Book Review: One Up On Wall Street
Investing advice from Peter Lynch:
I've been re-reading One Up On Wall Street by the high-performing Fidelity portfolio manager who held the position from 1970-1990. It was recommended at the top of Gavin Baker's investing book list. Important: This book was published in 1989, so it is both timeless and partially dated.
Interesting quotes and tidbits:
He states in the Forward that the most significant stock market development of the era is the Internet and that it has passed him by. He's been technophobic. Which now, as of today, is clearly not the right place to be.
If you can follow only one bit of data, following the earnings.
Stocks are most likely to be accepted as prudent at the moment they're not.
Buy the right stocks at the wrong price at the wrong time and you'll suffer great losses.
In relation to investing in a stock:
"If you are undecided and lack conviction, then you are a potential market victim, who hands all hope and reason at the worst moment and sells out at a loss. It's personal preparation as much as knowledge and research, that distinguishes the successful stockpicker from the chronic loser.
The unwary investor continually passes in and out of three emotional states: concern, complacency, and capitulation.
Professional investing is an oxymoron. There are great fund managers, innovative fund managers, maverick fund managers, these are notable exceptions who are outnumbered by the run-of the-mill fund managers, dull fund manager, comatose fund managers, sycophantic fund managers, timid fund managers, plus other assorted camp followers, fuddy-duddies, and copycats hemmed in by the rules.
Acceptable mediocrity is far more comfortable than diverse performance.
You can find terrific opportunities in the neighborhood or at the workplace, months or even years before the news has reached the analysts and the fund managers they advise.
We always seem to be preparing ourselves for the last thing that's happened, as opposed to what's going to happen next.
Stand by your stocks as long as the fundamental story hasn't changed.
The true contrarian is not the investor who takes the opposite side of a popular hot issue. The true contrarian waits for things to cool down and buys stocks that nobody cares about, and especially those that make Wall Street yawn.
High growth and hot industries attract a very smart crowd that wants to get into the business. Entrepreneurs and venture capitalists stay awake nights trying to figure out how to get into the act as quickly as possible. If you have a can't-fail idea but no way of protecting it with a patent or a niche, as soon as you succeed, you'll be warding off the imitators. In business, imitation is the sincerest form of battery.
What's a perfect stock:
It sounds dull - or, even better, ridiculous
It does something dull
It does something disagreeable
It's a spin-off
The institutions don't own it, and the analysts don't follow it (sort of date terminology here)
The rumors abound: It's involved with toxic waste and/or the mafia
There is something depressing about it, e.g., funeral homes
It's a no-growth industry
It's got a niche
People have to keep buying it
It's a user of technology
The insiders are buyers
The company is buying back shares.