One up on Wall Street Book Review and Summary: If you are just getting started with the stock market and want to read a book to understand the basics of investing / how the market works, then One up on Wall Street by Peter Lynch is unmissable.
One up on wall street is one of the best books ever published on the stock market and an all-time best seller. The book was originally published in 1989 by the Popular Investor and Fund Manager, Peter Lynch. In this article, we’ll look into the One up on wall street book review and discuss a few of the best points highlighted in the book. Keep Reading.
About Peter Lynch
First of all, let us introduce you to Peter Lynch if you do not already know him. Peter Lynch is an American Investor and a former fund manager. He was managing the Magellan fund at Fidelity Investments between 1977 and 1990. During this period, Peter Lynch averaged a 29.2% annual return on his investments. Moreover, what makes this more appealing is that the returns were consistently beating the market index with a factor of at least two.
During this period of 13 years, Peter Lynch’s assets under management which was originally $18 million in 1977, increased to $14 billion. Peter Lynch is one of the rare fund managers who gave a fairly high return to his investors for 13 long years in a row. Later after retiring, Peter Lynch wrote three popular books, “Beating the Street”, “Learn to Earn” and “One Up on Wall Street”.
Here are a few of our favorite quotes by Peter Lynch on Investing from his books.
- “Investing without research is like playing poker and never looking at cards.” – Peter Lynch
- “Invest in what you know. It leaves out the role of serious fundamental stock research. People buy a stock and they know nothing about it. That’s gambling and it’s not good.” – Peter Lynch
One up on Wall Street Book Review
In the book One up on Wall Street, Peter Lynch teaches how a common investor can get great returns from his investment in the stock market if they follow few general investing principles and a common-sense investing approach. Lynch believes that with a little research and steady discipline, every common person can outperform the so-called investment gurus and make consistent returns.
To start with, Peter Lynch advocates the idea of ‘Invest in what you know!’.
He suggests that many great investments could be right under the nose, if the investors are ready to look into the common stocks. Most people just have to look around the place where they work or the spots where they visit to grab those opportunities. A common person is exposed to many interesting local companies and products years before the professional investors would even be heard of them. If these investors find and invest in these growing local companies, they can surely make amazing returns.
Now let us understand what Peter Lynch means by ‘Invest in what you know’ strategy with the help of an example.
Suppose, you are a doctor and on the side, you want to invest in some good stocks to build your portfolio and make returns. What most doctors will do is to go back home, search for a banking or renewable energy stock, read a little about them, and make their investment.
On the other hand, assume there is another banking who works as a bank manager. He is also interested in the market and goes back home to search and invest in a Pharma stock.
What do you think will be the outcome of both these investments.
It’s most likely that both these investors will get below-average returns. The doctor, who will have a good knowledge of the medicines and the pharmacy sector, could have done a lot better if he has started investing with companies in his circle of competence. He might already know some of the Pharma companies who are doing exceptionally well and making amazing medicines.
On the other hand, the banker should also have first focused on the companies in the banking sector. With his years of experience in the banking industry and daily interaction with other co-bankers, he might already have good insights about which banks are doing well, how much profits or NPAs other banks are making, and similar banking stuff.
If only, these investors have invested in what they know already know, it’s would have been highly likable that both the investors would have made good returns. This is what Peter Lynch mean when he said “Invest in what you know”. Moreover, he focuses and highlights this as ‘Taking advantage of what you already know’.
Key Advises By Peter Lynch in One up on Wall Street
While looking into Peter Lynch’s One up on Wall Street Book Review, it’s also important to discuss a few of the best concepts taught by him in the book. There are a number of great pieces of investing advice given by Peter Lynch in One up on wall street. Here, we have assembled a couple of the best ones:
- ‘Only invest what you could afford to lose without that loss having any effect on your daily life in the foreseeable future’.
- There are few qualities which are required for a successful investor. They are Patience, self-reliance, common sense, open-mindedness, tolerance to pain, detachment, persistence, humility, flexibility, willingness to do independent research, an equal willingness to admit to mistakes, and an ability to ignore general panic.
- Invest in companies, not the stock market.
- Ignore short-term fluctuations.
- Do not try to predict the economy. A great many personalities have failed. Predicting the economy is futile.
- Large profits can be made in the stock market. Large losses can be made in the stock market.
- ‘If you want to avoid a single stock, it would be the hottest stock in the hottest industry’. Boring stocks gives the best results.
Further, Peter Lynch has also described six types of stocks that are found in the stock market and which can help you to judge and pick the stocks better. We have also written another article on the different types of stocks by Peter Lynch that you can read here: Six Different Types of Stock in Indian Market according to Peter Lynch .
One up on Wall Street Book Review – Other Key Points
In the book One up on Wall Street, Peter Lynch also described how to choose a stock and the things to consider before buying the stock.
In ‘The Two Minute Drill’ section inside the book, Peter Lynch describes a basic strategy that every common investor should use before purchasing any stock. This book also advocates how long to invest and when to sell in a few of its chapters.
Alongside, Chapter 18 (One of the best chapters in the book), narrates the twelve silliest (and most dangerous) mistakes that people say and make in the stock market, which is quite interesting to read.
In this article, we looked into the One Up on Wall Street Book Review. If you see the book as a whole, ONE UP ON WALL STREET by Peter Lynch is a must-read book, especially for all the stock market beginners. Peter Lynch’s strategies in the book are quite simple, logical, pragmatic, and easily replicable. Newbie investors can get great benefits by reading this book.
That’s all for this article. I hope this post on Peter Lynch’s One up on Wall Street book review and summary was useful to you. Do let us know what you think about the book and its review in the comment section below. We’ll be happy to read your reviews and feedbacks. Have a great day and Happy Investing!
Kritesh ( Tweet here ) is the Founder & CEO of Trade Brains & FinGrad . He is an NSE Certified Equity Fundamental Analyst with +7 Years of Experience in Share Market Investing. Kritesh frequently writes about Share Market Investing and IPOs and publishes his personal insights on the market.
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