hello friends, in today’s article we see chapter 8 of one up on wall street book. In chapter 8, we get the perfect stock, what a deal. Chapter 8 of one up on wall street book gives the perfect stock criteria. let’s see step by step.
The Perfect Stock, what a deal:-One Up On Wall Street: Chapter 8
In chapter 8 peter lynch give the 13 attributes of perfect stock. These attributes help you to get the perfect stock. if you learn this chapter, you get the simple and common things that very useful in stock picking. so let’s see step by step.
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13 Attributes of a Perfect stock:
- Its name sounds dull and even ridiculous: Peter Lynch says, if you any company have a dull name, so maximum people can not be interested in that company. If you invest in any company you need a good company name and also the feel of the owner, with a brand name like coca-cola. So there is the simple psychological thinking in the investor. so for that reason, so many people are not interested in the company that name was dull, whatever the profit of that company or those company is undervalued. So if you find any company whose name is dull then see the balance sheet of that company and then invest in that company. For this understanding, the author gives some examples, Automatic data processing. This type of company name doesn’t feel like a company-type investment, it feels like somethings is processing. so if you find this dull name don’t ignore the company see the company earnings and invest in that.(One Up On Wall Street: Chapter 8)
- It does something dull: So many institutional or individual investor wants the invest is clean and profitable and that invested company do something like changing the world. So many people ignore the companies that work is dull. The author gives examples of Crown Cork company, In this company produce the seal of the bottle, Can, etc. So no one interested in this company only because of his work. When the author sees the financial statement he gets the perfect company stock. The author gives another example of Seven ox international. This company sells the coupons to the customer, so these company not doing an interesting job. So if you are investing see the work of the company which has boring work with profitable financial.(One Up On Wall Street: Chapter 8)
- It does something disagreeable: Some companies do the disagreeable work. the author gives the example of a safely clean company. This company service is to clean the vehicle parts and Greece on those parts. So these types of companies give the dirty feeling and his work is disagreeable as an investor. So if you want to make money while investing in a company, then adjust with his work, not with the balance sheet.(One Up On Wall Street: Chapter 8)
- It is a spinoff: If you get the company that has the above characteristics of the company. and you find the spinoff company as well, then invest in that company. Spinoff company has a strong balance sheet. So invest in a company, which is a spinoff.
- Institutions don’t own it, the analysts don’t follow it: If you get the above characteristics company, this type of company doesn’t follow by analysts, and not any institution is interested in that. So you get the company then see the financial statement and also the stakeholder name.(One Up On Wall Street: Chapter 8)
- Rumors like involved with the mafia: If you get some rumors about the company, then see which type of rumors is if those rumors with the mafia then another investor is not interested in that company. So see the rumors are correct and invest in that company which people are ignoring.(One Up On Wall Street: Chapter 8)
- There is something depressing about it: If some company is looking or doing the depressing work. then find out those companies and invest in that company. If a company is depressing then no one invests in that company. Before that, you have analyzed the company information.(One Up On Wall Street: Chapter 8)
- It is a no-growth industry: There are some companies which has a no-growth industry. so the author gives some examples is in that Burial business. In this business, there is no growth, so many people don’t invest in that company. If you invest in these companies, so you get a good return, and this business does not close at all.(One Up On Wall Street: Chapter 8)
- It has got a niche: If you want to invest in the company they see, that company has a specific niche. If the company has a specific niche then they do the best work. the author gives some examples of niche companies, Washinton post, Boston globe, etc. this company makes the newspaper niche and very famous in that area.(One Up On Wall Street: Chapter 8)
- People have to keep buying it: You have to find out the companies which have the product, that product is people buying it regularly. If these companies always make the benefit by selling the regular product.
- It is a user of technology: Company is using the technology for their improvement and increasing the sales earning. the author says don’t buy technology company, buy the company which uses technology.
- Insiders are buying: If in your company the insider is buying, then there is only reason is that the stock is undervalued. If you want to invest in a company then check for insider buying.
- Company is buying back share: If a company is buying share then, invest in that company. because the price of that company is very low as compare to the market value of that company.
Above mentioned attributes may help to find out the unique and best company.
This is all about chapter 8 of One Up On Wall Street.
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