Wednesday, 22 June 2016

One Up on Wall Street By Peter Lynch

穷小子 has finished the book early of this year. For those who have not heard of him, he is one of the greatest investors of all time. When Peter Lynch is the manager of the Magellan Fund at Fidelity Investments, he averaged a 29.2% annual return, consistently more than doubling the S&P 500 market index and making it the best performing mutual fund in the world. The assets under management increased from $18 million to $14 billion during his tenure. Lynch is consistently described as a "legend" by the financial media for his performance record, and was called legendary" by Jason Zweig in his 2003 update of Benjamin Graham's book, The Intelligent Investor. More of this bios can be read here.

Why is 穷小子 recommends this book? Reason is simple, because it is easy to understand. 穷小子 does not have much of finance background to begin with. If he can understands it, and so can you. Main take away from this book for 穷小子 is that, observe the environment, observe on what is happening in your surroundings. The next most "in" stock may just be around the corner in your neighbourhood.
Starbucks is one of the good examples to relate in this. Every where and every when 穷小子 goes, Starbucks seems to be full house forever, or almost as to say. This has always been much on the scene we had seen when the first Starbucks store came to Singapore in 1996.

How does Starbucks performed throughout all these year?
A simple answer tells it all. If one had bought 1,000 during its IPO in 1992, the value is estimated to be at $302,048 after its sixth splits in 2015. On a side track, an interesting calculator from Starbucks website for all these calculations to share.
穷小子 is not suggesting that Starbucks will be around here forever, but it is a good example to illustrate at least until today. 

Of course, not forgetting the six types of stocks which Peter Lynch had identified.

1) The Slow Growers
2) The Stalwarts
3) The Fast Growers
4) The Cyclicals
5) Turnarounds
6) The Asset Plays

Bottom line is that 穷小子 is not suggesting that Peter lynch is not good in his financial analysis, and hence his stock pick is by observing only. Of course much is still needs to be done after that. By observing is just the first step to identify a rare gem.
This method is useful and applies significantly to 穷小子. He doesn't not has much of financial fundamentals in it, observing the surroundings may just be a good start for him, and together with his basic-reading skills in financial reports reading.

Few of his famous quotes:

  • "Invest in what you know and why you own it."
  • "Go for a business that any idiot can run – because sooner or later, any idiot is probably going to run it."
  • "If you stay half-alert, you can pick the spectacular performers right from your place of business or out of the neighborhood shopping mall, and long before Wall Street discovers them."
  • "Investing without research is like playing stud poker and never looking at the cards."
  • "Absent a lot of surprises, stocks are relatively predictable over twenty years. As to whether they're going to be higher or lower in two to three years, you might as well flip a coin to decide."
  • "If you spend more than 13 minutes analyzing economic and market forecasts, you've wasted 10 minutes."
  • "There's no shame in losing money on a stock. Everybody does it. What is shameful is to hold on to a stock, or worse, to buy more of it when the fundamentals are deteriorating."

Go for a business that any idiot can run – because sooner or later, any idiot is probably going to run it


  1. Warm greetings. I was wondering if can contribute/guest post on your website? I send out weekly editorials as enclosed. Thanks, Kat.

    VICE PRESIDENT, COMMUNICATIONS Ι Singapore’s #1 financial comparison platform
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    1. Hi Katrina,

      May I know what kind of editorials are you referring to? I did not received any attachment.
      Can we discussed it through email?
      Kindly send to