One up on Wall Street

Recently, I completed reading the book. In the previous articles, we talked about Monday Effect, It won’t go more low and The Lynch way. Those write ups were inspired from this book.

At the outset of the book, Peter walks us through how did he get into investing. At the age of ten, he lost his father, aged 46. It was a painful moment for him. During his school day, to have some pocket money, he started caddying at a golf course. His clients were primarily Presidents and CEOs of major corporation like Gillette Polaroid, Fidelity. He is not the only caddy who has learnt that the quickest way to a boardroom was through a locker room at a golf course. Most of his clients used to talk about business and stocks. It was more like he gave five tips on golf and they gave five on stocks. He continued caddying throughout his high schools. Thereafter, he got the Caddy Scholarship to pursue education at Boston College.

During college, he was at far distance from accounting, finance, and math. The important subjects for business world. He was more into history, psychology and political science. When he looks back now, he is happy to made that decision after all investing is an art. Quantifying everything has a big disadvantage.

The best advice that he gives on investing is to not listen to the analyst. Because they always have a reason why the market goes up and they will use the same rationale to explain why the market went down. No one has become rich just by listening to those analyst. Secondly, if an analyst is not covering a stock and very few institutions have holding in the company. It is worth checking the company’s earnings and products/services. Analyst covers a stock only after it had jumped 2-3 times. He keeps some amount of money always invested in the market. Looking for new opportunity every now and then. He suggests that the best time to sell is when the initial reason you purchased the stock doesn’t hold anymore or there is no more convincing story to stay invested. It is the best time to sell.

He advice young investors to write down a pager story of why are you investing in a particular stock. As it helps you understand the rationale behind the purchase and you can check it any time in the future to see if the the story still holds or there is something more to it.

Lastly he sums up that we shouldn’t lose faith that there will no more progress or the end is near. We have survived recession in the pasts and have grown stronger every time.

Happy Friday!