Beating the Street Read Online Free
Author: Peter Lynch
funds, your ultimate success or failure will depend on your ability to ignore the worries of the world long enough to allow your investments to succeed. It isnât the head but the stomach that determines the fate of the stockpicker. The skittish investor, no matter how intelligent, is always susceptible to getting flushed out of the market by the brush beaters of doom.
A group of us investment seers meets every January to participate in a panel discussion sponsored by Barronâs magazine, which later publishes the transcript. If you had bought many of the stocks that we recommended, you would have made money, but if you paid attention to our expert opinions on the direction of the market and the economy you would have been too scared to own stocks for the last seven years. Chapter 2 deals with the pitfalls of this âweekend worryingâ and how to ignore it.
Chapter 3 , âA Tour of the Fund House,â is my attempt to devise a strategy for mutual fund investing. Although I remain a stockpicker at heart, my retirement gives me the opportunity to discuss a subjectI was reluctant to tackle as a fund manager. When youâre still in the business, almost anything you say about it could be construed as either self-serving or a sneaky way to attract new customersâcharges that I trust will not be leveled against me now.
Recently, I helped a not-for-profit organization in New England devise a new portfolio strategy. (This organization shall remain nameless because its identity isnât relevant to the exercise.) We first had to decide how much of the money to put into stocks and how much into bonds, and then how to invest each portion. These are the same decisions that every household CEO must make, which is why Iâve provided a detailed description of how we approached the problem.
Chapters 4, 5, and 6 are a three-part retrospective: how I managed Magellan during 13 years and 9 major corrections. This exercise gave me an excuse to go back and figure out exactly what factors contributed to whatever successes I had. Some of the conclusions have surprised even me, and I was there.
In this part of the book Iâve tried to concentrate on methodology and to downplay the idle reminiscence. Perhaps thereâs something to be learned from my occasional triumphs and my numerous mistakes.
In Chapters 7 through 20, which account for more than half of these pages, I describe how I went about picking the 21 stocks I recommended to the readers of Barronâs magazine in January 1992. Iâve talked before about theories of investing, but in making these selections I took notes as I went along. With these notes in hand, Iâve tried to analyze my stockpicking habits in as much detail as possible. This includes both how to identify promising situations and how to go about researching them.
The 21 stocks that Iâve used to illustrate this Lynch Method cover many of the important categories and industry groups (banks and S&Ls, cyclicals, retailers, utilities) in which people routinely invest. Iâve arranged the chapters so that each one deals with a specific kind of company. Chapter 21 , âThe Six-Month Checkup,â describes the regular process of reviewing the story of each company in a portfolio.
I have no pat formulas to offer. There are no bells that ring when youâve bought the right stock, and no matter how much you know about a company you can never be certain that it will reward you for investing in it. But if you know the factors that make a retaileror a bank or an automaker profitable or unprofitable, you can improve your odds. Many of these factors are laid out here.
The text is fortified with liberal doses of Peterâs Principles, such as the two youâve already had to tolerate. Many of these lessons Iâve learned from experience, which is always an expensive teacher, so youâre getting them here at a discount.
(The stock prices of the 21 companies that I
A group of us investment seers meets every January to participate in a panel discussion sponsored by Barronâs magazine, which later publishes the transcript. If you had bought many of the stocks that we recommended, you would have made money, but if you paid attention to our expert opinions on the direction of the market and the economy you would have been too scared to own stocks for the last seven years. Chapter 2 deals with the pitfalls of this âweekend worryingâ and how to ignore it.
Chapter 3 , âA Tour of the Fund House,â is my attempt to devise a strategy for mutual fund investing. Although I remain a stockpicker at heart, my retirement gives me the opportunity to discuss a subjectI was reluctant to tackle as a fund manager. When youâre still in the business, almost anything you say about it could be construed as either self-serving or a sneaky way to attract new customersâcharges that I trust will not be leveled against me now.
Recently, I helped a not-for-profit organization in New England devise a new portfolio strategy. (This organization shall remain nameless because its identity isnât relevant to the exercise.) We first had to decide how much of the money to put into stocks and how much into bonds, and then how to invest each portion. These are the same decisions that every household CEO must make, which is why Iâve provided a detailed description of how we approached the problem.
Chapters 4, 5, and 6 are a three-part retrospective: how I managed Magellan during 13 years and 9 major corrections. This exercise gave me an excuse to go back and figure out exactly what factors contributed to whatever successes I had. Some of the conclusions have surprised even me, and I was there.
In this part of the book Iâve tried to concentrate on methodology and to downplay the idle reminiscence. Perhaps thereâs something to be learned from my occasional triumphs and my numerous mistakes.
In Chapters 7 through 20, which account for more than half of these pages, I describe how I went about picking the 21 stocks I recommended to the readers of Barronâs magazine in January 1992. Iâve talked before about theories of investing, but in making these selections I took notes as I went along. With these notes in hand, Iâve tried to analyze my stockpicking habits in as much detail as possible. This includes both how to identify promising situations and how to go about researching them.
The 21 stocks that Iâve used to illustrate this Lynch Method cover many of the important categories and industry groups (banks and S&Ls, cyclicals, retailers, utilities) in which people routinely invest. Iâve arranged the chapters so that each one deals with a specific kind of company. Chapter 21 , âThe Six-Month Checkup,â describes the regular process of reviewing the story of each company in a portfolio.
I have no pat formulas to offer. There are no bells that ring when youâve bought the right stock, and no matter how much you know about a company you can never be certain that it will reward you for investing in it. But if you know the factors that make a retaileror a bank or an automaker profitable or unprofitable, you can improve your odds. Many of these factors are laid out here.
The text is fortified with liberal doses of Peterâs Principles, such as the two youâve already had to tolerate. Many of these lessons Iâve learned from experience, which is always an expensive teacher, so youâre getting them here at a discount.
(The stock prices of the 21 companies that I
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