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One Up On Wall Street: Chapter 20

March 25, 2021 by Laxman Sonale 9 Comments

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.
Previous Chapter

50,000 Frenchman can be wrong:-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.

One Up On Wall Street book summary

February 26, 2021 by Laxman Sonale 6 Comments

Hello friends, In today’s article we see the summary of one up on wall street book. In this chapter, the author says, which things we have to check for our stock, so let’s begin a summary of one up on wall street book.

Checklist: For all stocks in general(One Up On Wall Street book summary)

In a company, you have to check the P/E ratio, and this P/E ratio compares with the other company which has in the same industry.
The Company in you has seen how much is institutional ownership. if you see the institutional ownership is very less, then that is good for the company and you also.
In company stock, you have to see insider is buying and companies buying share back. So both point is a positive sign for investors.
The company, the earning of the company is increasing or not. if constantly increase or increase sometimes and decrease sometimes. (One Up On Wall Street book summary)
In a company, the balance sheet of the company is strong or not means debt or equity. So minimum the debt than the equity and decreases timely then that is a good sign.
Lastly, also see the cash position ( In previous chapter 13 author give the example of FORD company, in this company $16 is net cash is present, means ford company is never going down $16. if is going down then buy the more share.)

* So see specifically each and every category:

Slow growers:

In this category, you have to see the company is paying dividends or not and they pay regularly or increase slowly in a constant way or and give dividends in recession time also.
Company is how much percentage of earning pay in the form of a dividend. If they pay a minimum percentage of earnings in the form of dividends then this is a good sign, If they pay the maximum dividend then earning is decreases, and earnings decrease so no money to pay dividends so this is a like vice-versa to each other.

Stalwarts: (One Up On Wall Street: Book summary)

So in this category, you have to see the company is strong or not easily go out of business.
For this purpose, you have to see the P/E ratio to pay maximum money for that stock. if you pay maximum money then their value is decreased.
Also check of company plan related to the diversification of business, if the company is making diversification, then stay away from this category of company.
See the long-term growth of the company is constant grow or decrease in the previous year, and what happens in recession time, their earnings decrease or not.

Cyclicals:

In a cyclical category, you have to see in the company the supply and demand relationship of the product.
And also see the inventories present in the company( if the company is trying to build up, so in this category there is a new entrance, so that is more dangerous and focus on the cycle of the business.
In a company you have to see how much time is company cycle is staying. (One Up On Wall Street book summary)
So you can easily predict the upper level of the cycle of business but a lower level of the cycle we can’t predict easily. If you know that where to start the cycle of a business is good for you, because most of the people don’t know about that.
For example automobiles stock, this business cycle is staying 3 to 4 year and if they fall as bad as to fall and, they also increase in the very good rise of the business cycle.

Fast growers:

in this category, you have to see, which product is selling in the maximum volume of all products of the company.
So you have to check how much percentage of the sale that product on other product, and how much percentage of earning of that product on the other products of the company. (One Up On Wall Street book summary)
So you see the companies growth rate is 20-25 is a good sign if they more than 30 means that are fake growth and they can’t stay constant and they fall in the coming year.
The company is spread well and they are doing the successful operation in other cities, states and country also, so you have to see this. And see the is there any space for the company to grow.
If they are still in one state and have space to grow in another state then it a good sign for expansion.
So this is not like in the previous example of the limited company, in this company, the company is growing all over all mall i.e 670 out of 700 so there is no space for the growth of the company. So if a company wants to grow then they need a new idea and new innovation in their product to expand.
So you have to see also the PEG ratio. This ratio is one or less than one, and stay than is a good sign.
You have seen the company like Gillette, they sell the lezzer which use and through type. So people use their product every time, and the company is growing continuously. and other company which has sold the electronic surveillance system. They spread all over the country and they don’t have any space for sale and this system stays 10 years of lifespan of that product, so what is the company is doing in 10 years. So the growth of the company stops. (One Up On Wall Street Book summary)
So lazzer selling a business is good, then the electronic surveillance system selling business.
Lastly, you have to see how much institutional ownership is present in the company. if as much as less and very as much as fewer analysts follow that stock.

Turnaround:

In this category, you have to see how much debt is present in the company. as much as fewer the debt is good for that company and you have to see which type of debt is present, bank debt or funded debt.
The company is taking debt that is over than the equity then they affect the earning dilution. So in this debt, you can recover the company but the stock of that company is not recovering in the whole life span.
What is the plan of the company to recover from this situation? and they are selling the unproductive branch of the company. and they reduce the cost. and is there any plan for improvement of the company?

Asset plays:

In this category, you have to see is there any hidden asset present in the company. or if present then what is the value of that asset.
You have to see how much is debt, if the debt is more than the asset, then it is the cause of concern. if they have some value than after paying debt then it is beneficial to the company. (One Up On Wall Street: Book summary)
If a company is taking more debt then this is not a good sign or not have a value of the hidden assets.

Previous chapter

One Up On Wall Street: Chapter 2

December 6, 2020 by Laxman Sonale 2 Comments

Hello friends, in today’s article we see chapter 2 of one up on Wall Street book. In chapter 2 you get what is the oxymorons. And Why Peter Lynch called as oxymorons to the professional investor. In chapter 2 of One Up On Wall Street book, Peter Lynch explains that not all are the professional investor are oxymorons. let’s see step by step.

The Wall Street Oxymorons:-One Up On Wall Street: Chapter 2

Oxymorons: The professional investor who is doing dull work and gets the average return. So this type of professional investor is Oxymorons. So many professionals are not Oxymorons. Those are as follows.

So let’s see that people are professional investors but not oxymorons.

John Templeton: The best thing about john Templeton is that When the stock market crash in 1972 in the USA. These guys invest in other countries like Canada, Japan. They take all money from the USA market and invest in other countries. Most of the investor is not doing well in other country so for that, they can’t invest in other countries. (One Up On Wall Street: Chapter 2)
Max Heine And Micheal: Max and Micheal both are students of Benjamin Graham, so they follow the value investing approach, when the stock market is down then they invest in the market. So it is the professional investor but against the Oxymorons, so that why they are not the Oxymorons.
John Neff: He is a good investor, and choose that company to become a good return for him. For this reason, is also called Champion of out of Favor Stock. So he is not the oxymorons.
Ken Heebner and Peter Deroeth: Both of this investor is not going to the business school. Ken Heebner has a law background, and they completed their graduation from Harvard law school. So suddenly they have a passion for Equity. and then they start investing in equity and make more money. This is also a type of investor who does not go to business school and it’s got the benefit of that. (One Up On Wall Street: Chapter 2)
George Soros: This is a type of investor, who has the world record of the hedge fund. he is not also an oxymoron. And not doing what other oxymorons do.
Warren Buffet: Warren buffet is also a student of Benjamin Graham. He still operates the biggest holding company in the world. that has a big stock price. Warren Buffet is one that type of investor who comes in the Top riches people as an investor. He is a world-famous investor, and also a humble investor.

So let’s talk about the professional investor, following are some point about the professionals.

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Constraints for professionals:

Professionals discover companies very late: In professionals portfolios have a big size company and they don’t have time to research so that they don’t discover a company early. Sometimes it takes 10 years to discover the company. (One Up On Wall Street: Chapter 2)
Most Professionals focus on a handful of Companies: Professional investors select the company. which has a big size, and minimum risk. So they only focus on a handful of companies.
Fear of getting fired: Professional investor has a pressure of getting fire. So they do the same things as all professional investors do.
Spend a lot of time explaining to bosses and clients: If any one of those professional investors makes an investment in unpopular companies, They have to explain to the boss and also the clients. so for that difficult, most of the investor is not doing the investment in unpopular companies.
Constraints for professionals and the opportunity for amateurs: So individual investors make anywhere investment, without constraints and do a good job as compared to the professionals.
Amateur investor: If you think like an amateur, most of the time, you have common sense with you. So amateur investors to good investment as compared to professional investors. (One Up On Wall Street: Chapter 2)
Peter thinks like an amateur as frequently as possible: So that reason, he has the world record of fund manager continue of 13 years. You get good company, when you think like an amateur, so that reason peter thinks like an amateur.

So this is all about the oxymorons.

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Read More: Common Stocks and Uncommon Profits

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One Up On Wall Street: Introduction

December 4, 2020 by Laxman Sonale 2 Comments

Hello friends, In today’s article we see the new book, One Up On Wall Street. This book was written by Peter Lynch. Peter Lynch, Mutual fund manager of fidelity. He manages the Magnal fund of fidelity company. The Magnal fund has the world record of annual return for 13 years. His performance is double as compared, to market performance. in this article, we see the One Up On Wall Street book introduction.

Introduction:- One Up On Wall Street

In this book, Peter Lynch, shares his experience as well as his investment philosophy for the common investor or individual investor. An individual investor can be outperformed, most the professional investor. By reading this book you will get a simple philosophy of investing. so let’s see peter’s advice and some experience.

Peter’s Advice And Some Experience:

Ignore what professional investors buy and recommend: If you want to outperform as an individual investor, you have to ignore the professional investor’s buy and it’s a recommendation. Because they have three reasons 1) they will be wrong 2) if they are right, you don’t know when they sell the stocks. 3) You have the maximum sources of information than a professional investor. (One Up On Wall Street: Introduction)
Some Example from Past: the author gives one example, in this in jule,1994 you invested in one company. This company gives you a maximum return in five years of 3 lakh dollars. and also if you not invested in 30 days, from five years you will get 1.5 lakh dollars. So not investing or trading is the maximum chance of getting good stocks.
You just have to find one winner stock in a lifetime: In your whole life, you need one stock to get super-rich. So just invest in 20 companies, in between that you get the one winner stock. (One Up On Wall Street: Introduction)
Finding a promising company is the first step: here don’t make the mistake of seeing the company and invest in the popularity of the product. Finding a company is the first to step then analyze it.
The next and main step is Research: When you find the company, then do the whole research about the company. In this research, you can check all fundamentals of the company and also management.
Story of “The limited”: there was a friend of peter lynch, they also invest in the stock market. One day his wife making shopping for his daughter and telling husband about the cheap price of clothes. The husband told in reply to his wife that, “I am trying to make money, and you are spending money.”, and they invest in other companies, which are that time popular. (One Up On Wall Street: Introduction) After a week few years, the company was big and every professional investor talking about that company. And husband also read about that company and that company comes in the newspaper. Then the husband tells the wife that, once time you are telling me about the limited company, saying that the company is doing good. Then wife replies that that company, me and my friends don’t buy from him our clothes because they increase the price of the product. Again husband not listen to his wife and make an investment in the limited company. Then again lose their money, one company not chosen, and again when the company is chosen, when they overprice.

So above story, you get the basic philosophy. that is seeing around the product and find the company. After that make the investment. (One Up On Wall Street: Introduction)

If you want to be an intelligent investor you have to read to books