Monday, June 25, 2012

Time to One Up Wall Street

Here are two classic books about investing in the stock market. Peter Lynch had an impeccable record when he managed the Magellen Fund for a little over a decade. In his writings, he claims that small investors can do just as well by investing in things they understand well. As consumers we may notice trends before Wall Street does, and that according to Mr Lynch gives us an edge.

But just because you eat at Taco Bell doesn't mean you should run out and buy shares in that stock. Lynch explains that shopping at your favourite store or buying your favourite product can help put these companies on your investment radar, however one should research the company thoroughly before taking the leap and investing their hard earned cash.

Lynch takes a bottom-up approach to investing, which means he researches companies and the fundamentals that drive their business. The top-down approach looks at investing within a certain country or industry until settling on a company. Lynch will invest regardless of the economic climate if an attractive enough company presents itself.

I found that both books are quite similar in their lessons. So it's probably not worth your time reading both. There are a lot of great lessons here and perhaps after reading it you'll find yourself a ten-bagger!

Peter Lynch talks about bottom-fishing on Wall Street:

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