2018 challenge day 14 – Beating the Street

About the book

Written by the famous Magellan mutual fund manager Peter Lynch, Beating the Street, was published on May 25, 1994 by Simon & Schuster, the book sports a good 336 pages.

This book begins with Peter telling a story of how armature investors have been able to outperform the market by applying very simple principles such as: investing only in companies where you can described how and why its profitable to children. In fact a stock portfolio built by children does outperform the market. Peter also remarks on how the art of stock picking has declined.

The book continues then with Peter discussing his journey as a stock picker for Fidelity, a North American investment company, and how it has impacted his investment principles and the fun and sometimes funny facts that he has run into. He discusses how he invested in a “Mexican Telephone company”, Taco bell because, he loved the tacos, the company has a large untapped market, and it has strong fundamentals (his colleagues thought it was a Mexican Telephone company). He discusses his forays into Fantastic Sams where he learned that you need a license to cut hair.

He also discusses foreign investments and economies such as Europe which at the time was very anemic and Japan which contrary to what the American consumer market though, Japan’s economy was artificial. Lending practices in Japan was hilariously more lenient then American standards which lead to extreme inflation.

He also discusses different industries and different company types such as Limit Partnerships. He even discusses the performance of different funds and how one should invest accordingly.

Throughout the book Peter Lynch sprinkles his investment principles in with personal stories and experiences and in-depth research.

Key Takeaway and commentary

This book is really interesting to me, way he wrote the book really gives me a different look at the market. Coming from a mathematics background I tend to see things in number form, however this book shifted my view of stocks, not as numbers but as parts of a company.

My key takeaways from Peter’s investment style are:

  1. Invest at most only as many companies as you can keep track of. For example if you only have time to read up on 4 companies, do not invest in more then 4.
  2. Invest in companies where you can explain in simple terms how it works and why its profitable.
  3. Invest in companies that have strong fundamentals, growth potential and isn’t necessarily in a great industry.
  4. Diversify among different asset classes and different investment strategies. For example do not go pure bond and also do not go purely in growth.
  5. Regularly do a health check on your stock portfolio.

Of course my takeaways and commentaries do not do the book justice. My blog post is just too short for me to explain the different takeaways and key points that I liked about this book. However if you are looking to invest money for your retirement I do recommend you read this book – even if you are going to look for a professional money manager, you’ll know what to look for.

What do you think? Feel free to leave your thoughts in the comments and if you found this post useful or enjoyable, please share and leave a like. Thank you!  Stay tuned for tomorrows book Call Me Ted

For more information on the 2018 challenge, visit the following link: Business Trek 2018 reading challenge.

You can also get the book via the following link: Beating the Street

The image was taken from wikimedia commons: Here



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