary in 3 sentences
- Large profits can be made in the stock market by investing in what you are familiar with and ignoring the short term upsets.
- Investing is the only option to grow money and you have to decide whether you want to pick your own stocks or entrust a mutual fund.
- Patience is rewarded with immense returns.
Who Should Read It?
Want to create money in stock market? Are you able to see yourself drowned into annual reports and fundamentals before choosing a stock. Then this book is a master key to your fortune.
Top 3 Quotes
- Ignore short term fluctuations.
- Having an edge will help you make money in stocks.
- Predicting the economy is futile.
One Up On Wall Street Notes
1. Part 1 💵
- Don’t overestimate the skill and wisdom of professionals.
- Take advantage of what you already know.
- Look for opportunities that haven’t yet been discovered and certified by Wall Street-companies that are “off the radar scope”.
- Invest in a house before you invest in a stock.
- Invest in companies, not in the stock market.
- Ignore short-term fluctuations.
- Large profits can be made in common stocks.
- Large losses can be made in common stocks
2. Part 2
- Understand the nature of the companies you own and the specific reasons for holding the stock (It is really going up!” doesn’t count).
- By putting your stocks into categories you’ll have a better idea of what to expect from them.
- Big companies have small moves, small companies have big moves.
- Consider the size of a company if you expect it to profit from a specific product.
- Look for small companies that are already profitable and have proven that their concept can be replicated.
- When purchasing depressed stocks in troubled companies, seek the ones with the superior financial positions and avoid the ones with loads of bank debt Companies that have no debt can’t go bankrupt.
- Managerial ability may be important but it’s quite difficult to assess. Base your purchases on the company’s prospects not on the presidents resume or speaking ability.
- A lot of money can be made when a troubled company tums around.
- Carefully consider the price-earnings ratio. If the stock is grossly over priced, even if everything else goes right you won’t make any money.
- Find a story line to follow as a way of monitoring a company’s progress.
- Look for companies that consistently buy back their own shares.
- Study the dividend record of a company over the years and also how as earnings have fared in past recessions.
- Look for companies with little or no institutional ownership.
- All else being equal, favour companies in which management has a significant personal investment over companies run by people that benefit only from their salaries.
- Insider buying is a positive sign, especially when several individuals are buying at once.
- Devote at least an hour a week to investment research. Adding up your dividends and figuring out your gains and losses doesn’t count.
3. Part 3:
- Sometime in the next month, year, or three years, the market will decline sharply.
- Market declines are great opportunities to buy stocks in companies you like.
- Corrections-Wall Street’s definition of going down a lot-push outstanding companies to bargain prices.
- Trying to predict the direction of the market over one year, or even two years, is impossible.To come out ahead you don’t have to be right all the time, or even a majority of the time.
- The biggest winners are surprises to me, and takeovers are even more surprising. It takes years, not months, to produce big results.
- Different categories of stocks have different risks and rewards.
- You can make serious money by compounding a series of 20-30 percent gains in stalwarts.
- Stock prices often move in opposite directions from the fundamentals but long term, the direction and sustainability of profits will prevail.
- Just because a company is doing poorly doesn’t mean it cant do we Just because the price goes up doesn’t mean you’re right.
- Just because the price goes down doesn’t mean you’re wrong.
- Stalwarts with heavy institutional ownership and lots of Wall Street coverage that have outperformed the market and are a rest or a decline.
- Buying a company with mediocre prospects just because the stock is cheap is a losing technique.
- Selling an outstanding fast grower because its stock seems slightly overpriced is a losing technique.
- Companies don’t grow for no reason, nor do fast growers stay that way forever.
- You don’t lose anything by not owning a successful stock, even if it’s a tenbagger.
- A stock does not know that you own it.
- Don’t become so attached to a winner that complacency sets in and you stop monitoring the story.
- When favorable cards turn up, add to your bet, and vice versa.
- If you don’t think you can beat the market, then buy a mutual fund and save yourself a lot of extra work and money.