One Up On Wall Street: How To Use What You Already Know To Make Money In The Market

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Shortform note: Aside from the missed gains Lynch alludes to, when you withdraw from the market, you must also pay a capital gain tax on your withdrawal. That tax rate can be as high as 20%, making it important to think carefully about withdrawing.) Where and How to Encounter Strong Investment Opportunities Initially fast grower (fast-growing industry), but has turned mature. For example, Electric utilities, Railroads Let’s start with the first one – slow growers . These companies are usually large, part of a mature industry, and therefore grow slower.

Lynch's personal touch) The everyday experiences you have with a company should inform your investing decisions. When you like a company's products and everyone else seems to also, that company makes a good target for investigation for *possible* investment.. AFTER you have verified the value of the underlying business. Conversely, if a business that seems to be doing great but you don't like its products or services and many others agree with you, maybe you should avoid it -- the business may be about to tank. Here is where the money is generally made, according to Lynch, since they are companies that are in frank expansion and their profits grow between 20% and 25% annually. The percentage of the earnings paid out as dividends. If it's a low percentage, then the company has a cushion in hard times. Otherwise, the dividend is riskier.If you work in an industry and understand the complete value chain, you have an advantage over Wall Street’s analysts. Why does an engineer who works in the aeronautical sector end up buying shares in a biotech company? It doesn’t make sense to Lynch.

I have the impression that books about investing are generally awful—greedy, crass, self-promoting, illogical, and mediocre. It must have something to do with money. This one, written in the late 1980s, and published in this edition in 2000, is none of those things. It's just out of date. Don't get faked out by macro events such as M1-money supply, oil prices, dollar index, etc. Lynch pays no attention to external economic conditions, except in the few obvious instances when he's sure that a specific business will be affected in a specific way. I probably first read the book when I was about the age of 20 or 21, and now, after about five years in the market, I can tell you that the lessons hold.A major division that contributes 25 percent of earnings is vulnerable to an economic slump that's taking place (housing, oil drilling, etc) Uses common sense and explains things in ways that are logical. (For example: He points out many investors try to time the market, instead of focusing on researching companies or using knowledge that they have which gives them a personal edge.) But hopefully, by doing this, we will be able to make better decisions. Personally, for me, I put in minimally four hours a day to just read up on companies and find potential investments. Dollar discount shops might also be recession-proof too because, in a recession, people tend to be more budget-conscious and shop more at discount stores. 4. Cyclical