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Peter Lynch: What Truly Separates Good Investors from the Mediocre​


In his book – Learn to Earn, Peter Lynch explains that a twenty-year investment horizon is ideal for stock market success, allowing time to recover from downturns and accumulate profits.

Historically, stocks have returned 11% annually, turning $10,000 into $80,623 over two decades. Achieving this requires unwavering loyalty to stocks, treating the relationship like a marriage. Patience, courage, and discipline—not just intelligence—are key to becoming a successful investor.

Lynch advises ignoring short-term market noise and sticking to solid companies with strong earnings, even during declines. Many claim to be long-term investors, but true commitment is tested during market downturns, highlighting the importance of resilience and consistency.

Here’s an excerpt from the book:

Twenty years or longer is the right time frame. That’s long enough for stocks to rebound from the nastiest corrections on record, and it’s long enough for the profits to pile up.

Eleven percent a year in total return is what stocks have produced in the past. Nobody can predict the future, but after twenty years at 11 percent, an investment of $10,000 is magically transformed into $80,623.

To get that 11 percent, you have to pledge your loyalty to stocks for better or for worse—this is a marriage we’re talking about, a marriage between your money and your investments.

You can be a genius at analyzing which companies to buy, but unless you have the patience and the courage to hold on to the shares, you’re an odds-on favorite to become a mediocre investor.

It’s not always brainpower that separates good investors from bad; often, it’s discipline.

Stick with your stocks no matter what, ignore all the “smart advice” that tells you to do otherwise, and “act like a dumb mule.”

That was the advice given fifty years ago by a former stockbroker, Fred Schwed, in his classic book Where Are the Customers’ Yachts? and it still applies today.

People are always looking around for the secret formula for winning on Wall Street, when all along, it’s staring them in the face: Buy shares in solid companies with earning power and don’t let go of them without a good reason.

The stock price going down is not a good reason.

It’s easy enough to stand in front of a mirror and swear that you’re a long-term investor who will have no trouble staying true to your stocks.

Ask any group of people how many are long-term investors, and you’ll see a unanimous show of hands. These days, it’s hard to find anybody who doesn’t claim to be a long-term investor, but the real test comes when stocks take a dive.
 
Yea, but if you know the dive is coming you should sell.

My industry super is up 8% for the year because I went to capital stable when Trump announced the tariffs on Canada. I changed to Conservative when I realised he was pulling back , about a month ago.

You shouldn't do it often and not for long but when its obvious, why not?
 

Delicious Apples and Speculative Investments: A Metaphor for Market Bubbles​


In their book Animal Spirits, Akerlof and Shiller discuss The Delicious Apple as a metaphor for speculative investments. The apple used to taste good, but now it doesn’t. It’s still popular because it’s cheap and widely available. The same thing happens with speculative investments. People buy them because they think other people will buy them, not because they believe in the underlying asset. This can lead to a bubble, which can then burst, leaving investors with worthless assets. Here’s an excerpt from the book:

The Delicious Apple offers another metaphor for much the same theory. Hardly anyone today really likes the taste of the varietal now called Delicious.

And yet these apples are ubiquitous. They are often the only choice in cafeterias, on lunch counters, and in gift baskets. Delicious Apples used to taste better, back in the nineteenth century when an entirely different apple was marketed under this name. The Delicious varietal had become overwhelmingly the best-selling apple in the United States by the 1980s.

When apple connoisseurs began shifting to other varietals, apple growers tried to salvage their profits. They moved
the Delicious Apple into another market niche. It became the inexpensive apple that people think other people like, or that people think other people think other people like.

Most growers gave up on good taste. They cheapened the apple by switching to strains with higher yield and better shelf life. They cheapened it by clear-picking an entire orchard at once, no longer choosing the apples as they ripened individually.

Since Delicious Apples arc not selling based on taste, why pay extra for taste? The general public cannot imagine that an apple could be so cheapened. Nor does it imagine the real reason these apples are so ubiquitous despite their generally poor taste.

The same kind of phenomenon occurs with speculative investments. Many people do not appreciate how much a company with a given name can change through time, or how many ways there are to debase its value. Stocks that nobody really believes in but that retain value are the Delicious Apples of the investment world.
 
originally planned for 10 years but still hold some of the originals 14 years later , 20 years might be asking a bit much , but some stocks held are in extremely comfortable positions ( despite 2011, 2018 and 2020 ) , i guess the question to ask is will i see 2030 ( and after ) ?
 

"Terry Smith Explains The “Busy Fool Syndrome”​

In his book – Investing for Growth, Terry Smith argues that most fund managers prioritize matching their benchmark rather than outperforming it, leading them to become “index huggers” who underperform after fees.

He supports Warren Buffett and John Bogle’s view that low-cost index funds are better for most investors. Smith explains that “active” fund management doesn’t mean frequent trading but rather not strictly following an index.

Successful investors like Buffett minimize trading to reduce costs and improve returns. He highlights that fees should reflect performance rather than activity, cautioning against the “busy fool syndrome” where frequent trading results in poor returns.

Here’s an excerpt from the book:

The majority of fund managers do not see the biggest threat to their career as underperforming their benchmark but in differing from that benchmark and their peers. As a result, they become “index huggers” who own enough shares in whatever market index is used for their performance benchmark to make sure their performance more or less matches it.

But that, of course, is before fees and other costs such as dealing. The inevitable result is that the majority of active fund managers underperform the index.

I agree with Warren Buffett and John Bogle (the founder of Vanguard, one of the world’s largest index fund providers) that most investors would be better served investing in a low-cost tracker fund, which charges a lot less than the “active” managers who are simply index hugging.

One of the problems for outsiders trying to understand fund management is that words are often used in ways that differ from their common meaning. Take the word “active.” It doesn’t denote that the manager of an active fund engages in a lot of dealing activity—rather, it is meant to distinguish those managers who manage funds which are not strictly index trackers.

Some of the finest fund managers, such as Warren Buffett, eschew index hugging and run active funds—but also avoid dealing activity as much as possible, as dealing adds to the costs of managing money and so detracts from funds’ performance. As Buffett says, “The stock market is designed to transfer money from the active to the patient.”

This also confuses people who ask, “If the fund manager doesn’t deal much, what am I paying fees for?” The answer is that the fees are payment for the outcome—the performance. Look at it this way: would you be happy paying fees to a manager who dealt a lot but delivered poor performance—or, as it is known, “busy fool syndrome?” I doubt it.
 
this is not a totally bad thing for a 'hands on ' retail investor , yes the manager's performance can be erratic , and a fair amount of the time their strategy/narrative is unpopular , thus you often find aggressively-managed LICs trading at a discount to NTA ( often in excess of a 10% discount at that )

now a careful retail investor notices that discount ( to NTA ) but realizes that is not the whole story ( as most of these managers never liquidate 100% of the portfolio ) what the investor also needs to note is the div. yield at the current share price , sometimes that is quite nice and that LIC might 'smooth dividends into the bargain ( spread the big wins over 3 or 4 years )

so you need to look at several things BEFORE you decide to part with some cash ( or not )

'index huggers ' rely on a rising market ' lifting all boats , this is dangerous for the eager retail investors sometimes the market goes down ( 10% , 20% and sometimes even more than that ) and all you see is capital gains vanishing .

please note those conservative fund managers also present moments they are excellent value as well ( when the market is chasing 'the new narrative ' and the boring old managers are left behind )
 

Chuck Akre: Timeless Lessons From Warren Buffett​


In his 1988 Shareholder Letter, Chuck Akre discussed the lessons he learned from Warren Buffett. Here’s an excerpt from the letter:

Over the years, I have been most significantly influenced by the writings of Warren Buffett. (Fortunately, I have been a shareholder of Berkshire Hathaway since 1977). Warren was a student of Ben Graham at Columbia where he learned the important balance sheet value method of investing.

Every company has a value determined by its balance sheet, and you buy a stock when it’s selling for $.50 on the balance sheet dollar and sell it at $.80. Buffett has taken the balance sheet value as a starting point and gone on to identify “really good business” as the place to focus.

These businesses are ultimately identified by their extremely high returns on assets and capital. When these high returns appear, Buffett contends an economic royalty of some kind exists, and the “value” of the business is much greater than the balance sheet reveals. Buffett has detailed the many common attributes of these companies, and a few of them are as follows:

  • They see their profits in cash.
  • They are not natural targets of competition.
  • They have freedom to price their products.
  • They are understandable.
  • They do not take a genius to run.
  • They earn very high returns on capital and assets.
I am in the Buffett “camp” and accordingly try to find companies that fit these criteria. One very important benefit of these companies is that neither poor managerial decisions, nor adverse economic environments will upset the apple cart for too long. That is, their business franchise will prevail in the long run.

Our resulting style in the partnership is to try and find outstanding businesses, to understand their true value, and when the price is reasonable, purchase shares. Occasionally, the market will allow an opportunity to buy the shares at a real bargain price and once every few years at a “steal.”

The whole purpose of course in pursuing superb businesses is to achieve superior investment results. I believe that this is the most compelling route to achieve such results! It is a route that is magnificent in its simplicity and accordingly has some chance of leading us to success.

In addition to focusing on these superior businesses, Buffett also promulgated two rules for investing to which we try to adhere. They are:

  • Rule #l- Don’t lose money.
  • Rule #2- Don’t forget the first rule!
The practice of not losing money is significantly advanced by the selection of superior businesses, because as we just pointed out, their royalty keeps on working in spite of general business conditions and isolated poor managerial decisions. In the case of the former, however, the market may offer up the shares at a true bargain price. In following the Buffett principles to their logical conclusion, I leave defined Nirvana in investing as finding a company with the following characteristics:

  1. It is a superior business.
  2. It is exceptionally well-managed.
  3. The managers reinvest the naturally occurring excess capital as well as they run the business enterprise.
Our motto in investing is “happiness comes from small improvements.” We try to find great companies to invest in which will do well in nearly all environments. And when we buy shares in them, we do not fuss with them because we believe that they will improve and grow in value and that as time passes, that improvement in value will be reflected in the stock price. The fewer investment decisions we make, the less exposure we have to making mistakes. Obviously, these decisions that are made must be correct, which is why we spend so much time trying to understand the quality of businesses.

Epilogue

I reread this letter for the first time in many years after my partner, Chris Cerrone, recently reminded me of its contents. This approach has been responsible for the investment outcomes of the subsequent 32 years. We spend our time at Akre Capital Management trying to improve each element of our investment approach which, some time after this letter was written, we began referring to as our “three-legged stool”: business model; talented and honest management; and an outstanding thought process and execution in the reinvestment of free cash flow.

Some things are timeless and meant to be!
 
Thanks divs4ever

All this content reminds me of what i posted The Day after i Joined this Great Site.

Just a Thought

Many Moon's ago, My Grandfather had some very wise words for me.......He said, we are Born with 2 ears & 1 mouth for a reason and spoke no more!

Many years later, i have come to realize why i love to read so much in that reading is simply a form of listening to the thoughts of others in silence.......And through this silence & contemplation wisdom shall come to life through the watering of the mind through reading.

G.E.N.....MAY 2025

Each day That i post in this Thread Continues to water my Mind & hopefully keeping it alive into old age ha ha

Cheers!
 
Go as far as you can see. When you get there you will see how you can go farther.
Thomas Carlyle - 1795-1881 - British Historian-Essayist-Philosopher-Mathematician-Teacher


"If you have knowledge, let others light their candles in it." "A bird doesn't sing because it has an answer, it sings because it has a song." "We are not what we know but what we are willing to learn." "Good people are good because they've come to wisdom through failure."
 

How To Invest Like Sir John Templeton​

One of the most famous contrarian investors of all time was Sir John Templeton. Templeton was remembered for a number of famous quotes including:

“To buy when others are despondently selling and to sell when others are avidly buying requires the greatest of fortitude and pays the ultimate greatest reward.”

In the book, The Power of Failure: 27 Ways to Turn Life’s Setbacks Into Success, Charles Manz wrote a great piece on some of Templeton’s contrarian investments:

Some of the notable examples of Templeton’s against-the-tide investments include Japan in the 1960s when people thought the Japanese market was a mess and it would be crazy to invest there, Ford Motor Company in the late 1970s when the future looked very bleak for the auto giant, and Peru in the mid-1980s when political tension gripped the country and money and the middle class were fleeing. He committed significant sums in each of these cases and just a few years later earned millions on these investments.

Templeton saw significant stock market drops, which sent others into panic selling, as golden opportunities to invest. The best time to buy is when everyone is selling, the price is low, and there is almost nowhere to go but up, was the logic he espoused. This perspective extends to many other difficulties beyond financial investing. When things have hit bottom in some aspect of our lives, we have an opportunity to rebuild, to try something new and fundamentally different, to make an investment when there is little left to lose and a lot to gain.

So how do you invest like Sir John Templeton?

Templeton was very gracious with sharing his investing strategy, he provided 16 Rules for Investment Success, the rules of which still apply Today.

1. Invest for Maximum Total Real Return

This means the return on invested dollars after taxes and after inflation. This is the only rational objective for most long-term investors. Any investment strategy that fails to recognize the insidious effect of taxes and inflation fails to recognize the true nature of the investment environment and thus is severely handicapped.

2. Invest—Don’t Trade or Speculate

The stock market is not a casino, but if you move in and out of stocks every time they move a point or two, or if you continually sell short…or deal only in options…or trade in futures…the market will be your casino. And, like most gamblers, you may lose eventually—or frequently.

3. Remain Flexible and Open-Minded about Types of Investment

There are times to buy blue chip stocks, cyclical stocks, corporate bonds, U.S. Treasury instruments, and so on. And there are times to sit on cash, because sometimes cash enables you to take advantage of investment opportunities.

The fact is there is no one kind of investment that is always best. If a particular industry or type of security becomes popular with investors, that popularity will always prove temporary and—when lost—may not return for many years.

4. Buy Low

Of course, you say, that’s obvious. Well, it may be, but that isn’t the way the market works. When prices are high, a lot of investors are buying a lot of stocks. Prices are low when demand is low. Investors have pulled back, people are discouraged and pessimistic.

5. When Buying Stocks, Search for Bargains Among Quality Stocks

Quality is a company strongly entrenched as the sales leader in a growing market. Quality is a company that’s the technological leader in a field that depends on technical innovation. Quality is a strong management team with a proven track record. Quality is a well-capitalized company that is among the first into a new market. Quality is a well known trusted brand for a high profit-margin consumer product.

6. Buy Value, Not Market Trends or The Economic Outlook

A wise investor knows that the stock market is really a market of stocks. While individual stocks may be pulled along momentarily by a strong bull market, ultimately it is the individual stocks that determine the market, not vice versa. All too many investors focus on the market trend or economic outlook. But individual stocks can rise in a bear market and fall in a bull market.

7. Diversify. In Stocks and Bonds, as in Much Else, There is Safety in Numbers

No matter how careful you are, you can neither predict nor control the future. A hurricane or earthquake, a strike at a supplier, an unexpected technological advance by a competitor, or a government-ordered product recall—any one of these can cost a company millions of dollars. Then, too, what looked like such a well-managed company may turn out to have serious internal problems that weren’t apparent when you bought the stock.

8. Do Your Homework or Hire Wise Experts to Help You

People will tell you: Investigate before you invest. Listen to them. Study companies to learn what makes them successful. Remember, in most instances, you are buying either earnings or assets. In free-enterprise nations, earnings and assets together are major influences on the price of most stocks. The earnings on stock market indexes—the fabled Dow Jones Industrials, for example—fluctuate around the replacement book value of the shares of the index. (That’s the money it would take to replace the assets of the companies making up the index at today’s costs.)

9. Aggressively Monitor Your Investments

Expect and react to change. No bull market is permanent. No bear market is permanent. And there are no stocks that you can buy and forget. The pace of change is too great. Being relaxed, as Hooper advised, doesn’t mean being complacent.

10. Don’t Panic

Sometimes you won’t have sold when everyone else is buying, and you’ll be caught in a market crash such as we had in 1987. There you are, facing a 15% loss in a single day. Maybe more.

Don’t rush to sell the next day. The time to sell is before the crash, not after. Instead, study your portfolio. If you didn’t own these stocks now, would you buy them after the market crash? Chances are you would. So the only reason to sell them now is to buy other, more attractive stocks. If you can’t find more attractive stocks, hold on to what you have.

11. Learn From Your Mistakes

The only way to avoid mistakes is not to invest—which is the biggest mistake of all. So forgive yourself for your errors. Don’t become discouraged, and certainly don’t try to recoup your losses by taking bigger risks. Instead, turn each mistake into a learning experience. Determine exactly what went wrong and how you can avoid the same mistake in the future.

12. Begin With a Prayer

If you begin with a prayer, you can think more clearly and make fewer mistakes.

13. Outperforming the Market is a Difficult Task

The challenge is not simply making better investment decisions than the average investor. The real challenge is making investment decisions that are better than those of the professionals who manage the big institutions.

14. An Investor Who Has All the Answers Doesn’t Even Understand All the Questions

A cocksure approach to investing will lead, probably sooner than later, to disappointment if not outright disaster. Even if we can identify an unchanging handful of investing principles, we cannot apply these rules to an unchanging universe of investments—or an unchanging economic and political environment. Everything is in a constant state of change, and the wise investor recognizes that success is a process of continually seeking answers to new questions.

15. There’s No Free Lunch

This principle covers an endless list of admonitions. Never invest on sentiment. The company that gave you your first job, or built the first car you ever owned, or sponsored a favorite television show of long ago may be a fine company. But that doesn’t mean its stock is a fine investment. Even if the corporation is truly excellent, prices of its shares may be too high.

16. Do Not Be Fearful or Negative Too Often

And now the last principle. Do not be fearful or negative too often. For 100 years optimists have carried the day in U.S. stocks. Even in the dark ’70s, many professional money managers—and many individual investors too—made money in stocks, especially those of smaller companies.
 
Point 14 and 15 so very true.
As a novice many years ago I got caught by a so-called stockbroker expert, dazzled us with all and sundry and we committed a serious amount of shekels on his recommendations.
The only winner was this shark, who was a broker for an old established company, with the commissioners he got from us.
Lesson learnt very quickly, with burnt fingers to prove it.
 
i see investing as a numbers game ,

1. try to win more often than you lose ( some companies WILL fail or be taken-over when in deep distress )

2. without leverage the most you can lose is 100% ( plus brokerage ) of the cash invested in that investment

BUT you can win 5 , 10 , 20 times ( or more ) over on a successful selection ... now i will not get a big cash splash , to go hard again , so i try to recycle the cash when i think it is sensible ( and mostly let the profits run )

3. inflation .... well that is anyone's guess pick any number except the official figure , i take a guess and double that ( because i live a frugal lifestyle and miss at least half the nasty rises that others are inflicted with )

i nearly always have a plan B. ( and sometimes C. and D. also )

re No. 15 , i do invest on sentiment , i remember clearly the flaws in every major company i worked for ( as an employee or sub-contractor ) and look to see how many flaws have been fixed ( some still haven't been fixed in 50 years )

4. neither you or the companies you invest in survive forever , sure there are a few companies that have been listed for 100 years ( or more ) and yet there are more than 2000 companies listed on the ASX , currently , that is probably less than 1% of the bourse

and remember the game is risk vs. reward , you need to be rewarded when you take the risk especially the winners , to cover the losing picks .
 

François Rochon: The King of All Lessons For Investors​


In his latest 2023 Annual Letter, François Rochon explains why trying to time the market is a futile exercise for investors. While some may be tempted to avoid the market due to economic fears, he emphasizes the importance of long-term ownership in quality companies, regardless of short-term fluctuations. Here’s an excerpt from the letter:

I have learned many lessons over the years. I had already dealt with this during the 20th anniversary of the portfolio and I do not want to repeat myself (I invite you to reread the 2013 letter).

The lesson that remains king of all lessons is this: the best stock selection philosophy is futile if you try to predict the stock market. The worst mistake made by stock market investors is trying to predict the direction of the market over the short term (a few years or less).

Our mission at Giverny Capital is to be long-term owners of around twenty above-average companies and to remain unfazed by the vicissitudes of the economy, geopolitics and financial markets.

Of course, there will always be investors who want to try to predict the stock market despite all the studies which demonstrate the futility of such a quest. The intentions of these investors are laudable (optimizing the return on their capital) but they remain illusory.

This translates into phrases like “I find the market expensive, and I think we should get out of the market temporarily” or the famous and recurring phrase: “I don’t think it’s a good time to invest in the stock market.”

The reasons provided change from one year to the next, but it always comes down to the same mistake: depriving oneself of owning quality companies out of fear of macro-economic and/or political events (which are undoubtedly temporary in nature).
 

Howard Marks: The Essence of Investing Is Risk for Profit​


During his recent panel discussion at the 2025 Qatar Economic Forum on Bloomberg Live, Howard Marks said: “The essence of investing is appropriately bearing risk for profit.” In this conversation he laid bare how risk, uncertainty, and judgment shape the core of long-term investing.

Marks emphasized the importance of understanding risk rather than running from it: “We never know the future. And that’s where the risk comes in.” Citing a favorite quote from Elroy Dimson, he noted, “Risk means more things can happen than will happen.” That, Marks explained, is what makes investing so unpredictable — and so potentially rewarding.

Throughout the discussion, he pushed back against the idea that simply avoiding risk is a viable strategy: “If risk avoidance ends up in return avoidance, we have to knowingly, intelligently take risk for profit.” But — and this is where Marks shines — he draws a clear line: “The definition of the risk we should take is one that we’re aware of, that we can analyze, that we can diversify and that we’re well paid to take.”

One of his most memorable stories dates back to 1969 when banks poured capital into the Nifty 50 stocks, assuming these top companies were nearly riskless. “If you held those stocks for five years until ‘74, you lost about 95% of your money.” He added, “These people were taking risks they were unaware of. And that’s the worst thing you can do.”

Marks also highlighted the danger of being lulled into complacency by long bull runs. “In the last 50 years, the person who took the most risk made the most money. But by definition, that can’t be true all the time, or it wouldn’t be risk.” He warns that when markets are generous, many investors become emboldened — precisely when they should be cautious. “Just at the time when you should be reducing [risk], most people are putting on more.”

And what about those chasing the latest tech trends or index performance? Marks cautions against overreliance on passive strategies: “When things are going well, people underestimate risk and overestimate their ability to live without liquidity.” In his view, liquidity isn’t just a number — “there might actually someday be a need for money.”

Ultimately, Marks admitted his own blind spots: “I’m a skeptic with regard to new and not obviously meritorious development. That hasn’t been a good thing in the last 15 years.” But even as markets evolve, his message remains grounded: Take risks, but only the right ones — and only if you’re truly prepared.
 
Just remember: The people that say, 'your dreams are impossible' have already quit on theirs.
Grant Cardone - Author and Speaker
 

Triumph of the Optimists – Book Summary​

Triumph of the Optimists. If you’ve ever wondered what history can teach us about the markets, this book delivers—with over 100 years of data. Written by Elroy Dimson, Paul Marsh, and Mike Staunton, it explores one simple but profound idea: over the long run, “the risk-takers who optimistically invested in equities were the group who triumphed.

Spanning sixteen countries and every major asset class—stocks, bonds, bills, inflation, and currencies—the authors deliver a global audit of market returns from 1900 to 2000. Why go so far back? Because “brief snippets of stock market history are not very helpful… to estimate the expected return, we need a long run of data.” And not just from the U.S., either. “The U.S. economy has been remarkably successful. It would be dangerous for investors to extrapolate into the future from the U.S. experience.”

So what did the authors find after a century of digging through dusty archives and reconstructing returns, stock by stock? First, equities beat bonds in every single country studied. Second, while equities were riskier than bonds or bills, “these risks were rewarded.” But they’re careful to note that the “equity premium”—that extra return for taking on stock market risk—has probably been overstated. “Our risk premium are lower than those that have been reported in previous studies,” they caution, partly because older studies suffer from “survivor ship and success bias.”

Another big takeaway? Global diversification works. “Investors in most countries would have been better off investing worldwide… rather than restricting their portfolios to domestic securities.” And yet, despite the clear benefits, investors still tend to stay local—a phenomenon the authors call the “home bias puzzle.”

The book also takes a hard look at famous anomalies. The small-cap premium? It reversed after being discovered. The value effect? “Value stocks have performed markedly better than their growth-stock counterparts,” not just in the U.S., but in the UK and across other countries too.

Still, the most pressing lesson might be this: don’t count on past returns repeating. The authors warn that “high long-term returns on equities, relative to bonds, are unlikely to persist.” Investors today “embody exaggerated expectations based on an imperfect understanding of history.”

In short, if you’re planning your portfolio for the decades ahead, Triumph of the Optimists reminds you to zoom out, think globally, and manage expectations. Because in investing, the real edge belongs to the informed optimist—with the patience to look back a century and the discipline to stay the course.
 

One Up On Wall Street.....Peter Lynch​


WHO IS PETER LYNCH?​

Peter Lynch, born on January 19, 1944, is a legendary American stock investor and businessman. Lynch managed the Magellan Fund and generated a stunning 29.2% annual return over a 20-year period. Read on to know more about Peter Lynch and his investing strategies in: One up on wall street.

CHAPTER 1: THE MAKING OF A STOCKPICKER
Contrary to popular myth, nobody is born with a knack for stock investing. It’s not something that’s in our genes, but one becomes a seasoned stock picker only after doing his research. Many people distrust the market, and Lynch’s family was no exception. However, when he took up a job in a golf course as a caddy and listened to too many conversations with his clients discussing the stock market, he realized that the positive evidence beat the negatives. After saving some money, he bought stocks for the first time at $7 per share, but as America went to war and he had luckily invested in an airfreight company, the stock rates hiked up, and he knew that bigger things were in store for him.

CHAPTER 2: THE WALL STREET OXYMORONS
When an average investor invests in stocks, he often confronts an oxymoron. Professional investing – you’ve definitely heard the term too many times – is also an oxymoron. Of course, this doesn’t point fingers at all the professionals out there, but free thinkers like Max Heine have also done a fantastic job at making money. They read the same magazines or books we do, but it’s important to understand what you’re up against. There are many exceptions where people who haven’t even attended business schools have done spectacularly well in the stock market, but it’s only because they rely on logic and are never limited by rules that are set by other professionals.

CHAPTER 3: IS THIS GAMBLING, OR WHAT?
There’s always a debate between people investing in stocks and those who prefer bonds. While stocks appear to be scary for some, bonds seem to be safe and secure. However, history shows that stocks have beaten bonds by a big margin since 1927. Comparatively, stocks have yielded 9.8 percent while bonds are yet to cross the 5 percent threshold.
Although there were numerous crashes, recessions, wars, and depressions, stocks have always yielded more, and it’s because you have the company as an ally with you. You grow as the company grows, and you even a part of the company, but with bonds, there is no such option. In fact, the bond market is also not completely risk-‐ free since it has become volatile over the years.

CHAPTER 4: PASSING THE MIRROR TEST
Before an investor jumps to invest in stocks, he must ask himself if he owns a house already. Investing in your home is a lot safer than the stock market. Most people manage to buy houses and it usually returns a decent profit. Also, it’s very rare for an individual to lose all his life savings on his home, but it just might happen with stocks.
The second question an investor needs to ask himself is if he can afford to invest in stocks at any given point in time. If you have too many commitments, it’s best to stay away from the stock market. The third and the most important question is to ask yourself if you have all the qualities – patience, persistence, detachment, and a lot more – before you invest in stocks.

CHAPTER 5: IS THIS A GOOD MARKET? PLEASE DON’T ASK
If it were possible to make money in the stock market by predicting the future, almost everyone would have lost money. Most people who claim to forecast a bear or bull market lose money, too. The stock market and the general economy move hand in hand sometimes, but it’s not possible to predict inflation or deflation either. Stock owners prepare themselves for an upcoming disaster, but how do they do that when they aren’t even aware of what it is? Therefore, instead of trying to predict or beat the market, an average investor should focus only on profitable companies that aren’t overpriced.

CHAPTER 6: STALKING THE TENBAGGER
A commoner has better chances of receiving tips about rising stock prices much before a professional. For instance, if you own a tire store and notice that there’s a lot of demand for Goodyear, you already have your tip. People don’t realize the opportunity they have in their hands and always look for something better, but it doesn’t work that way in the stock market.
Therefore, if you’re interested in the stock market, your best bet is to invest in something you’re knowledgeable about rather than looking for something better to turn up.

CHAPTER 7: I’VE GOT IT, I’VE GOT IT—WHAT IS IT?
When an average investor gets a tip, he jumps the gun and rushes to buy the stock, but is it a good move? Buying stocks without any research is like playing poker without even looking at the cards! That being said, it always looks wise to invest in big companies like Coca-‐Cola or GE to get maximum profits; however, it’s not for people looking to double or triple their stock prices in a short period of time. While big companies are great, it’s best to take a look at small companies if you want to make more money.

CHAPTER 8: THE PERFECT STOCK, WHAT A DEAL!
When looking for perfect stocks, there are a few things to consider. Firstly, notice the name. Is it dull and boring like, say, Pep Boys? Secondly, does it do something equally boring? The more boring, the better, and yes, it sounds ridiculous, but you have an edge if you buy stocks in such companies because they go up even before anyone notices it. Thirdly, if the company produces something that’s not all that interesting, it’s a big plus again.
There are no perfect companies in the stock market, but you need to look for something that has the potential to stretch, rather than looking at big companies that have no room to expand.

CHAPTER 9: STOCKS I’D AVOID
If there’s any stock you need to avoid, you need to take a look at some of the hottest picks available. For instance, when the carpet industry boomed, just about everybody invested in carpets, but the industry declined soon, and many people lost huge amounts of money. The problem with hot stocks is that they have too many competitors too soon, and they go out of business even sooner. Additionally, the problem is that the price declines rapidly without giving you a chance to sell what you have.

CHAPTER 10: EARNINGS, EARNINGS, EARNINGS
When you want to buy a stock, how do you determine whether it will increase in price? The best way to do that is to look at the earnings. A stock isn’t like a lottery ticket, and you actually become the owner of the company along with the others who bought the stocks, so it’s important to look at the earnings.
Several theories float around, but it all boils down to the assets and the earnings. When you invest, you do so by keeping the potential earnings of the company in mind. This also means that if the earnings crash, the stock crashes, too.

1 of the First & Best Books i read on investing.....Peter lynch Talks to you in a very Down to earth Language in a way that Helps you Take on Board the world of investing & in understanding the world Around you Through Investing in very simple terms that Everyone who is new to investing can Understand......Enjoy The ride!
 
but i think of investing in a stock ( most of the time ) as buying a tiny piece of the company , so i am more interested in the path the company is taking , is it a path with probable growth , or an unmarked path liable to have pitfalls and detours ( and a forest of regulations )

yes the share price may go up or down ( or stay static ) but where is the company going , are shareholders growing impatient and liable to demand a board change , is the company expanding too rapidly , and losing it's focus

'the market ' only comes into play in my thinking when i am thinking about index funds and LICs ( because i am buying tiny slivers of several companies at the same time )

i believe Buffett made a quote about buying business so good even an idiot can run it ... because eventually one will

.. sadly i have seen that several times with stocks i held ( i have seen companies with compelling applications for their product or obvious markets , but the management may as well have brought their white canes to work , they just kept on bumping into walls )

now reacting to a general market move ( not trying to predict it ) can be more interesting and profitable , because the masses ( or the over-leveraged ) cause a trend where contagion affects most stocks in that sector of index

remember when BHP ( and Vale ) had that tailings dam disaster .. well i topped up on a small miner that specialized in iron pellets ( at the time ) and had one major customer ( and bought so very cheap BHP as well )
 
ShareSuccess said:
CHAPTER 10: EARNINGS, EARNINGS, EARNINGS
Click to expand...
when looking at earnings , i look for stocks with a ( mostly ) stable record of earning THEN look at earnings forecasts

and ask is this company liable to SURVIVE another 10 years and let some lucky opportunity find the company

few companies can maintain consistent growth for an extended period , there is always an upper limit to how far they can grow ( too big to coordinate effectively , so big they trigger anti-monopoly laws , etc etc )
 

Adam Smith: The Stock Market as a Game​


It’s become abundantly clear to me that there’s a high degree of gambling in today’s stock market. From the frenzied trading of meme stocks to the speculative bets on tech IPOs, investing often feels more like a high-stakes poker table than a carefully calculated financial strategy.

This isn’t a new phenomenon, though. The tendency to treat investing as a game, rather than a disciplined approach to building wealth, has existed for decades.

Investing is serious business—or is it? In The Money Game by Adam Smith (the modern one, not the 18th-century economist) makes a compelling argument that the stock market is both a game and a Game.

He describes it as “both sport, frolic, fun, and play, and a subject for continuously measurable options.” That idea might sound strange to some. After all, investing is about making money, right? Well, not necessarily.

Smith quotes a leading Wall Streeter who claims, “Eighty percent of investors are not really out to make money.” At first glance, that seems absurd.

Why else would people put their hard-earned cash into the market? But when you think about it, investing often has less to do with pure profit-seeking and more to do with entertainment, ego, and the thrill of the chase.

For many, the stock market is a national pastime. Smith points out that “we have more than twenty-six million direct investors in this country” and that the number keeps growing.

That’s a massive pool of people engaged in an activity that, for some, is less about long-term wealth accumulation and more about the action itself. It’s a form of legalized gambling, only with better odds (most of the time).

And like any good game, there are winners, losers, and the house always takes its cut. Smith acknowledges that “the investment game is intolerably boring save to those with a gambling instinct, while those with the instinct must pay to it ‘the appropriate toll.’”

That’s the cost of playing—whether it’s trading fees, bad decisions, or just the emotional highs and lows of watching your portfolio bounce around like a yo-yo.

So what about bonds, preferred stocks, and other “safer” investments? Smith argues that serious investors rarely touch them, because “they lack romance enough to be part of the game; they are boring.”

In other words, no one gets an adrenaline rush from tracing their finger down a bond yield table. The action, the thrill, and the big wins are in stocks.

But here’s the real question: is it wrong to approach the market as a game? Not necessarily. As Smith points out, “Sometimes illusions are more comfortable than reality.” The danger comes when people fail to recognize which game they’re playing. If you see investing as a casino and treat it accordingly, then fine—just be aware of the risks.

But if you believe the market is some sort of get-rich-quick machine that always rewards daring moves, you’re in for a rude awakening.

Ultimately, the key is awareness. If you acknowledge that investing has a built-in gambling instinct, “we can ‘pay to this propensity the appropriate toll’ and proceed with reality.” In other words, play the game if you want—but know the rules before you bet the house.
 
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