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How to Find Great Businesses, the Peter Lynch Way

One of the first books I ask new investors to read is Peter Lynch’s One Up on Wall Street.

The easy-going and simplistic stock-picking style discussed in this book brought Lynch great success in his profession as a fund manager at the US mutual fund company, Fidelity, where he generated an average annual return of 29% during 1977 to 1990.

Lynch wasn’t just a great investor, he had a wonderful way of getting across the secrets of his success in everyday language, exemplified by this warning of the perils of putting money into businesses that you don’t understand.

Another of his catchphrases was to “invest in what you know” and he believed everyone could use this advice to spot successful companies.

In fact, he got many of his best ideas at home or when wandering around shopping malls, rather than by poring over company accounts.

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10 Investing Gems from Peter Lynch’s One Up on Wall Street

This article was originally published in June 2012. I was re-reading Lynch’s book and thought of re-publishing these amazing lessons again.

Apart from Benjamin Graham’s The Intelligent Investor, there is no better book to get started for beginners than Peter Lynch’s One Up On Wall Street.

The easy-going and simplistic stock picking style discussed in this book brought Lynch great success in his profession as a fund manager at the US mutual fund company, Fidelity.

The best part about this book is that it’s low on number crunching but high on anecdotal stories. Moreover, readers are given a clear picture on how to get off to a good start in the stock market.

One Up On Wall Street offers insight into the mind of one of the greatest money managers of all times.

Lynch helps you discover that he is a normal guy (like you and me) who thinks rationally, believes in doing his own independent research on companies, asks plenty of questions, and gets caught off guard by the market at times, just like anyone else.

Anyone thinking about buying individual stocks must read this book before they ever make their first stock purchase.

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The Cocktail Party Stock Market Indicator

Apart from Graham’s The Intelligent Investor, there is no better book to get started for beginners in the stock market than Peter Lynch’s One Up On Wall Street.

The real beauty of this book is the easy-going review of the simplistic stock picking style that brought Lynch so much success in his profession as a fund manager at the US mutual fund company, Fidelity.

This book is low on number crunching but high on anecdotal stories. Moreover, readers are given a clear picture on how to get off to a good start in the markets.

Using humour, Lynch helps you discover that he is a normal guy who thinks rationally, believes in doing his own independent research on companies, asks plenty of questions, and gets caught off guard by the market at times, just like anyone else.

Anyone thinking about buying individual stocks must read this book before they ever make their first stock purchase.

Anyways, as I was re-reading the book, here is something I came across that can be termed Peter Lynch’s Cocktail Party Stock Market Indicator.

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The Secret of Peter Lynch’s Investing Success

If there is one legendary investor who not just beat the market but destroyed it, it is Peter Lynch.

Lynch ran Fidelity’s Magellan Fund in the US for 13 years, from 1977 to 1990. During this period, he beat the US stock market index S&P 500 in 11 years. His average annual return during this period stood at a mind-boggling 29%.

It means that every US$ 1 invested in his fund in 1977 grew to more than US$ 27 by 1990.

Fortunately for us, Lynch has laid down his secrets in two great books that every investor must own and read several times – One Up on Wall Street, and Beating the Street.

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