Peter Lynch's One Up on Wall Street: Book Summary
Starter kit for equity markets
Here are 13 valuable Lessons from Peter Lynch's One Up on Wall Street:
1. Things are never clear until it's too late. Performance always comes with uncertainty.
2. The stock price is the least useful information you can track, and it’s the most widely tracked.
3. When you sell in desperation or fear, you always sell too cheap.
4. The big money can't invest where the big profits are.
One advantage of the individual investor is that he can invest in situations too small for institutions.
5. The best ideas often take the most time to play out.
That's why Good Ideas AND patience are the formula to success.
6. For small and profitable companies, the critical part is being able to scale the business.
7. If you find a stock with little or no institutional ownership, you’ve found a potential winner.
8. Do not think you are right because the stock goes up. Compare reality to your thesis.
9. There are five basic ways a company can increase earnings:
(1) reduce costs, (2) raise prices, (3) expand into new markets, (4) sell more in old markets, (5) revitalize, close, or otherwise dispose of a losing operation.
10. Long shots almost never play out.
11. The real problem with long shots isn't the (likely) failure of the upside, but the drastic downside.
12. Most investors don't struggle with the market or the companies, but with themselves.
13. It helps to manage expectations to categorize companies into these six: