peter lynch

The 12 Silliest things people says about stock prices

March 11, 2021 by Laxman Sonale 1 Comment

Hello friends, in today’s article we see the 12 different silliest things people say about stock prices. Peter Lynch gives the 12 silliest things people say about the stock prices in chapter 18 of one up on wall street. So let’s see one up one

The 12 Silliest Things People says about stock prices:

If it has gone down this much already, it can’t go much lower: About this thought peter lynch gives one example, one stock has the price of 30 when at buying time, and they go down and come to $13 dollar, So peter lynch things not go more than that means below $10. But that stock is going down up to $4. So thinking like the above though it doesn’t make any sense to the stock price or investment.
people can always tell when a stock has hit bottom: For this thought author says, “Don’t try to catch knife, when they are falling, if you want to catch the knife, first you have to do is that knife come to the ground and they settle on the ground, then catch the knife.” So so many people just assume that they know the fall of stock prices and for that, they make the Short selling and get the maximum losses when the stock goes up. So don’t try to catch the knife, when they are falling. So you have to be patience in buying you stock that you are analyzing. (The 12 Silliest things people says about stock prices)
If it has gone this high already, how can it possibly go higher than this: So many people just think like that “this stock is double and there is the growth cycle is ended and I don’t think so this stock is a little beat higher than this.” So if you are also thinking like that you can’t make the maximum money in that stock. The most probability is that you most of the time miss the multi-bagger stock. So don’t think like that, if you want to sell the stock then ask yourself, why are you buying this stock (initial main reason), or fundamental is weak.
It’s only $3 a share, what can I lose?: The price of a stock in a falling situation doesn’t matter, whatever the price of the stock is $1000, $500, or $3. If they go zero dollars then that doesn’t make any sense. So don’t think like that. So you lose then you have remembered there is also the zero number that you lose, then whatever that price is go higher in multiple of that is go zero again, so zero is also chance to you lose. (The 12 Silliest things people says about stock prices)
Eventually, they always come back? Most of the time people think that whatever the price of the stock is go down then will come back. So for this author says, there is no guarantee is that this price of stock comes back. So hoping this and waiting for the stock to go up is like wasting your time (money). So Don’t think like that, and see the possibility of coming again at the right position price.
It always the darkest before down: People think buying the stock and that stock is not growing, then people say this though, But it does not make any sense and staying with that stock. So there is no guarantee of the stock is go up after some time. Thinking like this stock means you have to die financially with that stock. If the stock is falling badly, and you want to come to some point of price. then you have to think like that, if you lose the 99% in that stock so there is very little means no guarantee you will recover this. So this stock is never ever recovering up to 99%, and it’s impossible to tread near that stock price. So author gives the example of Oil company stock, they buy the stock at $4560 in 1981. and this stock comes up to $2200 in 1983, so people think that the bad or darkest time is gone and actually that stock is going up to $686 in 1985 so there is no guarantee of stock is always the darkest come first or after go, it may happen the darkest stay after also. (The 12 Silliest things people says about stock prices)
When it rebounds to $10, I will sell: So this is not good to sell this stock at $100 means this does not make any sense with at stock. Or you sell at any arbitrary number. there are two possibilities of this thought is 1) if this can’t happen to that at an arbitrary number, and 2) If this happens then you can test the higher return after making above the $100 because you sell the first. So there is no sense of thinking like that.
Conservative stock doesn’t fluctuate much: Most people are thinking about some conservative stock, for this author gives the example of the Utility company. this company is a conservative stock company, and they go down at 80% and you ignore that stock buy saying this thought. So you have tracked the performance of the stock of conservative also with the regular time frame.
It’s taking too long for anything to happen ever: Most of the time the stock price remains the same and people say, it’s taking too much a long time to happen to anything in the company. If you think like that when you sell this stock, and most of the time next day’s stock price reaches high. for this author give the example of Merk company is a pharmaceutical company, this company stock remains same continuously in 9 years. And the earning is increasingly slowly means 14% annually. So the average stock price is the same, so peter lynch says, this stock of the company is very awesome, and the probability is that this stock can become the 3X, 5X, and 10 baggers in the next few months of in a year of one or two, so stay with this type of stock, without thinking above thought. (The 12 Silliest things people says about stock prices)
look at all the money, I have lost because I didn’t buy it: This type situation come in much many time and people says, I didn’t buy that stock, I lose that much of money in that. So for this author give some explanation, he said,” So this is the human psychology, so you have to consider in this stock, you can’t put money, so you don’t get the lose of that, and be happy with whatever you have in your hand, and ignore the other people grow, that you can make the biggest money in the stock market.
I missed that one, I will catch the next one: When Linux company IPO is coming, so many people are saying that this is next Microsoft and everyone is trying to buying only on this thought, is I missed that one Microsoft, I’ll catch the next one. So all know the result of Linux. So don’t think like that, so each and every stock of the company is different so don’t blame yourself. (The 12 Silliest things people says about stock prices)
The stock has gone up, so i must be right or the stock has gone down, so i must be wrong: So don’t think like that, because short term investment not telling you a clear picture of your right or wrong. in short term this only happen is that how many people ready to buy that stock or how many people are not ready for buy that stock.

This is all about the 12 silliest things people say about the stock price from chapter 18 of one up on wall street book.

The Best time to Buy and Sell Stock

March 9, 2021 by Laxman Sonale 4 Comments

Hello friends, in today’s article we see chapter 17 of one up on wall street book. in chapter 17 you get some idea about the best time to buy and sell. After reading this article you know the best time to buy a stock and sell at the right time. so let’s see chapter 17 of one up on wall street book.

Previous Chapter 16

The Best Time to Buy and Sell Stock:

When to Buy:-The Best time to Buy and Sell Stock

In this situation, you have to buy in two important times, they are as follows.

End-of-year tax selling to carry forward losses: During this time some people sell stock that has to lose and save tax or carry forward and buy again that stock.
During market collapses and drop(recession): In this people are get panic and everyone wants to escape from the market and they believe that this is the end of their capital. So this time the value investor take the advantage of him and get into the market.

When not to Sell:-

don’t sell because a stock is doubled its price.
The macroeconomic issue like The money supply increasing or decreasing, the dollar appreciating or depreciating, or whatever happens with the economy. You have to hold until the fundamental of the company is strong.
If you think, you have to sell, then you have to ask yourself why are you buying and what is the main reason for you to buying.

When to sell:-

So the author gives us so many different categories, between which we have to remember some point from each and every category.

Slow growers: In the slow growers’ category, you can sell this stock when you get a 30 to 50% return on investment or If the fundamental of the company is weak. If the company loses market share from the previous one or two years and does maximum diversification and they don’t have any new product, from this situation you can sell the stock. When you buy this stock the company has more cash and negligible debt, but now the company taking lots of debt in reason of expansion, and the dividend yield is not so high, in this situation sell the stock in the slow grower category.
Stalwarts: In this category, you have to see the P/E ratio, if the P/E ratio is high than normal then you have to wait for coming normal by falling P/E and then buy again. In this category, you can sell a stock when the company’s major division is given less than 25% earnings of the company and they have a problem with earning growth. So in the future, no cost-cutting happen in that major division. the company launched a new product they are failing and lastly the P/E ratio is high than the industry’s ratio.
Cyclical: In this category, you can sell when you see this problem, the cost is increasing, the existing plant is working at full capacity and the company spends more money on the new plant. Inventories are increasing and competition in the company is increasing also union contract is an end to expire and demand is minimum and lastly, capital expenditure is doubled. If the above situation is there, then you can sell the stock.
Fast growers: In this category, you have to see some point that looks like a problem in the company, they are as follows, you can see earnings decrease or the company stop to develop a new product. the customer doing more complaints and their complaints increasing continuously. Institutional investors buy a 60% stake in the company, then in this situation, you can sell the stock. or you can see if the company have the maximum publicity and everyone saying buying suggestion. The company P/E ratio is maximum than the growth rate, and the PEG ratio is more than 1.5 and also the company staff management exists from the company and joins other companies. company product sales decreased in the previous quarter and the new product result is poor if you see a company showroom in every mall then the company does not have any space to spread and increase sales.
Turnaround: In this category, you have to see this point If a company operates another company, but they have different industries. And the P/E ratio is maximum than the growth rate and increases in inventories as compared to the sale percentage. The company taking more dept and the dept is increasing as compared to the asset it is very hard to get the sale from the previous customer, then this condition is happening, then you have to sell this stock to another company.
Asset plays: in this category, your whole game is on the hidden asset value, so you have to see this point, Debt is increased or a 10% stake in the company is increased to 60% then sell that stock.

the above-mentioned point helps you to identify the stock in which category and you have very much benefit from this information to selling the stock.

So this is some point you have to consider while selling the stock. So don’t sell the stock seeing the one or two-point that above mentioned the probability of point is high then you sell the stock.

So this all depends on you. So no one tells the right time to sell, so everyone says the right time to buy the stock and it’s easy to know the right time to buy.

One Up On Wall Street: Chapter 16

February 26, 2021 by Laxman Sonale 2 Comments

hello, friends in today’s article we see chapter 16 of one up on wall street book. In chapter 16 we see how to design a portfolio in one up on wall street book. so let’s begin designing a portfolio.

Part-3: The long term view:-One up on wall street book chapter 16

So let start with some knowledge

In the stock market, If someone offers you a 25-30% return from the stock market is unrealistic. Because peter lynch is record is 29% in continuous 13 years.
It may happen you can earn 30% but in some years you earn 2% also some years -20% also. so 10 years continuously 25-30 % return is impossible. (One Up On Wall Street: Chapter 16)
If your long-term record is worse than a saving account, then you have to confirm your techniques of investment have flowed ( wrong).
If you are spending time and effort picking stock, then you have to do better than the stock market index fund. for example, if an index fund gives you the 10% return, then your return is maximum than the 10% of return i.e. 15%.
peter lynch says, ‘ diversification is good but if you buy 20-30 stock only on diversification is not good for your portfolio. so you have to analyze each and every stock individually.
In your portfolio, the author says, ” you can buy 3 to 10 stock in your portfolio. you can do more maximum and minimum also as your wish. So keeping maximum stock means your probability of high of getting multi-bagger stock, if your analysis is good.
peter lynch says, ” you can not be sure on a stock that will become the multi-bagger. If you think out of 10 stock 3 will be become the multi-bagger then in between that only one become the multi-bagger. So if you have maximum stock then you have a maximum probability of multi-bagger stock.
If you have the maximum stock then you have the maximum flexibility of your portfolio. If you make money in one stock then you can easily that money put in the other stock. So easy to switch your money from one stock to another stock. (One Up On Wall Street: Chapter 16)
if you invest in a maximum amount in one stock, then you have to wait to succeed in that stock.
Peter Lynch says, ‘ We are talking about the 6 different categories of stock, if you invest in all this category this is also the good diversification method.” If you think this one category is given maximum return then buy that stock in the maximum amount and if you then this category of stock give the minimum return then buy them in a minimum amount, as simple as.

So let’s talk about risk and return from each and every category

Risk and return characteristics:

Slow grower: In this category, low risk and low return concept, because in this category you can not make maximum money and low maximum money, because they grow like a walking elephant, they grow very slow.
Stalwarts: Low-risk moderate return, in this category, if everything is right in the company, then you can make a profit of a 50% return in just one or two years. if something is wrong in the company then you can lose a minimum of 20% of all your money.
Asset plays (Low-risk high return): If you make the right analysis of the balance sheet of the company then you can make maximum money. If the other side you are wrong then nothing is lost in your portfolio.
Cyclicals: (Low-risk high gain and high-risk low gain) In this category anything is possible you can make money or lose money. If you are right then you become double or 10% or if you are wrong then you lose 90% value of your money.
Fast growers and turnaround: In this, both categories have high-risk high gain. In this category, if you are wrong then you lose your all money, and if you right then you gain 10 baggers or sometimes is 15 baggers.

Some people are sell stock whenever they make some profit and keep those stock that has already lost. for this author says, ” it’s like in your garden you cut the glower and give the water to the garbage.”

Some people sell those stocks that have a loss and keep those stock that has profit in an increase in more so both the strategy is wrong. (One Up On Wall Street: Chapter 16)

If you are not concise yourself if your stock is down 25% and you are a buyer or throughout the thought is that sell stock by decreasing 25% so you can not make money in the stock market.

So stop loss is a bad thing. If you sell your stock by decreasing 10%, for this author say, ” if I am put the stop loss on taco bell company thock so this stock we have to sell 10 times but actually this stock is multi-bagger for me to not selling and putting stop loss.

So stop loss is losing strategy or don’t sell any stock because they are double or you can’t take benefit of multi-bagger so you have to hold stock on fundamental is right.

if you design your portfolio in the above thought, then your portfolio is good.

One Up On Wall Street book: Chapter 14

February 18, 2021 by Laxman Sonale 3 Comments

Hello friends, in today’s article we see the one up on wall street book chapter 14. In this book, chapter 14 is fully discussed the company that you are chosen by giving some story to them. In this book chapter 14 of one up on wall street, we see that story is perfectly running or not by rechecking the story. (One Up On Wall Street book)

How to recheck the story:-One Up On Wall Street book

1. Read quarterly reports regularly:

You have to check every quarterly company story by checking quarterly reports. So what you think about the company before investing in that and now after the quarterly report is the same thing is remains same or not.
And also check the earning is increase or not. the company store, people are visit or not and their product sale is increasing or decreasing. And also the loyalty of product is increase or remain same. (One Up On Wall Street book)
For understanding, this concept author gives the example of The limited company.
the limited company has 670 stores in the USA, in total store in the USA is about 700. So the company is spread all over the country. so explant the business of the company is there no space for traditional strategy.
So if a company want to expand they need the innovative idea to expand. So in that time as an investor, you have to take the exit from this company if the company nothing to do to expand. (One Up On Wall Street book)
The author gives another example of a company i.e. Mcdonald’s.
Mcdonald’s expand itself in innovative ways, they never stop to expand and increase their profit. When Mcdonald’s spread all over the USA, then they try to found the different or innovative way to make a profit, for example, is dining, breakfast and try to spread in a foreign country. so the company takes the decad of year to spread all over the world. and they also open home delivery. So this type of innovative idea uses to increase profit and spread the company. (One Up On Wall Street book)
Another example is the Texas Air company.
Texas Air company is when the author found they are in bad condition and after that, they come to the good condition. For this type of company, you have to check the story behind this miracle situation.
If any company is bad in fast and now is good, is that not means that this company is not going again bad condition. So for this, you have to check the company story continuously, and always the company in tracking.
And don’t become the emotional fool, if the company is good and stay better.
So Texas Air is a company that buys the continental company and they do continental company as a turnaround. (One Up On Wall Street book)
So the continental company is the low-cost carrier company. So Texas Air company also acquire the Eastern company. And they try to turnaround this company also. But they don’t do, because increase the customer complaints and also the employee union problem. So author also ignores this problem, but they realize this problem.
then the author says, they make here two mistakes, 1) Eastern company is becoming turnaround by trying Texas Air company but they don’t realize the employee problem and also their union problem. and 2) Ignore the Delta airline company, When eastern company performance is not good then that time Delta perform a very good job, so whatever the loss of the eastern company, that benefit the Delta airline company. (One Up On Wall Street book)
So Delta airline is the major competitor of the eastern company. So those people travel by the Delta and eastern company, they know the problem of the company and also the which one is good or bad.
So that people can understand which company gives the perfect investment return.

So this is all about rechecking the story of the company. So if you find the company and make the company analysis and make investment and also you have to focus on that company. I know this is a boring job, for that warren buffet says,” Investing is simple but not easy.” So people can bethink about how much company have in our portfolio, for this Peter Lync says, ” Put that much company in your portfolio, like how many children you have in your family.”

Previous chapter

making an investment is the other part following that company is the important part. So this is all about the rechecking story of the company.

Visit the value investing website: Investing math is so simple

One Up On Wall Street: Chapter 13

February 13, 2021 by Laxman Sonale 5 Comments

Hello friends, in today’s article we see the different chapter 13 of one up on wall street. In this chapter, you get the quantitative part of one up on wall street book. So from this chapter 13, you get which term is important in the balance sheet for looking at investment. so let’s begin.

Previous Chapter 12:

Some famous Numbers:-One Up On Wall Street: Chapter 13

so come in direct point let start with Percentage of sale

1. Percentage of Sales:-One Up On Wall Street: Chapter 13

In a company you have to see which product is selling very fast, as well as the quality of sale, is increasing, means you have to found the product that product sale is maximum. So you have to see the how the percentage of the sale that represent of company. (One Up On Wall Street: Chapter 13)
To see the sale account and how much account of profit that product is given.

2. P/E ratio:-One Up On Wall Street: Chapter 13

so let see the famous ratio that is the P/E ratio. So while looking for the P/E ratio. and then don’t only look at the P/E ratio look also at the company growth, which means earning in growth and compare with them.
If the P/E ratio and company growth are equal that means the company is fairly priced.
So here Peter Lynch talks about the PEG ratio. If the PEG ratio is 0.5 then that company is very good for investment. (One Up On Wall Street: Chapter 13)
If the PEG ratio is less than one then the company is good for investment, and if the PEG ratio is more than one then that the company stock is overrated.
If that PEG ratio is more than two then don’t buy the company stock. So let’s calculate the PEG ratio
The PEG ratio = (P/E ratio)/EPS Growth
So author gives the other things about considering the P/E ratio. (One Up On Wall Street: Chapter 13)
The dividend yield is added with the long term and that sum is divided by the P/E ratio. If you get the ratio is more than 2 then is a good investment and if you got 1.5 ratios then it is also ok.
But if you got the ratio is minimum than 1 then don’t buy that the company stock.

3. Cash position:-One Up On Wall Street: Chapter 13

If the company has maximum cash on the balance sheet then that company is very strong. In the previous chapter, we see the how-to calculate cash per share.
So the author gives the example of a ford company, In company, the stock price is increased from $4 dollar to $ 38, and wall street investors think this stock is overpriced. so let’s see what happen
But in the company, $16.3 of net cash is present at that time, which means if you buy that stock you get the $16.3 cash per share is completely free. (One Up On Wall Street: Chapter 13)
So do calculations, : $38 – $16.3 = $21.7, so P/E ratio is calculate on $21.7 price not on $38 price. so the P/E ratio is about $3.1, so the P/E ratio is 3 which means is a very good P/E ratio.
Ford company also has another insurance subsidiary name is FORD CREDIT.
and his subsidiary earning per share is $1.66, and the same similar company that P/E ratio is 10. If we calculate share price, in that time market trade is about $16.6 in market. (One Up On Wall Street: Chapter 13)
So interesting things is that ford stick is $38 and net cash $16.3 and if their subsidiary trade is $16.6, so you have to do the simple calculation: = $38 – $16.3 – $16.6 =$5.
So you have to buy the ford company at $5, which means that earning per share is 7, and you give $5 so you get the $2 free.
So some company looks like ford but they have the above stuff inside on balance sheet, just we have to think like a businessman. (One Up On Wall Street: Chapter 13)
So author also gives another company example for comparison, let’s see the company name is Boin
it has more cash and their shares price is about $42, and net cash is about $27. so make calculation and you get = $42 – $27 = $15.
so hence no difference in both above company. So ford’s company type of opportunity does not come again and again. so sometimes maximum cash also not affect the company’s goodness, and also if the company has maximum debt or NOSO(Number of shares outstanding) that time also not affect the company having maximum cash. (One Up On Wall Street: Chapter 13)

4. Debt factors:-One Up On Wall Street: Chapter 13

debt factor is the most important factor for identifying the value of the company. So you have to look at the company how much debt or equity.
If 75% are equity and 25% debt, then this company is a good company.
If 90% are equity and 10% debt then this company is a very good company.
If 80% are debt and 20% equity then this company has the weakest balance sheet. So in this situation, you have to focus on the turnaround company, as special attention.
If the debt is maximum then the company can’t become a turnaround company. You have to see in the company which type of debt are they carrying. (One Up On Wall Street: Chapter 13)
one is bank debt and another is funded debt. If they have bank debt, then the bank sees your performance and they realize you can’t do better then they liquidate your company and take their money from it.
Funded debt is the type of debt in which there is no power to liquidate your company, which means you can get the time to recover your company as a turnaround company.
If you select a company then see which type of debt is present on them.
Peter Lynch gives the example of Crysler company, This company becomes the turnaround because they have government-guaranteed debt that is helpful to recover the company. If they have the bank debt Crysler company also can’t recover itself. (One Up On Wall Street: Chapter 13)

5. Dividends:-One Up On Wall Street: Chapter 13

Peter lynch give the example to understand the term of dividends, so let’s see
If any company stock price is $20 and giving a $2 dividend, then this stock giving a 10% dividend yield.
If its stock price is down to $10 and they also give $2 at this time also, means its dividend yield is 20%.
So this stock maximum people buy because this stock comes in the floor means this stock never go down by 10%. So if the dividend price is $2 means the dividend yield is high so people can’t go this stock is down.
If you buy stock for dividends, then you have to see the history of the company. In history, you have to look for 20 to 30 years. (One Up On Wall Street: Chapter 13)
In this period if the company misses any dividend. so this is very important because if you buy slow growers and they miss dividends, then this stock does not become double in number. so you are found in a trap. so always check for dividend yield. (One Up On Wall Street: Chapter 13)

6. Book Value:

In book value, you can’t buy the company because the stock is less than book value, so don’t need to buy the company stock. Because book value can be overstated.
It may be happening if the asset value is not that much seen on the balance sheet. If you buy any stock on book value then check the real value of the asset at this time and confirm that the value is the same as to see on the balance sheet. (One Up On Wall Street: Chapter 13)
If you do not see this then your strategy of investment is 100% fail.

7. Hidden Asset:

In the company, sometimes see are understated on the balance sheet. Sometimes parent company is very cheap than the subsidiary. so focus on also his opportunity.
Many times happen with a foreign company and their subsidiary, so the parent company is cheap than our domestic company.
So careful of any hidden asset, and also see any tax law carry forward point, this is also a hidden asset. Because you don’t need to pay tax in future.

8. Cash Flow:

Peter Lynch says, ” stock price $20 and annual cash flow is $4, means 20% return on cash. If you get the stock like that the stock price is $20 and cash flow $10, which means you get a 50% return on cash for this stock.
For this stock peter lynch say, sell your house and take the loan for investment purposes, because this stock is minimum in number. (One Up On Wall Street: Chapter 13)

9. Inventories:

If the company increases inventories, so this is a bad sign, and also if inventory increases as fast as sales then this is the worst sign for the company.
and also you see the companies inventory is placed at the corner of the parking lot, so that also a bad time. This company can become a turnaround, so for this, you have to wait for this but not necessary for this company if the company happens. (One Up On Wall Street: Chapter 13)

10. Pension plans:

If you looking for a turnaround then also look, in the company, there is also any pension plan.
If there is a pension plan that comes underfunded, means that the pension obligation is more than the pension asset, so this is the cause of concern. (One Up On Wall Street: Chapter 13)
To solve it first then you can invest in the company.

11. Growth Rate:

If you get a business that increases the price of the product is continuously and people also buy that company stock and they don’t lose market share also.
Most of the time this type of product is present in cigarettes, liquor, drugs, etc, so this is a good investment but one cause is that you have to focus.
When someone is died because of a product and they do complain against the company and in between that one person wins then, the company has to pay the maximum money for his penalty. so this risk comes in this company. (One Up On Wall Street: Chapter 13)
In growth rate author say if any company has a 20% growth rate and its P/E ratio is also 20, and another company has a 10% growth rate and a P/E ratio is 10. so let’s what is a difference in that.
20% growth rate company is good than the 10% growth rate, let’s see how.
If a 20% growth rate increase in earing after 10 years the earning rate is 6.19, and if the P/E ratio comes 20 to 10, still company stock price stays 61.9. (One Up On Wall Street: Chapter 13)
and another company that growth rate of 10 increase in 10 years, the earning is growing like 2.50 time, and if their P/E ratio stays 10 then the company stock price is 25.9.
So this is the huge difference between the 20% growth rate and 10% growth rate.

12. Bottom line:

Profit after tax is called the bottom line or also called net income.
So different industries have different bottom lines.
If Company is in the same industry and the profit before tax company to each other and if the company profit margin is increased by 2% so their earnings are increased by 20%. so this is a big factor.
If that company’s profit margin is high they have maximum chances of survival in bad condition because some little losses increase or profit margin is minimum then they are going down. But when this company comes in recovery, this company become the double or triple also, means if 2% becomes 4% 6%. (One Up On Wall Street: Chapter 13)

Remember:

If you want to hold stock for a good or bad time for the long term, then choose the high-profit margin stock. But you want to see a turnaround then look for a low-profit margin so this gives a good return.

One Up On Wall Street: Chapter 12

February 4, 2021 by Laxman Sonale 4 Comments

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

Cash and marketable securities: you can see how much increase by comparing to the previous year. If increase then this is a good sign.
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.
(Cash + market securities) > Long term debt: If this is happening then is a good sign by comparing 10 years of the balance sheet.
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.
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.

One Up On Wall Street: Chapter 11

January 28, 2021 by Laxman Sonale 3 Comments

Hello friends, in today’s, article we see chapter 11 of one up on wall street book. In chapter 11 you see what to do after founding a company and that company is good for investment but you have to ask more questions on it. That all are discussed in chapter 11 of one up on wall street book. Let’s begin,

The Two Minute Drill: One Up On Wall Street: Chapter 11

If you find the company and do the analysis of the last annual report and get the good result of the investment, then also you have to ask a question regarding the future plan of the company that Peter Lynch called as Next Step. (One Up On Wall Street: Chapter 11)

Next step:

Building the story: The story is about the activity of the company from the past to the future. In this story, you have to consider each and every problem and also the good news of the company. To build the story of the company.
What the company is doing to bring prosperity: In company analysis, you have to also search for why the company is good and how this maintains the goodness of the company by checking what are a company doing to bring prosperity. If a company doing some plan the brings some value to the company in the form of prosperity. (One Up On Wall Street: Chapter 11)
What has to happen for the company to succeed: See how the company has overcome the problem of the company and how it succeeds in that sector of the company. see also the which are the problem and what is the solution in the past situation. And also see which type of problem has come and how the company is ready to defeat the problem. See the past situation and concluded the what company does to succeed in the past situation. (One Up On Wall Street: Chapter 11)
What pitfalls stand in the company’s path: For this question, you have to see the past annual report and also predict the future regarding the pitfalls that come into the company’s path.

So Peter Lynch gives each and every company category, which includes before, so let’s start step by step each category of the company. So you get the ideas of what to do after describing the company for a good return.

Previous Chapter 10

What to look for in this company category:

Slow growers: So from this name you predict this company is growing slowly, so you are only in this company because you need the dividend return on investment. So you have to look to the growth in the earning as well as the growth in the dividend yield that are increase step by step and maximum from the previous dividend. So for this, you can see the history of dividends and also look in those times when there is the recession time and this time company gives the dividend to the shareholders. If the company you the dividend in worse time then that is the good investment, and you are benefited from that company.(One Up On Wall Street: Chapter 11)
Cyclicals: In the cyclical category you have seen the company is three years in the business recession and recently business sides increases and company minimize the labor cost and also close those plant that is insufficient to work. So this is a good sign for the company in this category.
Asset Plays: In this category, you have to ask yourself is that which value is more of those assets than the book value on the balance sheet and how much they are worth today. To find this and also check the how much dept on the company. If you get the good value of the assets in today’s time then check dept an invest in this company.(One Up On Wall Street: Chapter 11)
Turnarounds: In this category, you have to see what is the company is doing in today’s condition and what is the plan of the company to improve the condition of the company. If the plan seems good then predict this plan is work or not, and the company is restructuring or not before doing diversifications. So asking this and you get a reasonable answer then invest in this company.
Stalwarts: In this category, you have to see the P/E ratio of the company and ask yourself this ratio is reasonable or not, and what is the company doing to increase the growth of the company. so Peter Lynch gives an example of a coca-cola company. Company consumption is increasing or not and also see the how much present increase in other countries like Spain, Japan, India, etc. Then if the growth ratio is increased in other countries then this is a good sign of company to do investment. (One Up On Wall Street: Chapter 11)
Fast growers: In this category, you have to see the company is doing fast growth continuously and which part or branch of the company grow very fast as compare to the other branches, and also see those areas which are not growing fast in the country. So the company is doing some good news to spread company and open the new outlet of company.

So asking this type of company you get the exact situation of the company and get the company’s whole information. so the author gives the above conclusion La Quinta Motels and Bildners in two examples let’s see them.

La Quinta Motels: This company is providing the motel for people, and all in one like holidays motel and this are very much cheap as compared to the holiday motel because they don’t make the reception, wedding hall, conference room and also kitchen and restaurant neglected and they make them only for staying. That way the cost is minimum and construction costs also minimum for the la Quinta motel. (One Up On Wall Street: Chapter 11) The maximum room is 120 in this motel but in the Holiday motel, the maximum room is about 250. So rooms are minimum that’s why the motel room does not take the maximum land, and they are situated like business side, in the district, government office, and hospital near. The best thing is that The insurance company gives the dept to the company and they have a share in their motel. So it’s is a good sign, if La Quinta motel defaults any payment so the insurance company can’t sell the share of the motel and get money. so because they have the share in profit. So the insurance company gives some time to return the debt. (One Up On Wall Street: Chapter 11) La Quinta motel increases its profit by 50% each year and the stock price is double in number and also now has the potential of stock to get a good return. So motel business running good, So that why Peter Lynch stays in this motel and peter lynch impress with his service but one thing is not like peter is that insider sells the share of the company. this thing is a bad sign in peter lynch consideration. After now that that insider is trying to diversify their portfolio, so that why they sell the share, so after this peter Lynch buys this share, and it’s increased 15 baggers in return. So this is a good sign for investors.(One Up On Wall Street: Chapter 11)
Bildners: This company is making the sandwich, the sandwich is very good in test and that why they are very famous in their cities, and also peter lynch go to eat that sandwich and they also like the most of there sandwich. and this company outlet is near to the peter lynch office. So its popularity is maximum than the other sandwich. so this company is thinking to expand its business in other cities by doing equity raise. So peter lynch excited and they like the sandwich also, so they make the investment in the IPO of Builders company. But company fail in 2, 3, and 4 outlets in other cities. (One Up On Wall Street: Chapter 11) So Peter Lynch said there are two reasons to fail builder company is that 1) They thinks builders is next to a famous company like Starbucks and 2) Peter Lynch forget to ask that is a good run in another city also, And they make mistake in the Bildners and they don’t wait for this and they make an investment in IPO’sSo peter lynch says wait for that time company is successful in other location also that time also has the potential in stock to get a good return. So this company is 15 bagger in reverse stock.

So from these two examples, you get the idea of what type of things you need while you doing an investment.

This is all about chapter 11 of One Up On Wall Street book.

Visit Biotechnology website

One Up On Wall Street: Chapter 10

January 16, 2021 by Laxman Sonale 1 Comment

Hello Friends, in today’s article we see chapter 10 of One up on wall street book. In chapter 10 we see the earning process of investors. let’s see one by one.

Earning, Earning, Earning:-One Up On Wall Street: Chapter 10

You read the before all chapter and you get the idea of investment to make money or say earn money. So to this process, you have to ask some thought to yourself in this earning process. this process as follows: (One Up On Wall Street: Chapter 10)

Read the previous chapter: Click here

Think to ask yourself:

What makes a company values and also why will it be more valuable tomorrow that is today: At this point, you have to see the company status and ask yourself the value of a company that is whatever is today, it may be changed in the future and which criteria that change in the positive way of company value. If you have a good answer in your thought they buy that company you get the absolute result of that company. (One Up On Wall Street: Chapter 10)
Earnings and Stock price move together: If some company stock price is more than the earning value then it is the market fluctuations. So long terms Earnings and Stock price is moving together. If earnings go higher or the stock price is low, then don’t worry the stock price follows the earnings price. that’s why Peter Lynch says Earnings and Stock price is moving together. (One Up On Wall Street: Chapter 10)
About the P/E Ratio: There are so many people who make the decision on the P/E ratio. So if you do also then you have to know there are three types of P/E ratio affect the stock. 1)Overprice stock: If the P/E ratio is maximum then, the stock is overpriced by the crowd of investors. 2)Underprice Stock: If the P/E ratio is minimum then, the stock is underpriced. 3)Fairlypriced: The stock price is medium than that stock is fairly-priced. That’s the common people things on the P/E ratio.
The author says,” To think about the P/E ratio is like how much time to take the company to recover our investment principle.” if we assume a company on P/E constant means a medium grower company then, 10 to 14 years is required to recover our money. The company is a fast grower then your money is recovered in the 7-9 years, and if the company is a slow grower, then it takes 14-20 years to recover your money. (One Up On Wall Street: Chapter 10)
Compare P/E ratio with industry and historical data: That you the right value of P/E which is not be followed by a crowd of investors. If you compare the P/E with historical and industry P/E then you the P/E ratio is bargain able or not. so always compare yourself with others.
Avoid stocks with high P/E: This type of company is followed by the big institutional investor and you have to wait in this situation time. Here our Patience quality is checked. (One Up On Wall Street: Chapter 10)

So Peter Lynch gives 5 ways that increase the earnings of the company. if the company is earning then the stock value is increased. that way as follows

5 ways to increase earnings:

Reduce cost: If you want to increase earnings of your stock then, check the company expending in which area that can be reduced by any reason, if the company is doing, then your price earning is increased. So check to reduce cost.
Raise Prices: If a company is increasing the price of the product, then they are directly proportional to the earnings. So check for the product price and also see the price of the limit of the product can be increased. (One Up On Wall Street: Chapter 10)
Sell more product in the existing market: Check for the company sales rate, if the company is doing great sales and sell more product then it’s ok for the earnings purpose.
Expand into the new market: If a company is moving and expand the whole over the country and globe then the price of earning is increasing because the company gets more sales and sells the product. So check for this purpose also. (One Up On Wall Street: Chapter 10)
Close or dispose of a losing operation: Check for the unworkable machine, or the department and this company is tried and close all of his department then the price of earnings is increases.

This is all about the 5 ways of earning in the company, and also chapter 10 of one up on wall street book.

Visit Biotech website: Click here

One Up On Wall Street: Chapter 9

January 9, 2021 by Laxman Sonale 1 Comment

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.”

Previous Chapter: Click here

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.

Visit biotech website: Click here

One Up On Wall Street: Chapter 8

January 1, 2021 by Laxman Sonale 2 Comments

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.

Read More: Click here

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.