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One Up on Wall Street

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One Up on Wall Street

How to Use What You Already Know to Make Money in the Market

Fireside,

15 min read
10 take-aways
Text available

What's inside?

Your routines as a consumer can help you discover companies worth investing in – if you can read their market signals.

Editorial Rating

9

Qualities

  • Innovative
  • Applicable

Recommendation

This book has become a classic of personal investment literature for good reasons. For one thing, watching Lynch lampoon Wall Street and its cadre of institutional investors is rich fun. He is, perhaps, the foremost money manager in the U.S., thanks to the success of Fidelity’s multibillion-dollar Magellan Fund. Lynch says that when E.F. Hutton speaks, the average investor ought to take a nap. Although this is an updated edition, most of the content dates to "pre-bubble" 1989. As such, it offers haunting warnings about stocks with inflated price-to-earnings ratios. Warning to novice investors: Lynch is a Wharton grad who’s been in the market since his college days and, as such, he tends to see stocks as simple and straightforward. Like the "Oracle of Omaha," Warren Buffett, he’s a quintessential value investor who looks for undervalued companies in nuts-and-bolts industries. The difference, as Lynch puts it, is that he buys those companies’ stocks, while Buffett buys those companies. getAbstract.com strongly recommends this book to those who govern their own portfolios.

Summary

Investment Vehicles

Next time you see an old Subaru, consider this: if, instead of buying a 1977 Subaru, you had invested the same $6,410 in the company’s stock - then $2 a share - and sold it in 1986, you would have earned exactly $1 million. Now, start your engines. Great values are waiting in the stock market and one of the best ways to find a good stock is via your personal experience. Taco Bell, La Quinta Motor Inns, Volvo, Apple Computer, Dunkin’ Donuts and Pier 1 Imports are just a few of the winning stocks author Peter Lynch discovered as a consumer.

As an individual, you have significant advantages over institutional investors, who have to slog through bureaucracies to move. You can spot new products and companies before the professionals just through your daily experiences. That said, before investing, ask yourself:

  • What do you expect to get from your investment?
  • Are you investing for the near term or the long-term? Think long-term.
  • How will you react if the stock price suddenly drops? Ignore short-term fluctuations.
  • Do you own a home? Invest in a house prior to putting your money into stocks.

The clearest path...

About the Authors

Peter Lynch is the vice chairman of the investment arm of Fidelity Investments. He was portfolio manager of one of the world’s premier funds, Fidelity Magellan, and is a board member of Fidelity funds. He is the co-author of Beating the Street and Learn to Earn. John Rothchild is the author of A Fool and His Money and Going for Broke.

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