peter lynch one up on wall street summary

(7) Cash flow – Free cash flow to be checked for heavy capex industries BV could also be Asset plays due to nderstaed value of real estate,land, securities, tax write offs etc (6) Book Value (BV) – Before buying for Book Value examine the assets that form part of BV and ensure it is worthy. (5) Dividends – Regualr dividends payouts acts as floor for drop in price. (4) Debt Factor esp for companies in trouble. Revised P/E = Market Price (less) Cash Per Share/ Earnings (3) Cash Position – Cash, Cash equivalents and marketable securities over long term debt. (2) PE Ratio & Growth = long term growth rate + dividend yield / P/E Ratio – ratio < 1 poor, 1.5 – 2 – Ok, 3 and above – Excellent. (1) Does this new trending product have an impact on co’s prospect. P/ E guideline – check historic P/E levels to know average.Ĭheck if companies have a plan on how to increase future earnings – reduce costs, raise prices, expand into new markets, sell more to same market, close down loss making operations etc. > Avoid whisper stocks i.e great stories with no substance and no earningsīuy when Price line is below Earnings line and Sell when Price line goes way above the earnings line. > Avoid ‘Diworsification’ i.e companies that expand into unrelated business It’s a user of technology which results in massive cost savings.There’s something depressing about the business Eg: Funeral homes.Rumours abound like toxicity, mafia Eg: Casino.Institutions don’t own and analysts don’t follow.It’s a spinoff from a well known holding company Eg: Bajaj Finance.It does something disagreeable Eg: Harpic.It does something dull Eg: Packaged Foods like biscuits, soap etc.Dull or simple business with a boring name.Peter Lynch Quotes What is a Perfect Stock? Asset Plays – Properties i.e land and other assets held by a company is more valuable than the quoted price.Ĭategorise the stocks you purchase into the above buckets and arrive at target price based on the category it falls.Lynch considers companies moving into unrelated fields as ‘ diworsification‘ But stay away from tragedies where outcome is unmeasurable. Turnarounds – Stay with bad news for a possible good turnaround.Eg: Auto, Airlines, Tyres, steel, Chemicals. Cyclical – Expands and contracts over time.Fast Growers – Medium to small size companies that grow at 20 – 25%.Take profits at 30 – 50% and repeat with other stalwarts. Established companies like HUL, CocaCola, P&G etc that grow year on year and make standard profit. Stable Business like Power and other Utilities. > Predicting economy or stock market direction is futile > Invest in a house before you invest in a stock market > Take advantage of what you already know. How retail investors can win in the stock market

Peter Lynch, one of the greatest investors of our time has given ample time tested techniques in this book.

Peter lynch one up on wall street summary