The Peter Lynch Way of Investing
Printed From: The Equity Desk
Category: Market Strategies
Forum Name: Buffet, Lynch and other legends - Investing Strategies
Forum Discription: DIscuss about the strategies followed by the great investors. Share an idea which would have impressed the masters. Try and bring their International experience into the Indian Markets.
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=1954
Printed Date: 24/Apr/2024 at 1:50am
Topic: The Peter Lynch Way of Investing
Posted By: omshivaya
Subject: The Peter Lynch Way of Investing
Date Posted: 29/Oct/2008 at 9:16pm
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(Image source: http://www.boston.com/business/articles/2008/10/09/lynch_faces_85000_fine_in_nh/ - 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) ------------- 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 |
Replies:
Posted By: omshivaya
Date Posted: 29/Oct/2008 at 9:28pm
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"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) ------------- 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 |
Posted By: omshivaya
Date Posted: 29/Oct/2008 at 9:31pm
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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) ------------- 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 |
Posted By: Vivek Sukhani
Date Posted: 29/Oct/2008 at 9:39pm
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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!!! |
Posted By: omshivaya
Date Posted: 29/Oct/2008 at 10:00pm
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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) ------------- 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 |
Posted By: tarkeshwar
Date 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. |
Posted By: omshivaya
Date 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.  ------------- 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 |
Posted By: omshivaya
Date Posted: 31/Oct/2008 at 11:09pm
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"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) ------------- 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 |
Posted By: ndzapak
Date Posted: 31/Oct/2008 at 11:58pm
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A brief summary of One Up On Wall street
http://money.cnn.com/magazines/moneymag/moneymag_archive/1989/01/01/84882/index.htm - http://money.cnn.com/magazines/moneymag/moneymag_archive/1989/01/01/84882/index.htm
------------- the Equitydesk is the best |
Posted By: omshivaya
Date Posted: 01/Nov/2008 at 7:32pm
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Nice link. Thanks very much for sharing. ------------- 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 |
Posted By: omshivaya
Date Posted: 02/Nov/2008 at 10:37pm
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"I know you don't expect the plastic surgeon to advise you to do your own facelift, nor the plumber to tell you to install your own hot-water tank, nor the hairdresser to recommend that you trim your own bangs, but this isn't surgery or plumbing or hairdressing.
This is investing, where smart money isn't so smart, and the dumb money isn't really as dumb as it thinks. Dumb money is only dumb when it listens to the smart money"
(P31) ------------- 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 |
Posted By: omshivaya
Date Posted: 03/Nov/2008 at 11:33pm
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(Continued from an earlier related post)
Do I need the money?
"...if you're going to have to pay for a child's college education in two or three years, don't put that money into stocks. Maybe you're a widow and your son Dexter has a chance to get into Harvard, but not on scholarship. Since you can scarcely afford the tuition as it is, you're tempted to increase your net worth with conservative blue chip stocks. In this instance, even buying blue-chip stocks would be too risky to consider. Absent a lot of surprises, stocks are relatively predictable over ten or twenty years. As to whether they're going to be higher or lower in two or three years, you might as well flip a coin to decide.
...Only invest what you could afford to lose without that loss having any effect on your daily life in the foreseeable future"
(P80) ------------- 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 |
Posted By: omshivaya
Date Posted: 03/Nov/2008 at 11:39pm
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(Continued from an earlier related post)
Do I have the personal qualities it takes to succeed?
"...It seems to me the list of qualities ought to include patience, self-reliance, common sense, a tolerance for pain, open-mindedness, detachment, persistence, humility, flexibility, a willingness to do independent research, and equal willingness to admit to mistakes, and the ability to ignore general panic. In terms of IQ, probably the best investors fall somewhere above the bottom ten percent but also below the top three percent.
It is also important to be able to make decisions without complete or perfect information. Things are almost never clear on Wall Street, or when they are, then it's too late to profit from them. The scientific mind that needs to know all the data will be thwarted here.
And finally, it's crucial to be able to resist your human nature and your "gut feelings"
(P80-81) ------------- 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 |
Posted By: omshivaya
Date Posted: 04/Nov/2008 at 6:25pm
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The cocktail theory
"In the first stage of an upward market-one that has been down awhile and that nobody expects to rise again-people aren't talking about stocks. In fact, if they lumber up to ask me what I do for a living, and I answer, "I manage an equity mutual fund,", they nod politely and wander away.
...When ten people would rather talk to a dentist about plaque than to the manager of an equity mutual fund about stocks, it's likely that the market is about to turn up."
"In stage two, after I've confessed what I do for a living, the new acquaintances linger a bit longer-perhaps long enough to tell me how risky the stock market is-before they move over to talk to the dentist. The coktail party is still more about plaque than about stocks. The market's up 15 percent from stage one, but few are paying attention"
"In stage three...a crowd of interested parties ignores the dentist and circles around me all evening. A succession of enthusiastic individuals takes me aside to ask what stocks they should buy. Even the dentist is asking me what stocks he should buy"
"In stage four, once again they're crowded around me-but this time it's to tell me what stocks I should buy. Even the dentist has three or four tips, and in the next few days I look up his recommendations in the newspaper and they've all gone up. When the neighbors tell me what to buy and then I wish I had taken their advice, it's a sure sign that the market has reached the top and is due for a tumble"
(P87-88) ------------- 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 |
Posted By: ndzapak
Date Posted: 04/Nov/2008 at 10:12pm
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The quote below from Peter Lynch is particularly relevant in present times
Lynch sums up stock investing and his outlook best:
"Frequent follies notwithstanding, I continue to be optimistic about America, Americans, and investing in general. When you invest in stocks, you have to have a basic faith in human nature, in capitalism, in the country at large, and in future prosperity in general. So far, nothing’s been strong enough to shake me out of it." ------------- the Equitydesk is the best |
Posted By: omshivaya
Date Posted: 04/Nov/2008 at 11:02pm
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"If I could avoid a single stock, it would be the hottest stock in the hottest industry, the one that gets the most favorable publicity, the one that every investor hears about in the car pool or on the commuter train-and succumbing to the social pressure, often buys.
Hot stocks can go up fast...but since there's nothing but hope and thin air to support them, they fall as quickly"
(P149) ------------- 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 |
Posted By: master
Date Posted: 04/Nov/2008 at 11:15pm
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Pardon me for saying, but frankly why are u spending time typing out from a book. If someone wants to read, one can buy it, borrow it or go to a library. ------------- Someone’s sitting in shade today because someone planted a tree long time ago. |
Posted By: omshivaya
Date Posted: 04/Nov/2008 at 11:33pm
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I wanted to keep Peter Lynch's thoughts posted at TED. But someday later, I may want to post something randomly from Peter Lynch(not from 'One Up...') and hence this topic.
By typing, the words also get ingrained into my head too...hence helps me too indirectly.
Is there a problem master jee? ------------- 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 |
Posted By: master
Date Posted: 04/Nov/2008 at 11:55pm
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No problem at all... carry on ------------- Someone’s sitting in shade today because someone planted a tree long time ago. |
Posted By: India_Bull
Date Posted: 04/Nov/2008 at 1:22am
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Keep up the good work Omjee, I read somewhere that one time writing is equivalent to 100 times reading. ------------- India_Bull forever Bull ! www.kapilcomedynights.com |
Posted By: Mohan
Date Posted: 04/Nov/2008 at 1:29am
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Keep it up OM Babu. ------------- Be fearful when others are greedy and be greedy when others are fearful. |
Posted By: omshivaya
Date Posted: 05/Nov/2008 at 1:30pm
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Hey...thanks all you guys...India Bull jee, master jee and Mohan jee. ------------- 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 |
Posted By: omshivaya
Date Posted: 05/Nov/2008 at 3:58pm
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"A fast-growing company doesn't necessarily have to belong to a fast-growing industry. As a matter of fact, I'd rather it didn't. All it needs is the room to expand within a slow-growing industry. Beer is a slow-growing industry, but Anheuser-Busch has been a fast grower by taking over market share. The hotel business grows at only 2 percent a year, but Marriott was able to grow at 20 percent by capturing a larger segment of that market over the last decade"
(P118)
(My notes: Reminds me of a certain TED thread titled something like "Pvt. banks taking over marketshare from PSU Banks") ------------- 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 |
Posted By: omshivaya
Date Posted: 05/Nov/2008 at 6:07pm
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"If you find a stock with little or no institutional ownership, you've found a potential winner. Find a company that no analyst has ever visited, or that no analyst would admit knowing about, and you've got a double winner
...I am equally enthusiastic about once-popular stocks that professionals have abandoned, as many abandoned Chrysler at the bottom and Exxon at the bottom, just before both began to rebound."
(P136) ------------- 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 |
Posted By: subu76
Date Posted: 05/Nov/2008 at 12:37pm
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Thanks for the posts.
Very refreshing reading this after watching 1/2 an hour of stupidity on TV where everyone is trying to predict why certain sectors behaved in a certain way TODAY. I think i'll stop watching tv18 completly now and watch the cartoon channel instead. The lack of any discussion on fundamentals during entire shows of Udayan is really very dissapointing. It's all about trading range and other bull.
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Posted By: omshivaya
Date Posted: 05/Nov/2008 at 10:44am
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"The market ought to be irrelevant. If I could convince you of this one thing, I'd feel this book had done its job. And if you don't believe me, believe Warren Buffett. "As far as I'm concerned,", Buffett has written, "the stock market doesn't exist. It is there only as a reference to see if anybody is offering to do anything foolish"
...What makes him(Buffett) the greatest investor of all time is that during a certain period when he thought stocks were grossly overpriced, he sold everything and returned all the money to his partners at a sizable profit to them. The voluntary returning of money that others would gladly pay you to continue to manage is, in my experience, unique in the history of finance.
I'd love to be able to predict markets and anticipate recessions, but since that's impossible, I'm as satisfied to search out profitable companies as Buffett is. I've made money even in lousy markets, and vice versa. Several of my favorite tenbaggers made their biggest moves during bad markets."
(P89) ------------- 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 |
Posted By: 9StockPortfolio
Date Posted: 05/Nov/2008 at 10:52am
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Just because a company is doing poorly doesn't mean it can't do worse.
Just because the price goes up doesn't mean you are right. Just because
the price goes down doesn't mean you are wrong. A stock does not know
that you own it. .. Peter Lynch ------------- Pursuit of Value |
Posted By: omshivaya
Date Posted: 05/Nov/2008 at 11:09am
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Very nice quote. Thanks for sharing sir. Although as far as I know, that quote came from Warren Buffett. http://www.youtube.com/watch?v=s_8fntwg8GU - Here is the video where Buffett speaks on the same. ------------- 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 |
Posted By: omshivaya
Date Posted: 06/Nov/2008 at 2:55pm
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(My notes: On betting proportionately or what could be called diversification in concentration) "Consistent winners raise their bet as their position strengthens, and they exit the game when the odds are against them, while consistent losers hang on to the bitter end of every expensive pot, hoping for miracles and enjoying the thrill of defeat. ...Consistent winners also resign themselves to the fact that they'll occassionally be dealt three aces and bet the limit, only to lose to a hidden royal flush...People who succeed in the stock market also accept periodic losses, setbacks, and unexpected occurrences. Calamitous drops do not scare them out of the game.
...They realize that stock market is not pure science, and not like chess, where the superior position always wins. If seven out of ten of my stocks perform as expected, then I'm delighted. If six out of ten of my stocks perform as expected, then I'm thankful. Six out of ten is all it takes to produce an enviable record on Wall Street."
(P75) ------------- 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 |
Posted By: omshivaya
Date Posted: 07/Nov/2008 at 1:54pm
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"...what makes a company valuable, and why it will be more valuable tomorrow than it is today? There are many theories, but to me, it always comes down to earnings and assets. Especially earnings. Sometimes it takes years for the stock price to catch up to a company's value, and the down periods last so long that investors begin to doubt that will ever happen. But value always wins out"
...Although it is easy to forget sometimes, a share of stock is not a lottery ticket. It's part ownership of a business."
(P161-162) ------------- 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 |
Posted By: 9StockPortfolio
Date Posted: 07/Nov/2008 at 9:24pm
May be WB elaborating the same.. I read it in Peter Lynch's Interview on MSN money or CNN? I clicked the link in your thread, that was an interview of peter lynch taken in 1989 on publishing One up on Wall street. Last paragraph has these lines.. Or just turn up to Page 16 of the Book.. Under Important Points to remember.. Dear, do you have a soft copy of it? please send me at [email protected] is possible. ------------- Pursuit of Value |
Posted By: omshivaya
Date Posted: 07/Nov/2008 at 11:19pm
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Okay, thanks for the info. Appreciate it!! I am sorry but I dont have a soft copy of 'One Up...' :-) ------------- 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 |
Posted By: subu76
Date Posted: 07/Nov/2008 at 11:19pm
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Some masala from Lynch: (courtesy The warren buffett way by Hagstorm)
Peter Lynch
"One weekday evening early in 1989 I was home and when the telephone rang. Our middle daughter, Annie, then 11, was first to the phone. She told that Warren Buffett was calling. I was convinced this had to be a prank. The caller started by saying "This is Warren Buffett from Omaha (as if I might confuse him with some other Warren Buffett). I just finished your book and loved it.and would like to quote one of your sentences in the Bershire annual report. I have always wanted to do a book, but i never have gotten around to it" He spoke very rapidly and with lots of enthusiasm and must have said forty words in fifteen to twenty seconds, including a couple of laughs and chucles"
Here's what WB put in his 1988 annual report:
We are just the opposite of those who hurry to sell and book profits when companies perform well but who tenaciously hang on to businesses that disappoint. Peter Lynch aptly likens such behavior to cutting the flowers and watering the weeds.
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Posted By: shankar
Date Posted: 08/Nov/2008 at 6:33pm
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I am guilty of pulling flowers and watering weeds many times Subu, but thankfully all those happened in the bull market, and the bull market like a kind goddess, forgives all mistakes. It is the bear market that makes qualitative selection and proper entry and exit such interesting concepts.
That said, I really must bow my head to Peter Lynch for lighting up the way for me in one of my picks. It was his glorious analysis and exhortation in his book Beating the Street that finally convinced me to invest in regional bank stocks. Believe me, what he says about regional banks in that book is applicable to India too. Some of them have given returns of fast-growing companies but trade at PE ratios fit for utility stocks.  ------------- When the tide runs out, you can see who has been swimming naked - Warren Buffett |
Posted By: 9StockPortfolio
Date Posted: 09/Nov/2008 at 9:44pm
Thats fine, Om, I bought the book yesterday, and I must admit that, it's wonderful book to read. Just like The Buffet way. Thanks for your thread that brought this book to me. 9StockPortfolio ------------- Pursuit of Value |
Posted By: omshivaya
Date Posted: 09/Nov/2008 at 11:38pm
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"Asking about the competition is one of my favorite techniques for finding promising new stocks. Muckamucks speak negatively about the competition ninety-five percent of the time, and it doesn't mean much. But when an executive of one company admits he's impressed by another company, you can bet that company is doing something right.
Nothing could be more bullish than begrudging admiration from a rival"
(P177)
PS: Glad that you got hold of the book 9Stock jee. Happy Reading ------------- 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 |
Posted By: manish_okhade
Date Posted: 10/Nov/2008 at 2:07pm
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I spent a lot of time reading investing strategies from proven people. Still i have one doubt, Is share prise is slave to earnings or slave to market sentiments.
For example in past bull phase one can buy any stock irrespective of fundamentals and earn a lot while in recent bear phase i am seeing many companies whose earnings growth on quarteraly basis is as good as that of bull phase but their shares are not moving up, at least not as they used to be in bull phase.
So is share mkt a purely matter of sentiments of group of participating people or its earning which truly reflects share to go up? Point is that whats the best investing strategy i.e. to buy when sentiments are down and wait (indefinitly) till sentiments recover irrespective of underlying fundamentals?
Moreover when i look at the all the MFs they are all -ve now just beacause of sensex crashing. MF are run by truly smart people (IIT,IIM) and they live their life on Dalal street, how can one say that all of them are dumb! In spite of so much smartness money comes only and only if mkt sentiments recovers or FII invests or say some good global news comes but not due to fundamentals.
Any comment from senior members will help to clear this dilemma.
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Posted By: hallmark
Date Posted: 10/Nov/2008 at 5:31pm
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From my limited knowledge, most of the mutual fund investors who had waited in january and october, had bailed out just at the wrong time. Right before the market hit it's bottom. That is a dumb thing to do.
Every strategy is a success in the bull market, every fool can make money. I am amazed how traders in the book "Stock Market Wizards" over a 5-7 year period are able to grow at 30-70% yearly. Maybe after the tech meltdown from 2000 onwards, things will be different.
My essential theory that I have understood first, that people should follow a strategy which is inline with their personality. In my case, i am an investor and can live with 20-40% returns from midcaps every year. Traders in most cases, are people who are highly sexed or might have lost their virginity at an early age or I would say have one-night stands.
The second theory I would say is have an independent mind and framework in trading or investing.
The third strategy to understand is even in the case of American equity markets, in the case of GE Warren Buffett has lent money at 10% interest. In developed markets, it pays to be a trader. Whereas in Indian equity markets, It is dumb not to be a investor.
We can learn from each other.
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Posted By: hallmark
Date Posted: 10/Nov/2008 at 5:40pm
| It is important to remember that most of the traders do not succeed. People with the following attributes which I have enumerated are successful. |
Posted By: omshivaya
Date Posted: 10/Nov/2008 at 5:46pm
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"You can see the importance of earnings on any chart that has an earnings line running alongside the stock price...On chart after chart the two lines will move in tandem, or if the stock price strays away from the earnings line, sooner or later it will come back to the earnings.
...ultimately the earnings will decide the fate of a stock. People may bet on the hourly wiggles in the market but it's the earnings that waggle the wiggles, long-term. Now and then you'll find an exception, but if you examine the charts of stocks you own, you'll likely see the relationship I'm describing."
(P163-164) ------------- 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 |
Posted By: manish_okhade
Date Posted: 10/Nov/2008 at 6:03pm
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But what's the reason for deviation between earning slope and share prise slope in Bear and Bull phase? Is'nt it related to mkt sentiments? I mean gain is more in Bull phase and less in Bear phase for same growth rate in earnings for both the period.
So ideally does'nt it make sense to do investment only in Bull phase when gain is naturally outstanding? While in Bear phase its moderate as well as volatile.
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Posted By: omshivaya
Date Posted: 10/Nov/2008 at 6:15pm
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If someone wants to make incredible gains, then bear market provides that perfect door to invest in companies that are growing earnings but whose stock prices are not moving up. Anyone who has made disproportionate gains would likely have invested in the bad phase where big bargains were available. Of course, the herd actually does the opposite: investing only when bull market has resumed and panicking & selling when bear market shows its face. Lynch explains this behavior nicely in his http://www.theequitydesk.com/forum/forum_posts.asp?TID=1954&PN=2 - (post number 6)
The deviation in earnings and stock price lines could be because of lots of things: not much publicity to the company, not much institution ownership and at other times it could be market sentiments as is the case in current market scenario.
Someone can view "bad market sentiment" as a blessing(if he likes seeing good companies at bargain prices) or as a curse(if he is out of cash or has a herd mentality)
All the above is in my humble opinion as I am also no expert...maybe Basant jee would be able to provide a much satisfying answer. ------------- 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 |
Posted By: cooldude
Date Posted: 10/Nov/2008 at 7:09pm
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Speaking of returns, Peter Lynch has given the highest 20 year return in mutual fund industry. He has achieved a return of 25.8% per year for 20 years (i.e till December 31, 1994). I guess we can call him the Bradman of the mutual fund industry. ------------- You can't see the future through the rearview mirror - Peter Lynch |
Posted By: omshivaya
Date Posted: 10/Nov/2008 at 7:28pm
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"Once you got into the game seriously, you'd be boggled by the examples of stocks that go down even though the earnings are up, because profssional analysts and their institutional clients expected the earnings to be higher, or stocks that go up even though earnings are down, because that same cheering section expected the earnings to be lower. These are short-term anomalies, but nonetheless frustrating to the shareholder who notices them. If you can't predict fuure earnings, at least you can find out how a company pans to increase its earnings. Then you can check periodically to see if the plans are working out."
(P173) ------------- 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 |
Posted By: omshivaya
Date Posted: 11/Nov/2008 at 1:49pm
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http://www.investopedia.com/articles/stocks/06/PeterLynch.asp - Lynch once conducted a study to determine whether market timing was an effective strategy. According to the results of the study, if an investor had invested $1,000 a year on the absolute high day of the year for 30 years from 1965-1995, that investor would have earned a compounded return of 10.6% for the 30-year period.
If another investor also invests $1,000 a year every year for the same period on the lowest day of the year, this investor would earn an 11.7% compounded return over the 30-year period.
Therefore, after 30 years of the worst possible market timing, the first investor only trailed in his returns by 1.1% per year! As a result, Lynch believes that trying to predict the short-term fluctuations of the market just isn't worth the effort. If the company is strong, it will earn more and the stock will appreciate in value. By keeping it simple, Lynch allowed his focus to go to the most important task – finding great companies.
------------- 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 |
Posted By: omshivaya
Date Posted: 11/Nov/2008 at 2:10pm
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"You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets."
"When stocks are attractive, you buy them. Sure, they can go lower. I've bought stocks at $12 that went to $2, but then they later went to $30. You just don't know when you can find the bottom." "I've found that when the market's going down and you buy funds wisely, at some point in the future you will be happy. You won't get there by reading 'Now is the time to buy.'" -Peter Lynch ------------- 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 |
Posted By: manish_okhade
Date Posted: 11/Nov/2008 at 7:51pm
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Hey Cooldude,
25% return till 20 yrs is truely outstanding. Just wondering if Peter Lynch is managing some fund in India then still he would have given 25% in recent crash !!
Well not a single MF Mgr is able to do so in India. Does it mean in India we do not have any equity mgr even remotly close to Peter Lynch! It looks really odd to me.
Are you sure your input is correct? In 20 yrs mkt must have gone through many crashes.
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Posted By: subu76
Date Posted: 11/Nov/2008 at 8:26pm
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CAGR is what he meant.
So each rupeee would have become 86 bucks if you returned 25% for 20 years.
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Posted By: cooldude
Date Posted: 12/Nov/2008 at 12:48pm
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Another quote by Peter Lynch: "Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in the corrections themselves." ------------- You can't see the future through the rearview mirror - Peter Lynch |
Posted By: omshivaya
Date Posted: 12/Nov/2008 at 4:14pm
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Once I've established the size of the copany relative to others in a particular industry, next I place it into one of the six general categories: slow growers, stalwarts, fast growers, cyclicals, asset plays, and turnarounds. Countries have a growth rate(GNP), industries have a growth rate and so does an individual company. The Slow Growers
Usually these large and aging companies are expected to grow slightly faster than the GNP(gross national product). Slow growers didn't start out that way. They started out as fast growers and eventually pooped out, either because they had gone as far as they could, or else they got too tired to make the most of their chances.
The Stalwarts
Stalwarts are companies which are not exactly agile climbers, but they're faster than slow growers
...Most of these are huge companies, and it's unusual to get a tenbagger out of a Bristol-Myers or a Coca-Cola. How much can you expect to squeeze out of a Colgate-Palmolive? Fifty percent in two years is what you'd be delighted to get from Colgate-Palmolive in most normal circumstances.
...Stalwarts are stocks that I generally buy for a 30 to 50 percent gain, then sell and repeat the process with similar issues that haven't yet appreciated
...I always keep some stalwarts in my portfolio because they offer pretty good protection during recessions and hard times.
The Fast Growers
These are among my favorite investments: small, aggressive new enterprises that grow at 20 to 25 percent a year. If you choose wisely, this is the land of the 10- to 40-baggers, and even 200 baggers.
...There's plenty of risk in fast growers, especially in the younger companies that tend to be overzealous and underfinanced. Aluminium was a great growth industry even in into the 1960s and so was carpets, but when these industries matured, the companies within them became GNP-type growers, and the stock market yawned.
Once a fast growers gets too big, it faces the same dilemma as Gulliver in Lilliput. There's simply no place for it to stretch out. But for as long as they can keep it up, fast growers are the big winners in the stock market. They trick is figuring out when they'll stop growing, and how much to pay for the growth.
The Cyclicals
A cyclical is a company whose sales and profits rise and fall in regular if not completely predictable fashion. In a growth industry, business just keeps expanding, but in a cyclical industry, it expands and contracts, then expands and contracts again.
The autos and the airlines, the tire companies...are all cyclicals. Even defence companies behave like cyclicals, since their profits' rise and fall depends on the policies of various administrations.
The Turnarounds
These companies are battered, depressed, and often can barely drag themselves into Chapter 11(bankruptcy)
...The only positive aspect about companies that diworseify themselves into sorry shape are future candidates for turnarounds. Goodyear has gotten out of the oil business, sold off some sluggish subsidiaries, and rededicated itself to the thing it does best: making tires.
The Asset Plays
An asspet play is any company that's sitting on something valuable that you know about, but that the Wall Street crowd has overlooked. They asset may be as simple as as pile of cash. Sometimes it's real estate. With so many analysts and corporate raiders snooping around, it doesn't seem possible that there are any assets that Wall Street hasn't noticed, but believe me, there are.
(P111-125) ------------- 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 |
Posted By: omshivaya
Date Posted: 12/Nov/2008 at 11:02pm
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Getting the story on a company is a lot easier if you understand the basic business...If it is a choice between owning a stock in a fine company with excellent management in a highly competitive and complex industry, or a humdrum company with mediocre management in a simpleminded industry with no competition, I'd rather take the latter.
"Any idiot can run this business" is one characteristic of the perfect company, the kind of stock I dream about.
(P130) ------------- 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 |
Posted By: Mohan
Date Posted: 12/Nov/2008 at 11:47pm
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Ombabu, If I may add to your wonderful list. Peter Principle # 4 You can't see the future through a rearview mirror. Source : Beating the Street. ------------- Be fearful when others are greedy and be greedy when others are fearful. |
Posted By: omshivaya
Date Posted: 13/Nov/2008 at 6:18pm
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"There are three phases to a growth company's life: the start-up phase, during which it works out the kinks in the basic business; the rapid expansion phase, during which it moves into new markets; and the mature phase, also known as the saturation phase, when it begins to prepare for the fact that there's no easy way to continue to expand. Each of these phases may last several years. The first phase is the riskiest for the investor, because the success of the enterprise isn't yet established. The second phase is the safest, and also where the most money is made, because the company is growing simply by duplicating its successful formula. The third phase is the most problematic, because the company runs into its limitations"
(P222)
PPS: Thanks for the addition Mohan jee, appreciate it!! ------------- 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 |
Posted By: omshivaya
Date Posted: 18/Nov/2008 at 6:01pm
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Reading the Reports
"...turn directly to the Consolidated Balance Sheet printed on the cheaper paper. The balance sheet lists the assets and liabilities. That's critical to me"
"...then I go to the other half of the balance sheet, down to the entry that says "long-term debt". When cash increases relative to debt, it's an improving balance sheet. I ignore short-term debt in my calculations. I simply assume that the company's other assets(inventories and so forth) are valuable enough to cover the short-term debt, and I leave it at that."
"...next I move on to the other 10-Year Financial Summary, to get a look at the ten-year picture. Suppose I see that the number of outstanding shares has been reduced in each of the past two years, it means the company has been buying back its own shares, another positive step"
Here, and not in particular order of importance, are the various numbers worth noticing:
Percent of Sales
The Price/Earnings Ratio
The Cash Position
The Debt Factor
Dividends
Book Value
More Hidden Assets
Cash Flow
Inventories
Pension Plans
Growth Rate
The Bottom Line
(P194-221)
PS: I shall be out for about 2 weeks from a few days from today, hence wouldn't be able to post here till then. Good luck everyone. ------------- 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 |
Posted By: basant
Date Posted: 18/Nov/2008 at 7:25am
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Enjoy your much needed break! ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: omshivaya
Date Posted: 18/Nov/2008 at 11:49am
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Thank you very much Basant jee!! ------------- 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 |
Posted By: arunshah2k
Date Posted: 19/Nov/2008 at 11:22am
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Here is another one: Peter Lynch's Even Bigger Picture: "In 39 out of 40 stock-market corrections in modern history, I would have sold all my stocks and been sorry. Even from the Big One, stocks eventually come back." Furthermore, "Because the famous Crash was followed by the Depression, we've learned to associate stock-market collaspes with economic collapses, and we continue to believe that the former will lead to the latter. This misguided conviction persists in the public mind, even though we had an underpublicized crash in 1972 that was almost as severe as the one in 1929 (stocks in wonderful companies like Taco Bell declined from $15 to $1) and it didn't lead to an economic collapse nor did the Great Correction of 1987."...the story of the 40 declines continues to comfort me during the gloomy periods when you and I have another chance in a long string of chances to buy great companies at bargain prices." |
Posted By: kanagala
Date Posted: 20/Nov/2008 at 9:24pm
Thanks for putting this up. ------------- While one person hesitates because he feels inferior, the other is busy making mistakes and becoming superior. |
Posted By: kumardiwesh
Date Posted: 20/Nov/2008 at 11:45pm
Is this crash the odd one out of 40  ------------- "History does not tell you the probability of future financial things happening" - Warren Buffett |
Posted By: kaushalchawla
Date Posted: 20/Nov/2008 at 12:02pm
even i thought the same when i read the other post.....this credit collapse is going to be a big one......infact has already become a big and self sustaining one...businesses are getting impacted, bankruptcies are increasing, unemployment numbers are soaring.........i was earlier waiting for 10K when this crisis initially started.......but now it looks like anything is possible......even 5-6K is possible...FIIs need money and they will do everything to save their positions in western world.......who would have thought abt 8.5K an year back.
------------- Warm Regards, Kaushal |
Posted By: arunshah2k
Date Posted: 20/Nov/2008 at 7:25am
Well, if this crisis really becomes big or close to the Great Depression, then the first thing we should start worrying will be about our jobs. All industries will get affected and with production stopping, people buying less, there will have to be job cuts across all industries. I always believe that stock markets reflect the state of the economy in the long run. So if Sensex does reach 5000 and is continuously trading at 5000 for many months, then we can rest be assured that something is wrong with economy. And we better start saving money in liquid cash (not in banks as they may not exist)and not investing in equities |
Posted By: kaushalchawla
Date Posted: 20/Nov/2008 at 7:38am
I am in India's one of the most prestigious companies (& hence safest place)!!! I am worried a lot about the world and specifically India!! (mera desh  ) I am in US and have been observing this crisis attentively and I am very worried......I hope my worries turn out baseless!!! but each and every word of my earlier post are my genuine thougts.------------- Warm Regards, Kaushal |
Posted By: kaushalchawla
Date Posted: 20/Nov/2008 at 7:45am
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I just read the news: Citi Weighs Its Options, Including Firm's Sale http://online.wsj.com/article/SB122722907151946371.html Citigroup May Seek Merger as Stock Plunges Further http://www.cnbc.com/id/27829103 Moderator ji, please move this post to an appropriate thread, if required. Thank you. ------------- Warm Regards, Kaushal |
Posted By: kanagala
Date Posted: 21/Nov/2008 at 10:26pm
May be in the case of US. I started hearing some of people stressing the need of getting out of dollar and invest in emerging markets. ------------- While one person hesitates because he feels inferior, the other is busy making mistakes and becoming superior. |
Posted By: kanagala
Date Posted: 21/Nov/2008 at 10:27pm
Rally in the emerging markets is attribed to hope of citi sale. ------------- While one person hesitates because he feels inferior, the other is busy making mistakes and becoming superior. |
Posted By: kaushalchawla
Date Posted: 21/Nov/2008 at 11:28pm
Please detail it out a bit for me.
Do you want to say that an organisation is breaking up and market is rejoicing during this bad time....Please explain your view. ------------- Warm Regards, Kaushal |
Posted By: omshivaya
Date Posted: 04/Dec/2008 at 1:29pm
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I am back. What an eventful 2 weeks it has been in India, while I was visiting my quiet old hometown. Anyway, may all the souls rest in peace. Basant jee, pranam lena and all other friends at TED, glad to be back at my second home. ------------- 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 |
Posted By: India_Bull
Date Posted: 04/Dec/2008 at 1:42pm
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Welcome back Omjee, Which place you have been to and how was your vacation ? ------------- India_Bull forever Bull ! www.kapilcomedynights.com |
Posted By: omshivaya
Date Posted: 04/Dec/2008 at 6:54pm
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I had been to my home village near Hoogly(in west bengal) full of greenery and ponds as far & wide as the eyes can see. I was actually out for some family event and it was peaceful: my vacation that is. Thanks for asking India Bull jee. Hope you are well too. ------------- 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 |
Posted By: kumardiwesh
Date Posted: 28/Jan/2009 at 1:02am
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"Thousands of experts study overbought indicators, oversold indicators, head-and-shoulder patterns, put-call ratios, the Fed's policy on money supply, foreign investment, the movement of the constellations through the heavens, and the moss on oak trees, and they can't predict markets with any useful consistency, any more than the gizzard squeezers could tell the Roman emperors when the Huns would attack." - Peter Lynch ------------- "History does not tell you the probability of future financial things happening" - Warren Buffett |
Posted By: valuepicks
Date Posted: 26/Mar/2009 at 2:10pm
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Hi,
From a Peter Lynch way, I see couple of things:
1. Organized travel: In the recent years, Citi cabs, private travels for corporate are on rise. Meru cabs is an interesting organized development. But I guess, this is a not a listed company yet.
2. Disposal hygiene: Liquid soaps, tissue papers etc., I found Pudumjee Group is the largest tissue paper manufacturer. They also manufacture liquid soap dispensers, kitchen towels and tissues, krepe paper used in packaging etc.,
Pudumjee Hygiene, a subsidairy of Pudumjee Inudstries, has been creating branks like GreenLime, which I am sure, some of you have comes across in your offices or hoardings on road.
I did a study glance through their financials - nothing attractive:
Low OPM - 2-5%.
Low MCAP - 17 cr.
Low EPS - 1.19
P/E - 7.73!!
Face vaue - 2
They had a split last march.
But disposals products is an interesting market to be in. If they do it right, it has tremendous potential.
Can anyone throw some light on this small cap stock. How is the management quality or prior experience with this company?
Any inputs are appreciated.
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Posted By: basant
Date Posted: 26/Mar/2009 at 2:23pm
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Inmteresting thought but I have no idea on these two companies.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: valuepicks
Date Posted: 26/Mar/2009 at 2:58pm
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Basanji,
You can find some more information about Pudumjee Hygiene at http://www.pudumjeehygiene.com - http://www.pudumjeehygiene.com
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Posted By: wiseowl
Date Posted: 26/Mar/2009 at 3:12pm
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Pudumjee Pulp and Paper Mills is their listed entity. Is the toilet / tissue paper business run by the same ?
------------- You alone are responsible for your actions. |
Posted By: valuepicks
Date Posted: 26/Mar/2009 at 7:35pm
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wiseowl,
To my understanding Pudumjee Pulp and Mills is the holding company for which Pudumjee Industries is a subsidiary.
Pudumjee Hygiene Products is again a subsidiary of Pudumjee Industries.
So, I find two listed entities - Pudumjee Industries; Pudumjee Pulp & Mills.
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Posted By: subu76
Date Posted: 27/May/2009 at 1:05pm
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An interesting interaction between Bill Miller and Peter Lynch. I especially liked the boldfaced line:
In 1984, Mr. Miller paid a visit to influential Fidelity Investments manager Peter Lynch, who suggested Mr. Miller take a look at Fannie Mae. Much like today, the mortgage company had a portfolio full of troubled loans. Traders were betting it would go bust.
Mr. Miller found Fannie's case compelling: The bad loans would soon roll off its books, he recalls, the government-backed company would be able to borrow at preferred rates and its low cost structure could make it hugely profitable. "Is this thing really trading at only two times what it's going to earn in three or four years?" Mr. Miller recalls asking Mr. Lynch in a follow-up phone call.
Mr. Miller figures that by the time he sold out of Fannie in 2005, he had made 50 times his money.
http://online.wsj.com/article/SB122886123425292617.html - Link
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Posted By: manish_okhade
Date Posted: 25/Jul/2009 at 9:59am
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I am right now reading Beating Street from Peter Lynch. This book is simpley awsome!!! In this book Lynch has opened his heart to his investing process and full of wisdome which Lynch has acquired while running Megallan. There are many eye popping facts on background news that how he ran the fund. Few learnings are written below:
1) Books says, contrary to othe MFs Lynch invested heavily but in small
proportion in small and mid caps unlike large caps. Its for simple reason
that he was seeing the bargains there!
2) Second way to inevest is to looks at special situation opportunities like
Chrysler.Lynch invested heavily (highest 5% of assets as per rule)
when others were prediciting bankruptsy to Chrysler. Lynch made 50
bagger from C hrysler.
3) Lynch loves cyclicals and good at detecting down trend and uptrends.
4) Lynch spent lots of time in meeting CEOs and attending investor
meets. By asking simple questions like hows the your competitor doing
or who is taking orders from you were enough tips for Lynch to invest in
those companies.
5) One most important info Lynch said that many MF Mgrs invest in large
caps just for safety while it should be opposite!!!
A very very good read for serious investors.
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Posted By: subu76
Date Posted: 10/Aug/2009 at 2:17am
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Risks of following a star investor.... Those who follow RJ picks might also be interested
http://www.turtletrader.com/PeterLynch.pdf - http://www.turtletrader.com/PeterLynch.pdf
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Posted By: Hitesh Shah
Date Posted: 10/Aug/2009 at 7:43am
Great link!  At least Lynch has / had the honesty / guts to admit something was wrong. Unlike some trader / investors in India. I hope your post is an guiding light to those who wait for quarterly portfolio updates of X, Y, & Z. Mr. Lynch says he was baffled. "It was a total surprise, out of left field," he says. "It's a terrible tragedy." Even the best investors have their misses, and Mr. Lynch freely admits this was one. "Just because I buy something doesn't mean it's going to work," he says. "People have to do their own homework." Mr. Lynch says he never sold any of his SafeScript stock, and took a beating along with others when it tanked. But unlike those who mimicked his moves, he might still salvage something. After the trouble broke, a buyout group came forward and agreed to buy all of SafeScript for $3 million. According to people familiar with the situation, the buyers include Mr. Lynch. He declines to say one way or the other. The case shows how badly things can go wrong as small investors try to ape the moves of celebrity stock-pickers. This copycat behavior is made easier by the Internet, because investors can quickly find out if an investment star has bought a 5% stake in a company and filed the required report to the SEC. Big investors sometimes are getting stock more cheaply than the ordinary investor, by buying bonds convertible into stock or by doing deals with the target company such as purchasing shares directly from it. ------------- |
Posted By: manish_okhade
Date Posted: 10/Aug/2009 at 10:34am
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Once somebody has asked the question to Prof Mankekar that whether he should buy his few stocks. Pet comes the reply - if you want to buy then buy entire portfolio!
Words of gem to those who follow legends.
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Posted By: chimak10
Date Posted: 10/Aug/2009 at 10:40am
| But look at the companies name SAFESCRIPT. Wasn't that enough of warning signs. |
Posted By: subu76
Date Posted: 08/Sep/2009 at 10:14am
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Peter Lynch's article about Charlie Silk.
Peter Lynch once called Charlier Silk the world's best amateur investor
http://files.meetup.com/81154/Charlie%20Silks%20150-Bagger%20by%20Peter%20Lynch.doc - http://files.meetup.com/81154/Charlie%20Silk's%20150-Bagger%20by%20Peter%20Lynch.doc
Also,Peter Lynch used to write for the Worth Magazine in the 1990s.
I'm unable to locate more articles on the web...please do share if you can locate them.
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Posted By: prashantmohta
Date Posted: 08/Sep/2009 at 11:12am
| Kya baat hai subuji, can we have some more |
Posted By: subu76
Date Posted: 08/Sep/2009 at 11:53am
| Damn!!! Unable to locate any more articles |
Posted By: Hitesh Shah
Date Posted: 09/Sep/2009 at 12:18pm
The more well-read one becomes, the more difficult it is to acquire new knowledge ....  Fortunately, some of us are far from having that problem  . ------------- |
Posted By: Mohan
Date Posted: 09/Sep/2009 at 12:21pm
Fortunately/Unfortunately ? Hard drive is full ? or CPU is overloaded ? ------------- Be fearful when others are greedy and be greedy when others are fearful. |
Posted By: Hitesh Shah
Date Posted: 09/Sep/2009 at 12:31pm
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Forget hard drive, even if I travel at warp drive, I won't be able to catch up.
------------- |
Posted By: prashantmohta
Date Posted: 13/Sep/2009 at 12:15pm
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http://www.forbes.com/2009/02/23/lynch-fidelity-magellan-personal-finance_peter_lynch.html
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Posted By: venkat
Date Posted: 28/Sep/2009 at 3:56pm
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The person that turns over the most rocks wins the game. And that's always been my philosophy. http://www.woopidoo.com/business_quotes/authors/peter-lynch-quotes.htm - Peter Lynch - http://www.woopidoo.com/business_quotes/action-quotes.htm - Action - http://www.woopidoo.com/business_quotes/success-quotes.htm - Success The key to making money in stocks is not to get scared out of them. http://www.woopidoo.com/business_quotes/authors/peter-lynch-quotes.htm - Peter Lynch - http://www.woopidoo.com/business_quotes/money-quotes.htm - Money - http://www.woopidoo.com/business_quotes/stock-quotes.htm - Stocks - http://www.woopidoo.com/business_quotes/fear-quotes.htm - Fear I think you have to learn that there's a company behind every stock, and that there's only one real reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies. http://www.woopidoo.com/business_quotes/authors/peter-lynch-quotes.htm - Peter Lynch - http://www.woopidoo.com/business_quotes/company-quotes.htm - Companies - http://www.woopidoo.com/business_quotes/stock-quotes.htm - Stocks In this business if you're good, you're right six times out of ten. You're never going to be right nine times out of ten. http://www.woopidoo.com/business_quotes/authors/peter-lynch-quotes.htm - Peter Lynch - http://www.woopidoo.com/business_quotes/luck-quotes.htm - Luck - http://www.woopidoo.com/business_quotes/stock-market-quotes.htm - Stock Market - http://www.woopidoo.com/business_quotes/investing-quotes.htm - Investing You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets. http://www.woopidoo.com/business_quotes/authors/peter-lynch-quotes.htm - Peter Lynch - http://www.woopidoo.com/business_quotes/bear-market-quotes.htm - Bear Market - http://www.woopidoo.com/business_quotes/stock-market-quotes.htm - Stock Market - http://www.woopidoo.com/business_quotes/investing-quotes.htm - Investing When stocks are attractive, you buy them. Sure, they can go lower. I've bought stocks at $12 that went to $2, but then they later went to $30. You just don't know when you can find the bottom. http://www.woopidoo.com/business_quotes/authors/peter-lynch-quotes.htm - Peter Lynch - http://www.woopidoo.com/business_quotes/stock-quotes.htm - Stocks - http://www.woopidoo.com/business_quotes/profit-quotes.htm - Profits I've found that when the market's going down and you buy funds wisely, at some point in the future you will be happy. You won't get there by reading 'Now is the time to buy.' http://www.woopidoo.com/business_quotes/authors/peter-lynch-quotes.htm - Peter Lynch - http://www.woopidoo.com/business_quotes/bear-market-quotes.htm - Bear Market - http://www.woopidoo.com/business_quotes/investing-quotes.htm - Investing - http://www.woopidoo.com/business_quotes/happiness-quotes.htm - Happiness Go for a business that any idiot can run - because sooner or later, any idiot probably is going to run it. http://www.woopidoo.com/business_quotes/authors/peter-lynch-quotes.htm - Peter Lynch - http://www.woopidoo.com/business_quotes/management-quotes.htm - Management - http://www.woopidoo.com/business_quotes/business-quotes.htm - Business - http://www.woopidoo.com/business_quotes/investing-quotes.htm - Investing ------------- Life is always a fight....to finish at the start line. Problem-Use challenge, Tension-Use excitement,Ican't-Use i can,avoid no at the beginning of sentence. |
Posted By: venkat
Date Posted: 28/Sep/2009 at 3:58pm
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In the early 1980s, a young portfolio manager named Peter Lynch was becoming one of the most famous investors in the world, and for a very understandable reason – when he took over the Fidelity Magellan mutual fund in May of 1977 the assets of the fund were $20 million. He proceeded to turn it into the largest mutual fund in the world, outperforming the market by a mind-boggling 13.4% per year http://www.investopedia.com/terms/a/annualize.asp - annualized !
Lynch accomplished this by using very basic principles, which he was happy to share with just about anyone. Peter Lynch firmly believed that individual investors had inherent advantages over large institutions because the large firms either wouldn't or couldn't invest in http://www.investopedia.com/terms/s/small-cap.asp - smaller-cap companies that have yet to receive big attention from analysts or mutual funds. Whether you're a registered representative looking to find solid long-term picks for your clients or an individual investor striving to improve your returns, we'll introduce you how you can implement Lynch's time-tested strategy. Once his stellar track record running the Magellan Fund gained the widespread attention that usually follows great performance, Peter wrote several books outlining his philosophy on investing. They are great reads, but his core thesis can be summed up with three main tenets: only buy what you understand, always do your homework and invest for the long run. (To see our review of one of Lynch's books, check out http://www.investopedia.com/articles/basics/03/050803.asp - Ten Books Every Investor Should Read .) 1. Only Buy What You Understand According to Lynch, o First-hand observations and anecdotal evidence are a great start, but all great ideas need to be followed up with smart research. Don't be confused by Peter Lynch's homespun simplicity when it comes to doing diligent research – rigorous research was a cornerstone of his success. When following up on the initial spark of a great idea, Lynch highlights several fundamental values that he expected to be met for any stock worth buying: Lynch has said that "absent a lot of surprises, stocks are relatively predictable over 10-20 years. As to whether they're going to be higher or lower in two or three years, you might as well flip a coin to decide." It may seem surprising to hear such words from a http://www.investopedia.com/terms/w/wallstreet.asp - Wall Street legend, but it serves to highlight how fully he believed in his philosophies. He kept up his knowledge of the companies he owned, and as long as the story hadn't changed, he didn't sell. Lynch did not try to http://www.investopedia.com/terms/m/markettiming.asp - market time or predict the direction of the overall economy. In fact, Lynch once conducted a study to determine whether market timing was an effective strategy. According to the results of the study, if an investor had invested $1,000 a year on the absolute high day of the year for 30 years from 1965-1995, that investor would have earned a http://www.investopedia.com/terms/c/compound.asp - compounded return of 10.6% for the 30-year period. If another investor also invests $1,000 a year every year for the same period on the lowest day of the year, this investor would earn an 11.7% compounded return over the 30-year period. Therefore, after 30 years of the worst possible market timing, the first investor only trailed in his returns by 1.1% per year! As a result, Lynch believes that trying to predict the short-term fluctuations of the market just isn't worth the effort. If the company is strong, it will earn more and the stock will appreciate in value. By keeping it simple, Lynch allowed his focus to go to the most important task – finding great companies. (To learn more about value investing, see http://www.investopedia.com/articles/01/071801.asp - Warren Buffett: How He Does It and http://www.investopedia.com/articles/05/012705.asp - What Is Warren Buffett's Investing Style? ) Lynch coined the term " http://www.investopedia.com/terms/t/tenbagger.asp - tenbagger " to describe a stock that goes up in value ten-fold, or 1000%. These are the stocks that he was looking for when running the Magellan fund. Rule No.1 to finding a tenbagger is not selling the stock when it has gone up 40% or even 100%. Many fund managers these days look to trim or sell their winning stocks while adding to their losing positions. Peter Lynch felt that this amounted to "pulling the flowers and watering the weeds". (For more information, read http://www.investopedia.com/articles/05/021705.asp - Achieving Better Returns In Your Portfolio .) Even though he ran the risk of over-diversifying his fund (he owned thousands of stocks at certain times), Peter Lynch's performance and http://www.investopedia.com/terms/s/stockpick.asp - stock-picking ability stands for itself. He became a master at studying his environment and understanding the world both as it is and how it might be in the future. By applying his lessons and our own observations we can learn more about investing while interacting with our world, making the process of investing both more enjoyable and profitable. ------------- Life is always a fight....to finish at the start line. Problem-Use challenge, Tension-Use excitement,Ican't-Use i can,avoid no at the beginning of sentence. |
Posted By: venkat
Date Posted: 28/Sep/2009 at 4:03pm
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The Greatest Investors: Peter Lynch
Lynch graduated from He went to work for Fidelity Investments as an investment analyst, eventually becoming the firm's director of research, a position he held from 1974 to 1977. Lynch was named manager of the little known Magellan Fund in 1977 and achieved historic portfolio results in the ensuing years until his retirement in 1990. In 2007, Peter Lynch was serving as vice-chairman of Fidelity's investment adviser, Fidelity Management & Research Co. Since his retirement, he has been an active participant in a variety of philanthropic endeavors. Apart from this punishing work ethic, Lynch did consistently apply a set of eight fundamental principles to his stock selection process. According to an article by Kaushal Majmudar, a CFA at The Ridgewood Group, Lynch shares his checklist with the audience at an investment conference in
In picking stocks (good companies), Peter Lynch stuck to what he knew and/or could easily understand. That was a core position for him. He also dedicated himself to a level of due diligence and stock research that left few stones unturned. He shut out market http://www.investopedia.com/terms/n/noise.asp - noise and concentrated on a company's fundamentals, using a http://www.investopedia.com/terms/b/bottomupinvesting.asp - bottom-up approach . He only invested for the long run and paid little attention to short-term market fluctuations. "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." ------------- Life is always a fight....to finish at the start line. Problem-Use challenge, Tension-Use excitement,Ican't-Use i can,avoid no at the beginning of sentence. |
Posted By: subu76
Date Posted: 28/Sep/2009 at 5:13pm
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Peter Lynch from his book's preface. http://www.amazon.com/One-Wall-Street-Already-Market/dp/product-description/0140127925 - Link
Back to Microsoft, a 100-bagger I overlooked. Along with Cisco and Intel, that high-tech juggernaut posted explosive earnings almost from the start. Microsoft went public in 1986 at 15 cents a share. Three years later you could buy a share for under $1, and from there it advanced eightyfold. (The stock has "split" several times along the way, so original shares never actually sold for 15 cents -- for further explanation, see the footnote on page 34.) If you took the Missouri "show me" approach and waited to buy Microsoft until it triumphed with Windows 95, you still made seven times your money. You didn't have to be a programmer to notice Microsoft everywhere you looked. Except in the Apple orchard, all new computers came equipped with the Microsoft operating system and Microsoft Windows. Apples were losing their appeal. The more computers that used Windows, the more the software guys wrote programs for Windows and not for Apple. Apple was squeezed into a corner, where it sold boxes to 7-10 percent of the market.
Meanwhile the box makers that ran Microsoft programs (Dell, Hewlett-Packard, Compaq, IBM, and so on) waged fierce price wars to sell more boxes. This endless skirmish hurt the box makers' earnings, but Microsoft was unaffected. Bill Gates's company wasn't in the box business; it sold the "gas" that ran the boxes. Cisco is another marquee performer. The stock price is up 480-fold since it went public in 1990. I overlooked this incredible winner for the usual reasons, but a lot of people must have noticed it. Businesses at large hired Cisco to help them link their computers into networks; then colleges hired Cisco to computerize the dorms, Students, teachers, and visiting parents could have noticed this development. Maybe some of them went home, did the research, and bought the stock. I mention Microsoft and Cisco to add contemporary examples to illustrate a major theme of this book. An amateur investor can pick tomorrow's big winners by paying attention to new developments at the workplace, the mall, the auto showrooms, the restaurants, or anywhere a promising new enterprise makes its debut. While I'm on the subject, a clarification is in order. |
Posted By: subu76
Date Posted: 28/Sep/2009 at 5:15pm
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Speaking of long-term gains, in eleven years' worth of luncheon and dinner speeches, I've asked for a show of hands: "How many of you are long-term investors in stocks?" To date, the vote is unanimous -- everybody's a long-term investor, including day traders in the audience who took a couple of hours off. Long-term investing has gotten so popular, it's easier to admit you're a crack addict than to admit you're a short-term investor. |
Posted By: omshivaya
Date Posted: 02/Oct/2009 at 9:37pm
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Was going thru "On Up On Wall Street" randomly and found another gem as below: Coming out of a recession and into a vigorous economy, the cyclicals flourish, and their stock prices tend to rise much faster than the prices of stalwarts. This is understandable, since people buy new cars and take more airplane trips in a vigorous economy, and there is greater demand for steel, chemicals, etc. But going the other direction, the cyclicals suffer, and so do the pocketbooks of the shareholders. You can lose more than fifty percent of your investment very quickly if you buy cyclicals in the wrong part of the cycle, and it may be years before you'll see another upswing.
Cyclicals are the most misunderstood of all the types of stocks. It is here that the unwary stockpicker is easily parted from his money, and in stocks he considers safe.
...timing is everything in cyclicals, and you have to be able to detect the early signs that business is falling off or picking up.
Page 122, OUOWS ------------- 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 |
Posted By: basant
Date Posted: 02/Oct/2009 at 9:48pm
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Good post. But in March 2009 this post was a worth a million but for now we will have to wait till this post becomes expensive again. Personally I think that the time to say goodbye to cyclical is fast approaching.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: omshivaya
Date Posted: 06/Oct/2009 at 12:21pm
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The psyche of most investors explained nicely by Lynch....
Perhaps a winning investment seems so unlikely in the first place that people can best imagine it happening as far away as possible, somewhere off in the Great Beyond, just as we all imagine that perfect behavior takes place in heaven and not on earth.
Therefore the doctor whoe understands ethical drug business inside out is more comfortable investing in Schlumberger, and oil-service comapny about which he knows nothing; while the managers of Schlumberger are likely to own Johnson & Johnson or American Home Products
Page 99, "OUOWS" ------------- 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 |
Posted By: Hitesh Shah
Date Posted: 06/Oct/2009 at 8:01am
Another oxymoron for the Kulmanji Files. ------------- |
Posted By: kulman
Date Posted: 06/Oct/2009 at 10:53am
 Thanks for not using another oxymoron like Rev Kulman
An oxymoronic sentence heard often on http://theequitydesk.com/forum/forum_posts.asp?TID=1297&FID=3&PR=3 - The Laal Street :
That good broker has many expert analysts who do professional research and recommend their clients profitable stock tips.
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Posted By: Hitesh Shah
Date Posted: 06/Oct/2009 at 10:57am
 What is the oxymoron here? The tips are profitable. The issue is for whom? ------------- |
Posted By: kulman
Date Posted: 06/Oct/2009 at 11:03am
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Hmm....
One man's TIP is another's PIT....like one country's freedom fighter is another's terrorist.
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