One Up On Wall Street by Peter Lynch
Subtitled “How To Use What You Already Know To Make Money In The Market”, this book was originally published in 1989 and is one of my favourite books of all time about investing.
Peter Lynch ran the Fidelity Magellan Fund from 1977 to 1990, when it was one of the most successful mutual-funds of all time; so he certainly knows what he is talking about. At the very core of the book is the belief that each individual has enough inherent knowledge and experience to be a successful investor, something that I whole-heartedly subscribe to.
At its heart the book assures us that investing is not rocket science and that anybody can do it.
Using various analogies he shows us:
- The power of common knowledge (take advantage of what you already know).
- You don’t need to be a Wall Street analyst to uncover great investment opportunities.
- You are not disadvantaged vs. large, institutional investors because you don’t have to accurately predict the stock market to make money in stocks.
- To keep an open mind to new ideas.
The book is divided in to three sections. The first bit covers how to assess yourself as an investor, while the second part deals with how to find the most promising opportunities, what to look for in a company and what to avoid. This section also covers the numbers such as PE, net asset value, cash flow and the like. The third part of the book pulls it all together in the form of what and when to buy and sell.
My favourite line is in the opening chapter: “Stop listening to professionals! Twenty years in this business convinces me that any normal person can pick stocks just as well, if not better, than the average Wall Street expert”. It’s a must read for anybody wanting to manage their own investments.