Active TopicsActive Topics  Display List of Forum MembersMemberlist  CalendarCalendar  Search The ForumSearch  HelpHelp
  RegisterRegister  LoginLogin

Buffet, Lynch and other legends - Investing Strategies
 The Equity Desk Forum :Market Strategies :Buffet, Lynch and other legends - Investing Strategies
Message Icon Topic: The Peter Lynch Way of Investing Post Reply Post New Topic
Page  of 22 Next >>
Author Message
omshivaya
Senior Member
Senior Member
Avatar

Joined: 06/Sep/2006
Location: India
Online Status: Offline
Posts: 5966
Quote omshivaya Replybullet Topic: The Peter Lynch Way of Investing
    Posted: 29/Oct/2008 at 9:16pm

Peter%20Lynch%20owned%2025%20percent%20of%20First%20Call%20Mortgage.

(Image source: Boston.com)
 
I shall be typing thoughts and views from time to time of Peter Lynch here, including from "One Up on Wall Street". As I shall be manually typing them, the frequency of the posts may be low so please bear with me. I hope that some paragraph somewhere will connect with someone on some level and help her/him make a good investment decision.
 
 
"According to information published by Investor's Intelligence, which tracks investor sentiment via the newsletters, at the end of 1972, when stocks were about to tumble, optimism was at an all-time high, with only 15 percent of the advisors bearish.
 
At the beginning of the stock market rebound in 1974, investor sentiment was at an all-time low, with 65 prcent of the advisors fearing the worst was yet to come. Before the market turned downward in 1977, once again the newsletter writers were optimistic, with only 10 percent  bears.
 
At the start of the 1982 standoff into the great bull market, 55 percent of the advisors were bears, and just prior to the big gulp of October 19, 1987, 80 percent of the advisors were bulls again.
 
The problem isn't that investors and their advisors are chronically stupid or inperceptive. It's that by the time the signal is received, the message may already have changed. When enough positive general financial news filters down so that the majority of investors feel truly confident in the short-term prospects, the economy is soon to get hammered.
 
What else explains the fact that large numbers of investors(including CEOs and sophisticated business people) have been most afraid of stocks during precise periods when stocks have done their best while being least afraid precisely when stocks have done their their worst."
 
 
(P81)


Edited by omshivaya - 12/Nov/2008 at 7:43pm
The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it
IP IP Logged
omshivaya
Senior Member
Senior Member
Avatar

Joined: 06/Sep/2006
Location: India
Online Status: Offline
Posts: 5966
Quote omshivaya Replybullet Posted: 29/Oct/2008 at 9:28pm
"Things inside humans make them terrible stock market timers. The unwary investor continually passes in and out of three emotional states: concern, complacency and capitulation.
 
He's concerned after the market has dropped or the economy has seemed to falter, which keeps him from buying good companies at bargain prices. Then after he buys at higher prices, he gets complacent because his stocks are going up. This is precisely the time he ought to be concerned enough to check the fundamentals, but he isn't. Then finally, when his stocks fall on hard times and the prices fall to below what he paid, he capitulates and sells in a snit.
 
Some have fancied themselves "long-term investors", but only until the next big drop(or tiny gain), at which point they quickly become short-term investors and sell out for huge losses or the occasional minuscule profit. It is easy to panic in this volatile business.
 
 
Some have fancied themselves contrarians, believing that they can profit by zigging when the rest of the world is zagging, but it didn't occur to them to become contrarian until that idea had already gotten so popular that contrarianism became the accepted view. The true contrarian is not the investor who takes the opposite side of a popular hit issue. The true contrarian waits for things to cool down and buys stocks that nobody cares about, and especially that makes Wall Street yawn."
 
(P82-83)


Edited by omshivaya - 02/Nov/2008 at 10:49pm
The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it
IP IP Logged
omshivaya
Senior Member
Senior Member
Avatar

Joined: 06/Sep/2006
Location: India
Online Status: Offline
Posts: 5966
Quote omshivaya Replybullet Posted: 29/Oct/2008 at 9:31pm

Before you buy a share of anything, there are three personal issues that ought to be addressed:

1) Do I own a house?
2) Do I need the money?
3) Do I have the personal qualities that will bring me success in stocks.
 
Whether stocks make good or bad investments depends more on your responses to these three questions than on anything you'll read in The Wall Street Journal.
 
{The details of each of the above 3 points I shall post later on}
(P77)


Edited by omshivaya - 02/Nov/2008 at 10:51pm
The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it
IP IP Logged
Vivek Sukhani
Senior Member
Senior Member
Avatar

Joined: 23/Jul/2006
Online Status: Offline
Posts: 6675
Quote Vivek Sukhani Replybullet Posted: 29/Oct/2008 at 9:39pm
Its indeed a major cause of surprise to me, how consensus is proving to be so correct.......
 
Some stocks are trading at 2 times and even lesser than their cash earnings per share.
 
Also, I fail to understand why advisors are recommending banks and being bearish at the same point of time. if stocks go belly-up which shall be the case as they are priced currently, then the creditors and lenders and bankers shall be the worst sufferers. Also, no one and I mean practically no one thinks that this market will recover anytime soon. Everyone's expecting a bounce but no one is willing to buy.....trust you me, I have never faced so many contradictions in life.
 
What common advisors dont realise is that there is avery big segment, which only acts during this period. What people also dont realise that some companies can come under predatory attacks if the prices continue to be so low.
 
However to make money during this period requires very astute mind and full knowledge of the knock down value of the assets they are acquiring.
 
Also, what amzes me is that all people are recommending exit from mid-caps/small-caps and going into large caps. Goodness Gracious Me, what foolishness is this......there is no talk of value.
 
And although I am neutral on the markets, as I always have been, but the kind of propaganda thats going on is something which bamboozles me. Investors will do well to just apply their own minds, read annual reports, note down their observations neutrally, and work out whats the chance of their stocks going belly-up. If everything comes out well, they should get into their stocks, most preferably by converting, but even cash purchases can also be justified in some companies.
 
 
Jai Guru!!!
IP IP Logged
omshivaya
Senior Member
Senior Member
Avatar

Joined: 06/Sep/2006
Location: India
Online Status: Offline
Posts: 5966
Quote omshivaya Replybullet Posted: 29/Oct/2008 at 10:00pm
Continued from my last post...
 
(1) Do I own a house?
 
Before you do invest anything in stocks, you ought to consider buying a house, since a house, after all, is the one good investment that almost everyone manages to make. I'm sure there are exceptions, such as houses built over sinkholes and house in fancy neighborhoods that take a dive, but in 99 cases out of 100, a house will be a money-maker.
 
How many times have you heard a friend or an acquaintance lament: "I'm a lousy investor in my house"? I'd bet it's not often....
 
It's a rare individual who manages to lose money on a string of residences one after another, the way it rountinely happens with stocks.
 
It is not accident that people who are geniuses in their houses are idiots in their stocks. A house is entirely rigged in the homeowner's favor. The banks let you acquire it for a 20 percent down and in some cases less, giving you the remarkable power of leverage.
 
Finally, you are a good investor in houses because you know how to poke around from the attic to the basement and ask the right questions. The skill of poking around houses is handed down. You grow up watching how your parents checked into the public services, the schools, the drainage, the septic perk test, and the taxes. You remember rules such as "Don't buy the highest-priced property on the block".
 
No wonder people make money in the real estate market and lose money in the stock market. They spend months choosing their houses, and minutes choosing their stocks. In fact, they spend more time shopping for a good microwave oven than shopping for a good investment
 
(P80)


Edited by omshivaya - 02/Nov/2008 at 10:50pm
The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it
IP IP Logged
tarkeshwar
Senior Member
Senior Member


Joined: 14/Oct/2007
Location: India
Online Status: Offline
Posts: 140
Quote tarkeshwar Replybullet Posted: 29/Oct/2008 at 11:17pm
The book is so full of investment nuggets, that you might as well scan and post the whole book here
Good effort, om bhai! Will suggest to keep it succinct. Makes it easier to read.
IP IP Logged
omshivaya
Senior Member
Senior Member
Avatar

Joined: 06/Sep/2006
Location: India
Online Status: Offline
Posts: 5966
Quote omshivaya Replybullet Posted: 29/Oct/2008 at 11:47pm
Yes, you are very right Tarkeshwar bhai. I am trying my best to post the major points of the paragraphs in as concise a form as possible. Actually, most paras are so interconnected, that I end up writing most of it else the connections would be lost of a point that Lynch is trying to make. Big%20smile

Edited by omshivaya - 29/Oct/2008 at 12:13pm
The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it
IP IP Logged
omshivaya
Senior Member
Senior Member
Avatar

Joined: 06/Sep/2006
Location: India
Online Status: Offline
Posts: 5966
Quote omshivaya Replybullet Posted: 31/Oct/2008 at 11:09pm
"I also found it difficult to integrate the efficient-market hypothesis(that everything in the stock market is "known" and prices are always "rational") with the random-walk hypothesis(that the ups and downs of the market are irrational and entirely unpredictable).
 
Already, I'd seen enough odd fluctuations to doubt the rational part, and the success of the great Fidelity fund managers was hardly unpredictable.
 
Between theory and practice, I cast my lot with practitioners. It's very hard to support the popular academic theory that the market is irrational when you know somebody who just made a twentyfold profit in KFC, and furthermore, who explained in advance why the stock was going to rise. My distrust of theorizers and prognosticators continues to the present day."
 
(P52)


Edited by omshivaya - 02/Nov/2008 at 10:50pm
The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it
IP IP Logged
Page  of 22 Next >>
Post Reply Post New Topic
Printable version Printable version

Forum Jump
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot delete your posts in this forum
You cannot edit your posts in this forum
You cannot create polls in this forum
You cannot vote in polls in this forum



This page was generated in 0.140 seconds.
Bookmark this Page

Join Theequitydesk.com Today!

It’s easy to Join and it’s free.

Here's why members would love to be a part of theequitydesk.com

  • Equity Desk focuses on why to buy shares and invest in share rather than what to buy.
  • Live discussion forum wherein members can discuss the current Indian share Market trend, BSE Sensex or the Nifty Index.
  • Have huge cache of information on Indian and World Share Market.
  • Analysis of Indian stock market, Global events, Investing insights, portfolio management strategies and thoughts,
  • Meet investors from round the globe check their investing strategies share experiences and learn for their experiences on stocks and shares, evaluate opinions on investing in India.

Register now while it’s free!

Already a member? Close this window and log in.

Join Us           Close