Customer Reviews

One Up On Wall Street :; How To Use What You Already Know To Make Money In The Market [PB,2000]

5 star:		(96)
4 star:		(12)
3 star:		(5)
2 star:		(2)
1 star:		(4)

 

 

This is the first book I ever read on investing. My cousin, Paul, who was a broker at Merrill Lynch, recommended it to me. I followed Paul into the financial services industry, toiling 12 long years peddling stocks, bonds, mutual funds and insurance products. During my tenure as a Wall Street professional (I use that term very loosely), I must have read 200 different books on investing. Oddly enough, I have discarded many of those poorly written investor guides and still refer back to this classic book penned by Peter Lynch, mutual fund demigod, investment guru, stock-picking legend!

At the heart of Lynch's case is that each individual has enough inherent knowledge and experience to be a successful investor. He uses numerous analogies to show investors:

1. The power of common knowledge (take advantage of what you already know) 2. You don't need to be a Wall Street analyst to uncover great investment opportunities 3. You are not disadvantaged vs. large, institutional investors You don't have to accurately predict the stock market to make money in stocks 4. To keep an open mind to new ideas

From my years on Wall Street, I found many of his theories and ideas to be completely accurate. Many other books I have read focus on the inherent evils of the possessed financial consultant community. Yes, the industry has its problems. However, $8 stock trades are not the only ingredients in profitable investing. In fact, I don't recall him emphasizing the need for discount trades, a fact over-emphasized in almost every other book I have read (remember, I am no longer in the industry...I don't need to strike a case for broker commissions). Instead, he shows you what information to focus on and how to apply it.

Do yourself a favor: Buy this book. Read it twice. It is not outdated...it is timeless. Yea, I know, you already know it all. My advice is to lose the ego and take a refresher course on common sense investing. When you finish, put it on your bookshelf. Do not give it to your kids or neighbors; buy them their own copies. This is a great book!

There are 3 books any person who is new to investing in the stock market MUST have. This book, Benjamin Graham's The Intelligent Investor and Pat Dorsey's The 5 rules for successful stock investing. The insights these 3 books will give you are priceless and a MUST for anyone wanting to make money in the market. I am very happy to own all 3 and intend on passing them along to my son so he can learn how to best make his money work for him. Lynch goes through how to identify companies that may be of interest, then how to further analyze the prospects of making money by purchasing that company's stock, and then how to continue monitoring whether the stock is likely to head upward. Lynch places companies into 1 of 6 categories and gives you strategies for buying and selling companies that fall into each of the categories. As a fund manager who has proven his strategies are successful, his insight definitely carries some credibility.

Note: I assume you already know who Mr. Lynch is (a former fund manager), and what Mr. Lynch did (he consistently beat the market - "he has a proven track record" - for almost twenty years).

The book has a witty, easygoing style; it's entertaining and informative, and you'll pretty soon find the urge to read it all as soon as possible. Beware, it's not an easy book! To read this book is not a substitute for hard work. There are no magic formulae to apply. There are no shortcuts to riches, you have to do your homeworks anyway!

"One Up" is divided in three sections. The first deals with how to assess yourself as a stockpicker; the second deals with how to find the most promising opportunities, what to look for in a company and what to avoid, and what to make of the various numbers (p/e ratio, book value, cash flow, etc - explanations are clear, this is a book for everyone) that are often mentioned in technical evaluations of stocks. The third part basically is about everything else, including when to buy and when to sell.

Mr. Lynch opens the book with his rule number one, devoted to those believing that professionals will do better than individuals because professionals know more and have more skills (I'll extensively quote him): "Stop listening to professionals! Twenty years in this business convinces me that any normal person (...) can pick stocks just as well, if not better, than the average Wall Street expert". No wonder here and there we find 1-star, angry reviews of this book!

Here are, in my opinion, the basics of this book:

The Street Lag
"Under the current system, a stock isn't truly attractive until a number of large institutions have recognized its suitability and an equal number of respected Wall Street analysts (the researchers who track the various industries and companies) have put it o the recommended list. With so many people waiting for others to make the first move, it's amazing that anything gets bought."

A Good Market or a Bad Market
"Thousand 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." Is the current a good market? Please don't ask. Don't try to time the market.

The Perfect Stock
"Getting the story on a company is a lot easier if you understand the basic business. That's why I'd rather invest in panty hose than in communications satellites, or in motel chains than in fiber optics. The simpler it is, the better I like it. When somebody says, "Any idiot could run this joint," that's a plus as far as I'm concerned, because sooner or later any idiot probably is going to be running it."

How to find the tenbaggers
("In Wall Street parlance a "tenbagger" is a stock in which you've made ten times your money".)
Among other "qualities" to look for, explained by Mr. Lynch, the following are my favourites:
- Its name sounds dull - or, even better, ridiculous;
- It does something dull;
- The institutions don't own it, and the analysts don't follow it;
- It's got a niche;
- The insiders are buyers;
- The company is buying back shares.
Of course, Mr. Lynch describes in detail why he thinks you have to look for these aforementioned (and others) qualities in a stock to qualify it as a "buy"

The flaw in Book Value
"Book value gets a lot of attention these days - perhaps because it's such an easy number to find. You see it reported everywhere (...). People invest in these on the theory that if the book value is $20 a share and the stock sells for $10, they're getting something for half price. The flaw is that the stated book value often bears little relationship to the actual worth of the company. It often understates or overstates reality by a large margin. Penn Central had a book value of more than $60 a share when it went bankrupt!".

I can summarize the only weakness I found in this book after the following quotation:
"At one point I'd decided the motel industry was due for a cyclical turnaround. I'd already invested in United Inns, the largest franchiser of Holiday Inns, and I was keeping my ears open for other opportunities. During a telephone interview with a vice president at United Inns, I asked which company was Holiday Inn's most successful competitor.
"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 a begrudging admiration from a rival.
"La Quinta Motors Inns", the vice president of United Inns enthused. They're doing a great job. They're killing us in Houston and in Dallas."
"He sounded very impressed, and so was I."

Well, I guess everybody out there can pick up the telephone and have a nice, revealing conversation about the competition with a big company's vice president, uh? Don't you believe this to likely happen to you as well, do you?
And just in case, SEC's Regulation Full Disclosure made it almost impossible anyway (God bless Arthur Levitt, former SEC chairman, who gave us the Reg FD - after Mr. Lynch wrote this book).

That aside, what a great book! I definitely recommend this timeless classic.

I bought Peter Lynch's book for my son as a college graduation present and he and I are both impressed with the useful and down-to-earth investing advice it contains. After reading Peter's book my son finally confessed that he graduated from college with almost $9,000 in credit card debt. Despite what I thought I had shown him about handling money he, like so many 20-somethings, really needed to get up to speed on basic money management--and as quickly as possible.

Bob Edwards on NPR's "Morning Edition" recommended another book by NPR's personal-finance correspondent, Nancy Lloyd, called, "SIMPLE MONEY SOLUTIONS: 10 Ways You Can Stop Feeling Overwhelemed By Money and Start Making It Work For You." My son, Andrew, says he's enjoying that book too and has used it to develop a plan for paying off his credit card debt. He's also started contributing to his 401(k) plan and even chose to buy a used car with a 2-year loan (as recommended by Nancy) so he'll start amassing equity. My son and I are now able to discuss money matters without either one of us getting bored or losing our tempers. I highly recommend both books and have just bought additional copies of each for my older son and daughter.

I knew I needed to make some good investments with my IRA and 401(k) but I also knew I didn't have enough money left over after paying my bills. Two books have come to my rescue. In February, after watching Diane Sawyer interview Nancy Lloyd on GOOD MORNING AMERICA, I bought Nancy's superb book "SIMPLE MONEY SOLUTIONS: 10 Ways You Can Stop Feeling Overwhelmed By Money and Start Making It Work For You." It showed me how to finally pay off my credit card debts and how to shop for a much better credit card and mortgage deal--even though interest rates were rising at the time. The money I saved by following Nancy's advice allowed me to free up over $5,600 so far this year which I have begun to invest. That's where Peter Lynch's excellent advice in this book about picking stocks has taught me a lot. Even though many stocks have been dropping, using Peter's recommendations my portfolio has been steadily rising. Peter Lynch and Nancy Lloyd's books have given me an education on money that I wish I had gotten earlier in life. I now have the confidence that I always lacked and enough knowledge about money to tell my own kids what they need to know about money as they grow up. Well done!

This book is great. Not only does Peter Lynch give a run down of how he invests, but he uses a sensible approach while investing. He examines how to analyze a company, its operations, its financial statements and various other important factors when making an investment decision. This book is an important one that I will recommend and keep on my bookshelf for a LONG time.

When it comes to picking stocks, Peter Lynch is my hero. He's insightful and inspiring. But I needed answers to money questions beyond picking stocks.

"SIMPLE MONEY SOLUTIONS" by Nancy Lloyd was recommended by both MONEY magazine and MORNINGSTAR so I decided to take a look. For years I've enjoyed listening to Bob Edwards interview Nancy Lloyd about a wide range of money matters on NPR's "Morning Edition" and I liked the way she could explain complex information in clear and easy-to-follow terms. Her financial credentials are superb (unlike the hacks who have been spewing psychobabble on PBS Pledge shows). "SIMPLE MONEY SOLUTIONS" is entertaining and extremely useful.

My two main complaints are: 1) Lynch's 15 points to look for in the perfect stock fail in 3 ways: a) some are vague, b) some are redundant, and c) most are far too qualitative for my quantitative tastes (e.g., "Pick a business with a boring name."). 2) Lynch is always talking about great stocks of his career (Dunkin' Donuts, Pep Boys, Taco Bell, etc.), but he never really spells out the system he used to identify these stocks as winners before they took off. I'm a new investor, and what I'm looking for is a step-by-step approach. I've read about 5 books so far (including One Up...), and One Up... is by far the worst. The Motley Fool's Investment Guide (Gardners) and Common Stocks... (Fisher) were very good at the step-by-step approach. The Motley Fool book spelled out 2 good blue-chip strategies (Foolish Four and Rule Makers) and a good small-cap growth strategy. Fisher's book is famous for its 15-point analysis that is both quantitative and qualitative. Either is a much preferable choice over One Up...

Like a lot of women, we had some financial ground to make up == and make up quickly. We've tried a lot of books but many money books were more hype than help. Then we struck paydirt. First, we started with a book from FAMILY CIRCLE columnist Nancy Lloyd. It's called "SIMPLE MONEY SOLUTIONS" and it really got all our investment club members up to financial speed fast. Several of us had seen the author interviewed on GOOD MORNING AMERICA. Just like her interview, her book cuts to the chase AND explains money matters clearly. Next we turned to "ONE UP ON WALL STREET" by Peter Lynch == an investor's best friend. Our investment club's returns are so astounding that our husbands now want to join. We would not have had the confidence, basic money knowledge or sophisticated investment savvy without these two books.

Lynch does a great job introducing the world of stock investing. He writes in a very easy-to-read manner using lots of examples, and he always uses an encouraging and comforting tone, reassuring the reader that the reader as an amateur also has a spot in the investing world.

The book is split into 3 basic sections - preparing to invest, picking winners, and the long-term view. The first part goes over why you should invest, why amateurs can have an edge over professionals, and some other basic concepts. The second portion covers how to actually find good companies and how to analyze them to make sure they're worth investing into. The last section wraps things up by talking about basic stock portfolio management and the importance of a long-term mindset.

The book uses a lot of historical examples. Sometimes it feels like Lynch is showing off his experience and success, but the man has a fantastic Wall Street record - definitely something to brag about. He is also unafraid to talk about his mistakes, which is admirable and enlightening.

While some of the specifics Lynch discusses (what's a "good" P/E of certain companies compared to the growth rate, for example) may be somewhat out of date, the general concepts in this book hold very true today. I recommend this book highly to anyone looking to invest in stocks - there are some great lessons to take away. The two that really stuck in my mind are:

1. Amateur investors are not at a loss compared to professionals. In fact, amateurs are not constrained by many things that professionals may be bound to, such as fund restrictions, job security, etc. Amateurs can also spot potential future winners way before Wall Street can.

2. Take your time to do the homework on a company before you buy its stock AND before you sell it. Make sure you can give a good 2-minute summary of why you want to buy a certain stock. Keep in mind - if there's any doubt, check in later. For example, you never want to buy a fast grower before it proves it can expand.

Note that this book is only about stocks and how to find the "right" stocks. It covers bonds briefly (to convince the reader that stocks are a much better long-term investment), and it also has a very short chapter on futures, options, and shorting stock. However, Lynch quickly dismisses these three as overly risky speculative investment vehicles that don't contribute to the business world (i.e. money in the futures/options markets is not used by companies to expand operations - it just changes hands depending on who won the "bet"). Don't expect to learn much about these types of investment, as Lynch clearly dislikes them.

In conclusion, if you are thinking about stock market investing or even if you already own stock, read this book. It's a quick and easy read, and you will, without doubt, get something useful out of it.

Pros:
+ easy and relatively quick read
+ encourages the amateur investor to not be intimidated by professionals
+ Lynch presents his time-proven strategies in a very coherent manner, with lots of examples of things he did right AND things he did wrong
+ lots of useful advice that still holds true today

Cons:
- quick dismissal of stock shorting, options, and futures