hello friends, in today’s article we see chapter 9 of one up on wall street book. In this chapter 9 peter lynch explain the investor have to avoid the stock. so let’s see chapter 9 of one up on wall street book.
Stock to avoid:-One Up On Wall Street: Chapter 9
Peter lynch give some criteria which individual investor have to avoid for the great return form the investment. Let’s talk about it one by one.
- Hottest stock in the hottest industry: If any stock comes in a hot industry so many people ready to buy that stock. You know that if the crowd follows any stock that stock price increases more than its intrinsic price. This is one best reasons to avoid the hottest stock in the hottest industry.(One Up On Wall Street: Chapter 9)
- Beware of next Microsoft, next IBM, and next Macdonald: If someone telling you this stock is going to the next Microsoft company and next IBM then don’t buy that stock. Because Linux is the computer operating system, and everyone is ready to buy that technology company as saying, it is the next Microsoft. after this craziness then you got the what is the Microsoft and Linux. So don’t buy this type of company which people say it’s going to the next A or B.(One Up On Wall Street: Chapter 9)
- Avoid serial Acquirers: Ignore the company which acquires the other company’s business. This type of company does the diversification of the company. If the company buy continuously the other company without giving them time to run the bought company business. So the type of company you don’t buy. The process of diversification is good for some companies because they are waiting for the company successful and they acquire the other company.
- Avoid serial Acquirers: If you want to invest in that company. You should in those company which is going to acquire some other company. if this type of news comes in because you get the minimum price stock and after buying you get the maximum price of 30 t0 40%. After diversification, that company becomes the turnaround if they sell the unprofitable subsidiary. (One Up On Wall Street: Chapter 9)
- Beware of Whisper stocks: Peter Lynch says, “this type of company is only promising and emotional appealing, but don’t have any record of a company earning. if any company says promising, I am doing that then wait for a year. if they doing they become a good company and you get a fair price for that company. But most of the time this type of company doesn’t do that.”
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- Beware of suppliers: This type of company has a minimum number of customers or a couple of customers. if any company has the minimum customer they don’t grow maximum. This company is not growing drastically.
- Beware of stock with exciting names: If any company has an exciting name they all crowd follow that stock, for example, Xerox. If this Xerox company name is David Drive Copies, so no one attention to this type of name company. So beware of stock with an exciting name. If you want to buy an exciting name company then you get the overpriced stock. If you really want to buy then develop your own company.
So the above point helps you to get the which stock you have to avoid. So Make an investment carefully and develop the own portfolio smartly. Wish you get the best stock by avoiding the bad stock.
This is all about chapter 9 of One Up On Wall Street Book.
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