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One Up On Wall Street: Chapter 20

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Hello Friends, In today’s article we see chapter 20 of the one up one wall street book. In chapter 20 Peter Lynch explains that 50,000 Frenchman can be wrong in one up on wall street book. So let’s see chapter 20 of one up on wall street book.
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50,000 Frenchman can be wrong:-Chapter 20

One Up On Wall Street: Chapter 20

The Author says 50,000 Frenchman can be wrong.

So all people follow the crowd the only reason is that they think that much of people are right,

so they follow the crowd, by author say’s 50000 Frenchman are also wrong in the stock market.

So in the stock market don’t follow the crowd follow your own way.

So the author says, those small investors can calmly walk in the entrance when there is a  crowd at the existing position. OR

You can exist, when crowded at the entrance position, So at this time you are safe or not killed.

That simply means that The large institution loses interest in any stock, They want to sell that stock.

So in this time, you get a wonderful opportunity in that stock, and you have to analyze that stock.

If that company doesn’t have any problem(earnings are high, profit is good, Plan of future is good, Cashflows also good) but the people sell like crazy.

If they people buy any company at a crazy level, then you have to exist from that opportunity.

Monday Effect:-One Up On Wall Street: Chapter 20

The author says the Monday effect is nothing but,

‘so many people are looking for news on Friday and Saturday and

they will act like buying and selling stocks vigorously in the Market on Monday, that is called the Monday effect.

this effect is very dangerous for the crowd, they will destroy the company and make a tonne of loss of money.

So don’t take the stress of news and don’t act in the market like buying and selling in huge profit margin time.

You have only one work is to analyze the company and track the record of the fundamentals of the company.

So you are taking the stress of News then you act like an impatiently

so warren buffet says, ” Stock market is the vehicle of transport of money from impatient people to the patient people.”

So as possible as stay away from the news.

And don’t become the part of Monday effect.

……………………………………..

The author gives some points from part-3 of this book

Points to remember from part-3: -One Up On Wall Street: Chapter 20

  • Whenever the stock market is declining, it will decline today, tomorrow, or a few years later. So when they decline that is a good sign of the opportunity. So be prepared before the stock market is decline, with search stocks
  • So no one can’t predict the market direction, not for a single year, or someone says I will predict for 10 years so you have to forget about that person. this is not possible.
  • If you want to perform wonderfully in the market, then don’t try to right at any time. so peter lynch says, ” you can make the world record by selecting 10 stocks and 6 is the right stocks.” So don’t try to make money in every business. for this warren buffet says, ” I don’t want to make money in every business at 20% annual interest rates, if I get less than 10, I am happy with that.” So don’t try to be right in the stock market on stocks.
  • Peter Lynch says, ” Those stocks are the winner stocks they always surprise you.” So the author also doesn’t know this the stock becomes the Multi-bagger.
  • You can make more money in the Stalwarts category by making a simple 20 to 25 % gain continuously, so in long term, you make lots of money.
  • If any company is performing very badly, and you think another company is not doing badly, so there is no guarantee. So the company economy changes, so every company is can perform badly.
  • Whether you are right or wrong does not depend on the price of the stock, for example, let’s if the price is up you say, I am right and if the price of the stock is down, and you are wrong, so this not depends. the right or wrong is only to get while in the Long term investment period.
  • In stalwarts you have to focus on only one is ownership of Institutional ownership and how many people are following that stock. So in stalwarts always you get the overpriced company, so understand the fundamental and its Intrinsic price and when the price is down then you have to buy that stock.
  • the losing strategy is buying the average fundamental company and you sell that stock that has strong fundamentals but you sell after the price is doubled this is also a losing strategy.
  • In the Fast grower category, the Fast grower company is not always the fast grower, you have to attention to when the period of fast growth ends and which is the best time to exist for you.
  • So if you don’t buy any stock, you can’t lose the money in that stock, so don’t try to trap in that thinking is like, if I am buying that stock, I will increase my wealth by 50% annual interest rate.
  • So don’t attach so much with winner stocks. if you do that then you forgot about that stock to track.
  • If any company stock price is going zero, here doesn’t matter how much price you are buying that stock. you lose 100% of the money in that stock.
  • So you can improve your money, by simply rotating the stocks. In rotating you have to switch from one stock to another stock with making a profit from that. So time in your favor you can do that, but if they don’t make them or do not get results then minimize your acts of rotating stocks.
  • So don’t try to think like, I want to recover my loss. If you do that then you lose most of the money that is present in your hand.
  • don’t stay in past, whatever happened in that past, so be present in the present time.
  • you have to focus on reaching your financial goal or financial freedom
  • If you think, you can’t beat the market then go through the mutual funds.
  • So lastly, in the market there are always things to worry about, so don’t worry.

So this is all about the One Up On Wall Street book.

Lastly, we finish this book, so from the next article we see the new book summary.

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One Up On Wall Street: Chapter 12

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Hello friends, in today’s article, we see chapter 12 of one up on wall street book. this chapter helps you to know more about the company by asking simple questions. One up on wall street book chapter 12 helps you to find out the best questions you have to ask the company and broker.

Previous Chapter 11

 

Getting the fact: One up on wall street chapter 12

In this chapter, you get more information about the stock by asking the following questions. if you want to know more about the company ask the following point. (One Up On Wall Street)

1. If you have a full-service broker, ask them some good questions:(One Up On Wall Street) 

  • How you classify this stock as a cyclical, slow grower, fast grower. in this situation most of the time they fast, grower, because they are giving you advice about the stock.(One Up On Wall Street: Chapter 12)
  • then again ask about Recently growth in earning. What is the P/E ratio from a historical level?
  • If they tell you to buy now this time, then ask why now buying is good? And this company before buying is why not good? What happens suddenly in the company?
  • What is the company business and which business comes with maximum profit and how much spending on the growth of the company? (One Up On Wall Street)
  • How finance the company by doing issuing equity or taking maximum dept?
  • in this company any insider buying or not and give the analyst report of your analyst, I am study first and then come again ask you some good questions.
  • You have seen the price and earing report charts report of five years. And also ask the dividends of the company if the company is giving the dividends, then ask how much time pay the regular dividends and any growth in dividends in history to today. (One Up On Wall Street)
  • In the company is there any institutional ownership or not, if the answer is yes then check how much ownership is there in the company. if the institutional ownership is more then is a good sign for the company.
  • How many times your analyst follow this stock.

2. Call Investor relations: (One Up On Wall Street)

  • You can ask some questions directly to the company by using call investor relation. Then ask some question they are as follows
  • Plan of the company for debt reducing, and what is about that recently launch the drug, if they are a pharmaceutical company or that product. (One Up On Wall Street)
  • what is the effect on earnings? and how much sales of that recently launched the product in this year?
  • In this year how much company is opening a new outlet? and also how much percentage the market share increases?
  •  The company is operating at the full capacity of the plant. yes or no.
  • Properties in the balance sheet that market price value are how much?
  •  If you don’t have any above stuff question, then ask simple two questions 1) What are the positive of the company this year and 2) What is the negative of the company this year. (One Up On Wall Street)

3. Visit the company’s headquarters:(One Up On Wall Street)

  • Visiting company headquarter ask these questions, they are following
  • Any fund manager or analyst come in this headquarter. If come in two or three year then, this is a good sign for us, because this company is not followed by any fund manager or analyst.
  • If the companies headquarter is situated in like that place is not easy to like everyone to go and see.
  • The good earning and cheap headquarter is a good sign for us.(One Up On Wall Street)
  • If the company headquarter is used expensive furniture and expensive things in headquarter, then this company is not using the right place of money, so this company loses earnings in the future. So peter Lynch gives some examples is Pepboys and crown cork and shield.

4. Attend annual meetings:(One Up On Wall Street)

  • you can attend the annual meeting of the company, and talk to executives about the company.
  • Peter Lynch meets the company executive of XYZ company and ask about that company. Then after that Peter Lynch search the proxy statement of the company and they got the result is that the stock and stock option of the company is about $100 million. (One Up On Wall Street)
  • And this company’s P/E ratio is high. So if the author wants to increase his income double, then the executives of the company’s net worth also become $200 million.
  • So becoming this is unrealistic, so peter lynch never buys that stock, and sometime after the stock is going down.
  • If you think some executives do not become that rich then most of the time you are right.

5. Visit stores, buy and or taste product:

  • You can visit the store and ask some questions like that.
  • Ask questions to users of products like, Why you buy this product? and how much time is gone by using this product? and also can you recommend this product to other people. (One Up On Wall Street)
  • If one or two people give a bad review of that product, then is this no big deal.
  • So author gives the Apple company example, is that The Apple company is failing in mid-time but this time also in Peter Lynch office order the 7 to 8 macintosh computer and his wife also order macintosh, but the author doesn’t realize this stock and they lose the Apple company. (One Up On Wall Street)
  • This company can become the turnaround company, and you know the price of Apple Company in today’s day.
  • And The author also found the Crysler company that also fail for some time but this company become a turnaround by a person name is Lee Iacocca.
  • Then Peter Lynch calls Lee Iacocca and asks about the plan of the company regarding this situation and they love the plan and they think the plan also is going to execute. then they buy the Crysler company and this company becomes the turnaround. (One Up On Wall Street)

Read more on the previous chapter

Read Annual Report:

  • Screw the initial colorful pages and come to the annual report, and ask this question about the annual report to you, they are as follows
  1. Cash and marketable securities: you can see how much increase by comparing to the previous year. If increase then this is a good sign.
  2. Long-term debt: In this year and compare with previous year debt. if this debt is minimum than the previous year, if yes then good sign.
  3. (Cash + market securities) > Long term debt: If this is happening then is a good sign by comparing 10 years of the balance sheet.
  4. NOSO: If the Number Of Share Outstanding is decreased then the company does the share buyback, so this is a good sign. That is not mean is that buying buyback any time. you can check for a previous year’s buyback to share.
  5. Net cash per share= [ ( cash + market securities) – long term debt]/NOSO

By asking and seeing the above stuff you get more information about the company.

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