{"id":78568,"date":"2022-09-20T18:59:00","date_gmt":"2022-09-20T22:59:00","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=78568"},"modified":"2022-09-23T13:14:53","modified_gmt":"2022-09-23T17:14:53","slug":"peter-lynch-one-up-on-wall-street","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/peter-lynch-one-up-on-wall-street\/","title":{"rendered":"Peter Lynch: One Up on Wall Street (Book Overview)"},"content":{"rendered":"\n<p>What is Peter Lynch&#8217;s <em>One Up on Wall Street<\/em> about? What is the key message to take away from the book?<\/p>\n\n\n\n<p>In <em>One Up on Wall Street<\/em>, Peter Lynch describes a no-nonsense approach to the stock market. Rather than following the complex predictions of so-called professionals or leaping on the latest and greatest overpriced stock, he advises you to keep your own counsel, <a href=\"https:\/\/www.shortform.com\/blog\/being-self-reliant\/\">be self-reliant<\/a>, and see yourself as your greatest resource.\u00a0<\/p>\n\n\n\n<p>Below is a brief overview of the key takeaways from <em>One Up on Wall Street<\/em> by Peter Lynch. <\/p>\n\n\n\n<!--more-->\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-one-up-on-wall-street-how-to-use-what-you-already-know-to-make-money-in-the-market\"><em>One Up on Wall Street: How to Use What You Already Know to Make Money in the Market<\/em><\/h2>\n\n\n\n<p>Have you always wanted to invest in the stock market but felt too uninformed or inexperienced to do so? In <em>One Up on Wall Street, <\/em>Peter Lynch argues that you not only have all the tools you need to become a savvy investor but that you actually have a <em>better <\/em>chance of investing successfully than professionals and firms: You can act independently and based on your own good information.&nbsp;&nbsp;<\/p>\n\n\n\n<p>In <em>One Up on Wall Street<\/em>, Peter Lynch describes a no-nonsense approach to the stock market that involves examining your daily life for investment opportunities, doing your research, and diligently monitoring your portfolio over time. Rather than following the complex predictions of so-called professionals or leaping on the latest and greatest overpriced stock, he advises you to keep your own counsel, be self-reliant, and see yourself as your greatest resource.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-reasons-to-invest-on-your-own\"><strong>Reasons to Invest on Your Own<\/strong><\/h3>\n\n\n\n<p>Lynch insists that <strong>you already have everything you need to do well in the stock market and that you don\u2019t need the services or guidance of a professional investor<\/strong>. He believes this is the case because:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Professional investors and firms aren\u2019t flawless.<\/li><li>You\u2019re usually a better source of knowledge than professional investors.<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-professional-investors-and-firms-aren-t-flawless\"><strong>Professional Investors and Firms Aren\u2019t Flawless<\/strong><\/h4>\n\n\n\n<p>Lynch argues that<strong> professional investors can lead you astray because they\u2019re often misguided or operating from high-minded theories, rather than on-the-ground experience<\/strong>.&nbsp;<\/p>\n\n\n\n<p>In part, this is because professional investors face the following obstacles, according to Lynch:<\/p>\n\n\n\n<p><strong>Delays: <\/strong>Most professional investors only buy stock once other investors or firms have done so, and it\u2019s therefore a proven good investment. This means they\u2019re not free to leap on early opportunities, when the stock price is low.&nbsp;<\/p>\n\n\n\n<p><strong>Reputation management: <\/strong>Professional investors have a greater <a href=\"https:\/\/www.shortform.com\/blog\/what-is-incentive-meaning-and-definition-economics\/\">incentive<\/a> to stick to safe, established companies because they risk less professionally. Investment firms also often like to prioritize parity over profit, spreading investment success somewhat equally among clients so clients don\u2019t become upset if others\u2019 portfolios do better than theirs. The result is that when you allow an investment firm to make investing decisions for you, you\u2019ll likely only ever make moderate gains.<\/p>\n\n\n\n<p><strong>Restrictions on what they can buy: <\/strong>Many investment firms don\u2019t invest in companies that have unions, operate in certain industries, or follow other relatively arbitrary rules. Further, the SEC imposes restrictions on what firms can buy. This limits the range of companies they\u2019ll invest in for your benefit.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-you-re-usually-a-better-source-of-knowledge-than-professional-investors\"><strong>You\u2019re Usually a Better Source of Knowledge Than Professional Investors<\/strong><\/h4>\n\n\n\n<p>When you invest yourself, you have the advantage of being a consumer who can learn about and test a company\u2019s products or services on a daily basis, either in your personal life or at work. This gives you first-hand knowledge of a company\u2019s output.&nbsp;<\/p>\n\n\n\n<p>You\u2019re also an independent entity who can make your own choices on your own timeline, continues Lynch. This lets you potentially <a href=\"https:\/\/www.shortform.com\/blog\/make-more-money\/\">make more money<\/a> on small yet promising companies you come across long before investment firms learn about and act on them.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-understand-five-truths-before-you-invest\"><strong>Understand Five Truths Before You Invest<\/strong><\/h3>\n\n\n\n<p>Even though you\u2019re equal to or better than any professional investor, you must be aware of certain key truths to have success and feel in control on the stock market, stresses Lynch.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-truth-1-there-s-inherent-risk-involved-in-investing\"><strong>Truth #1: There\u2019s Inherent Risk Involved in Investing<\/strong><\/h4>\n\n\n\n<p>Investing is inherently risky\u2014if you\u2019re not OK with that risk, you probably shouldn\u2019t invest, writes Lynch. You may not make a huge return each year, and some years, you may even lose money. However, if you understand this, you can develop the discipline and resilience to stick with your stocks through their ups and downs (rather than selling at the first sign of a downturn), thereby increasing your chances of making a good return on your investment.&nbsp;<\/p>\n\n\n\n<p>Lynch notes that you can further reduce the risks you\u2019re exposed to by educating yourself about the market and developing good investment skills. You might do this by reading books, scouring the financial section of the newspaper, or talking with people who are already savvy investors. You\u2019ll then better understand what qualifies as a successful portfolio and not aim for impossible gains by making unsound investments.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-truth-2-you-want-to-nab-the-tenfold-increaser\"><strong>Truth #2: You Want to Nab the Tenfold Increaser<\/strong><\/h4>\n\n\n\n<p>According to Lynch, as an investor, your goal should be to find a <em>tenfold<\/em> <em>increaser<\/em> (what he calls a <em>tenbagger<\/em>): a stock that makes you back 10 times what you invested. A tenfold increaser dramatically improves your return and helps erase the effect of a bad investment. You can find such companies anywhere and probably encounter two to three a year in daily life.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-truth-3-only-invest-money-you-won-t-miss\"><strong>Truth #3: Only Invest Money You Won\u2019t Miss&nbsp;<\/strong><\/h4>\n\n\n\n<p>Only invest money whose loss won\u2019t negatively affect your day-to-day comfort, stresses Lynch. This is because you can\u2019t predict how stocks will perform in the short term (though you can typically predict over 10 to 20 years) and may temporarily lose money you need to survive.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-truth-4-pay-attention-to-the-company-not-the-market\"><strong>Truth #4: Pay Attention to the Company, Not the Market<\/strong><\/h4>\n\n\n\n<p><strong>When you find a company you like, disregard what the market\u2019s doing and just buy stocks now<\/strong>, insists Lynch. This is because 1) the market will always be in flux and will eventually reverse itself, and 2) any pundit or acquaintance who thinks they know how the market will perform is likely wrong: It\u2019s virtually impossible to predict the market\u2019s future movements accurately. Therefore, it doesn\u2019t make sense to act based on the <em>market<\/em>\u2014instead, act based on how you think the <em>stock<\/em> will do. If the company\u2019s strong, it will do well in the long term, regardless of what the market\u2019s doing right now.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-truth-5-there-are-different-types-of-stocks\"><strong>Truth #5: There Are Different Types of Stocks<\/strong><\/h4>\n\n\n\n<p>Companies fall into one of six stock types and often change type over time, says Lynch. <strong>How you invest in a stock depends on what type of stock it is<\/strong>, and it\u2019s important to understand the type before you invest. This ensures you have correct expectations of that company\u2019s performance and won\u2019t sell a stock in a company type prematurely.&nbsp;<\/p>\n\n\n\n<p>Here are the stock types Lynch lists:&nbsp;<\/p>\n\n\n\n<p><strong>Slow-growth companies:<\/strong> Most companies that start out as fast growers eventually become slow growers. Lynch doesn\u2019t particularly recommend investing in slow-growth companies because you won\u2019t make money fast.<\/p>\n\n\n\n<p><strong>Dependable companies:<\/strong> These are large, established companies that grow more quickly than slow-growth companies but still maintain a relatively slow pace. It\u2019s good to have a few dependables in your portfolio because they\u2019ll keep you afloat in market downswings since they generally aren\u2019t as strongly impacted by such swings as smaller companies are.&nbsp;<\/p>\n\n\n\n<p><strong>Fast-growth companies: <\/strong>These companies are small and grow aggressively, at 20 to 25% per year. Such companies also tend to be tenbaggers or higher. These companies are riskier than dependable companies.&nbsp;<\/p>\n\n\n\n<p><strong>Cycle companies: <\/strong>These are companies that grow and contract in cycles. Such companies can be dangerous for inexperienced investors if they don\u2019t understand when\u2019s the best time to invest and that a downswing will be followed by an upswing.&nbsp;<\/p>\n\n\n\n<p><strong>Underdog companies: <\/strong>These are companies that are experiencing a low-growth moment but will soon make a rapid comeback and are therefore worth investing in when stocks are low.&nbsp;<\/p>\n\n\n\n<p><strong>Hidden-treasure companies: <\/strong>These are companies that have an asset you happen to know about but which professional investors have overlooked. An asset might be cash, real estate, a subscription model, or some other hidden advantage. It takes inside knowledge to know this advantage.&nbsp;<\/p>\n\n\n\n<p>Most companies change stock types over time. Fast-growth companies eventually slow down or might become cycle companies. Alternatively, a slow-growth company might become an asset play when clued-in investors recognize it owns good real estate. Any slow-growth company might become an underdog.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-truth-6-plan-to-be-in-the-stock-market-for-life\"><strong>Truth #6: Plan to Be in the Stock Market for Life<\/strong><\/h4>\n\n\n\n<p>Lynch advises you to put a fixed amount of money in the market and behave as though that money will always be invested. This assumption will keep you from unwisely withdrawing money from the market in a panic.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-where-and-how-to-encounter-strong-investment-opportunities\"><strong>Where and How to Encounter Strong Investment Opportunities<\/strong><\/h3>\n\n\n\n<p>Now that you understand how to regard and interact with the stock market, start looking for investment opportunities. Lynch believes <strong>you\u2019ll find the <a href=\"https:\/\/www.shortform.com\/blog\/best-investment-opportunities\/\">best investment opportunities<\/a> in the places most familiar to you: daily life and work<\/strong>. Familiar companies are best to invest in because you have the greatest odds of understanding them and how well they\u2019ll perform.&nbsp;<\/p>\n\n\n\n<p>For instance, if you regularly order house plants from a great online plant store, you have a strong knowledge of that company, which might make its stocks worth investigating. Similarly, if at work, you deal often with a great printing company, you have inside knowledge of that company\u2014an advantage in deciding if you should invest.&nbsp;<\/p>\n\n\n\n<p>Conversely, Lynch strongly warns against investing in companies you don\u2019t understand, trendy companies everyone else is investing in, companies that are diversifying, or companies that supply to only a single buyer. Such companies are likely to fail sooner or later.<\/p>\n\n\n\n<p>When on the lookout for good investments in your daily life and at work, pay particular attention to companies with the following positive attributes, writes Lynch:<\/p>\n\n\n\n<p><strong>Companies that are\u2014or sound\u2014mundane or unappealing: <\/strong>Unglamorous companies (like waste removal or pest control companies) often do well but don\u2019t attract investor attention until stocks are high. For this reason, investigate companies with boring or unappealing names, as this may indicate the company is uninteresting to most investors and therefore attractive.&nbsp;<\/p>\n\n\n\n<p><strong>Companies that have branched off from larger companies: <\/strong>When a subsidiary becomes its own company, it\u2019s often successful because the parent company ensures the subsidiary is in good financial standing beforehand.&nbsp;<\/p>\n\n\n\n<p><strong>Companies in no-growth industries:<\/strong> Seek out companies in industries that seem not to be growing at all because this indicates there\u2019s little competition in such industries, and strong companies can flourish.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-how-to-assess-and-research-a-company\"><strong>How to Assess and Research a Company&nbsp;<\/strong><\/h3>\n\n\n\n<p>Lynch advises that once you\u2019ve discovered an interesting and viable company, don\u2019t invest right away. First, conduct sound research. This should only take a few hours per stock.&nbsp;<\/p>\n\n\n\n<p>Do this in several steps:<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-step-1-determine-what-type-of-stock-it-is\"><strong>Step 1: Determine What Type of Stock It Is<\/strong><\/h4>\n\n\n\n<p>The first step of your research is to determine what type of stock you\u2019re looking at, writes Lynch. This is because you might only want to buy a certain type of stock now based on your needs and risk tolerance\u2014for instance, you might reduce risk by investing in a dependable company.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-step-2-gather-pertinent-data\"><strong>Step 2: Gather Pertinent Data<\/strong><\/h4>\n\n\n\n<p>The stock type you determined in the last step tells you <strong>what information you need to gather on the stock to evaluate its future success and assure yourself that it\u2019s a worthy investment<\/strong>, writes Lynch. Certain data will only be helpful in evaluating the potential of certain stock types.&nbsp;<\/p>\n\n\n\n<p>While the task of data collection can seem daunting to a novice investor, it\u2019s simpler than you might think. You just need a few pieces of information and a general understanding of how well the company is performing. You can obtain this from the investor-relations department of the company, your broker, company reports, or by visiting the company itself if you can.&nbsp;<\/p>\n\n\n\n<p>Here\u2019s the data you should find, says Lynch:<\/p>\n\n\n\n<h5 class=\"wp-block-heading\" id=\"h-the-p-e-ratio\">The P\/E Ratio<\/h5>\n\n\n\n<p><a href=\"https:\/\/www.shortform.com\/blog\/what-is-the-p-e-ratio-in-share-market\/\">The P\/E ratio<\/a> is the stock <strong>P<\/strong>rice to company <strong>E<\/strong>arnings ratio. You obtain this by dividing the company\u2019s stock price by the company\u2019s earnings per share (essentially how much the company makes per share; this is net profits divided by the number of shares issued).<\/p>\n\n\n\n<p>For instance, if a stock price is $4.00 and the company\u2019s earnings per share are $1.00, the P\/E ratio will be ($4.00 : $1.00 =) 4.&nbsp;<\/p>\n\n\n\n<p>Lynch writes that the P\/E ratio is helpful for several reasons: You can think of it as the number of years it will take the company to earn back your initial investment. Therefore, a high P\/E ratio (20 or 30, for instance) may be unattractive while a low one (say 6 or 7) may be attractive.&nbsp;<\/p>\n\n\n\n<p>Lynch also notes that by comparing the P\/E ratio to the P\/E ratios of other companies in the industry or to that company\u2019s previous P\/E ratios, you can see if a stock is priced fairly, too high, or too low. For instance, if a company\u2019s stock currently has a P\/E of 20 (stock price of $100\/earnings per share earnings of $5) and last year had a P\/E of 5 (stock price of $10\/earnings per share earnings of $2), you can tell that the stock price is very high now. You might therefore wait until it falls before investing.&nbsp;<\/p>\n\n\n\n<p>When looking at P\/E ratios to help guide your investing decisions, take into account what type of company it is. You can\u2019t expect the same ratios for dependable companies, fast-growth companies, and slow-growth companies.&nbsp;<\/p>\n\n\n\n<h5 class=\"wp-block-heading\" id=\"h-assets-and-liabilities\">Assets and Liabilities<\/h5>\n\n\n\n<p>It\u2019s also worth looking at a company\u2019s <a href=\"https:\/\/www.shortform.com\/blog\/rich-dad-poor-dad-assets-and-liabilities\/\">assets and liabilities<\/a> on company reports, writes Lynch. You want to see that a company\u2019s assets are growing and that its liabilities (debt) are shrinking over time. It\u2019s also a good sign when the company\u2019s assets are currently greater than its debt\u2014if this is true, the company likely isn\u2019t about to go out of business.&nbsp;<\/p>\n\n\n\n<p>Assets and liabilities won\u2019t give you a detailed view of the company\u2019s financial standing because they only indicate what the company owns and what it owes. However, when you subtract liabilities from assets, the result will tell you if the company is generally doing well or badly: If the result is positive, the company has greater assets than liabilities, and it\u2019s in good shape. If the result is negative, its liabilities are greater than its assets, and it\u2019s not in good shape.&nbsp;&nbsp;<\/p>\n\n\n\n<h5 class=\"wp-block-heading\" id=\"h-dividends\">Dividends<\/h5>\n\n\n\n<p>A dividend is the money a company regularly pays to shareholders, explains Lynch. (It\u2019s different from capital gains, which is the profit you make from selling a stock at a higher price than the price at which you bought it.) Not all stocks pay dividends, so you may prefer stocks that do if you like receiving a regular payout. Conversely, you may prefer stocks that don\u2019t pay dividends because these companies can invest that money into growth, which might result in greater capital gains later. Lynch himself prefers to invest in fast-growing companies that don\u2019t pay dividends over slow-growing companies that do.&nbsp;<\/p>\n\n\n\n<p>Once you\u2019ve examined the company\u2019s P\/E ratio, assets and liabilities, and dividends, find answers to these additional questions about the company:<\/p>\n\n\n\n<h5 class=\"wp-block-heading\" id=\"h-does-the-company-have-special-assets\">Does the Company Have Special Assets?<\/h5>\n\n\n\n<p>Identify if the company has certain types of valuable special assets because this can make the stock more valuable, writes Lynch. Special assets can be natural resources (precious metals, oil, land, and so on), brand recognition (think of Starbucks or Tesla), real estate, patents on drugs, ownership of TV and radio stations, or tax breaks.&nbsp;<\/p>\n\n\n\n<h5 class=\"wp-block-heading\" id=\"h-has-the-company-recently-diversified\">Has the Company Recently Diversified?<\/h5>\n\n\n\n<p>Lynch warns that you should <strong>be wary of companies that recently acquired another company<\/strong>. Often, a large company will do this hoping to increase its profits, but the resulting merger often fails to improve the parent company&#8217;s finances. This may be because 1) the parent company overpays for the deal, or 2) the parent company doesn\u2019t understand the company it just purchased. The result is that the company often ends up selling off unprofitable acquisitions by restructuring. This cycle tends to repeat itself and is bad for investors.&nbsp;<\/p>\n\n\n\n<h5 class=\"wp-block-heading\" id=\"h-are-the-company-or-its-employees-buying-back-its-own-shares\">Are the Company or Its Employees Buying Back Its Own Shares?<\/h5>\n\n\n\n<p>It\u2019s a good sign when a company buys back its own shares, asserts Lynch. By doing this, they take shares off the market. When there are fewer shares, demand drives the share price up\u2014a boon for those already or soon-to-be invested in the company.&nbsp;<\/p>\n\n\n\n<p>Similarly, when employees buy their own company stock, it means they have faith in the company\u2014another good sign.<\/p>\n\n\n\n<h5 class=\"wp-block-heading\" id=\"h-does-the-company-have-a-large-inventory\">Does the Company Have a Large Inventory?<\/h5>\n\n\n\n<p>If a company\u2014especially a retailer or a manufacturer\u2014has a large inventory, it usually means it isn\u2019t selling as much as it would like to, contends Lynch. Further, this inventory will depreciate in value and can\u2019t be sold for as much in the future\u2014think about clothing, which rapidly depreciates because it goes out of style. Consider avoiding such companies.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-step-3-craft-a-speech-explaining-why-the-company-s-worth-investing-in\"><strong>Step 3: Craft a Speech Explaining Why The Company\u2019s Worth Investing In<\/strong><\/h4>\n\n\n\n<p>Lynch recommends that if you\u2019ve answered the above questions and satisfied yourself that the company\u2019s financials are sound, the final step of assessing and researching a stock is to <strong>devise a two-minute monologue describing why the company\u2019s worth investing in<\/strong>, which you can say to yourself or to someone else. This practice firms up the reason for buying the stock in your mind or helps you question that reason if it\u2019s unsound.&nbsp;<\/p>\n\n\n\n<p>After you\u2019ve created your monologue about why to invest in a company and then actually invested, <strong>periodically check that the reasons you invested still stand<\/strong>, insists Lynch. Monitor your stocks carefully, and adjust your investments depending on your stocks\u2019 fortunes.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-how-to-manage-a-stock-portfolio-over-time\"><strong>How to Manage a Stock Portfolio Over Time<\/strong><\/h3>\n\n\n\n<p>You may by now have purchased your first stock, which means it\u2019s time to begin thinking about building a long-term stock portfolio. Let\u2019s look at Lynch\u2019s advice on how to <a href=\"https:\/\/www.shortform.com\/blog\/how-does-warren-buffett-invest\/\">manage a portfolio<\/a> over a lifetime.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-buy-as-many-stocks-as-companies-you-understand\"><strong>Buy as Many Stocks as Companies You Understand<\/strong><\/h4>\n\n\n\n<p>Lynch believes you should <strong>buy as many stocks as you feel you have special knowledge in or which you\u2019ve thoroughly researched and have faith in<\/strong>. For instance, if you work in the automotive industry, you might have special knowledge about a car manufacturer, or you\u2019ve done extensive research on a new coffee shop chain that\u2019s opened in your area, and you feel confident about its prospects. You\u2019d thus buy stocks in both.&nbsp;<\/p>\n\n\n\n<p>If you want a specific number, Lynch recommends acquiring between three and 10 stocks. It\u2019s advantageous to own multiple stocks because the more you own, the more likely you are to snag a tenfold increaser. Further, when you own multiple stocks, you can shift your money around between them, which we\u2019ll talk about in a coming section.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-build-your-portfolio-based-on-your-risk-tolerance\"><strong>Build Your Portfolio Based on Your Risk Tolerance<\/strong><\/h4>\n\n\n\n<p>To create a portfolio you feel comfortable with, take into account the risk and gain associated with each stock type, recommends Lynch. Then, acquire stock types that give you a risk vs. gain ratio you can live with. The risk versus gain ratio for each company type is:<\/p>\n\n\n\n<p><strong>Low risk, low gain: <\/strong>Slow-growth companies<\/p>\n\n\n\n<p><strong>Low risk, moderate gain: <\/strong>Dependable companies<\/p>\n\n\n\n<p><strong>Low risk, high gain: <\/strong>Hidden-treasure companies (provided you\u2019re sure of the company\u2019s assets) and cycle companies (provided you understand the company\u2019s cycles)<\/p>\n\n\n\n<p><strong>High risk, high gain: <\/strong>Fast-growth companies or underdog companies<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-always-reevaluate-stocks-and-shift-money-sensibly-between-them\"><strong>Always Reevaluate Stocks and Shift Money Sensibly Between Them<\/strong><\/h4>\n\n\n\n<p>Lynch recommends that you <strong>sensibly move funds between stocks as company situations change, and that you maintain approximately the same distribution of stock types in your porfolio<\/strong>.&nbsp;&nbsp;<\/p>\n\n\n\n<p>For instance, you might wish to maintain three dependable, two fast-growth, and one slow-growth company in your portfolio. Then, if you believe a cycle company has hit its financial peak and that its fortunes will soon reverse, sell that stock and buy stock in a <em>different<\/em> cycle company that\u2019s about to be on the upswing.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-understand-when-to-buy-and-sell\"><strong>Understand When to Buy and Sell<\/strong><\/h4>\n\n\n\n<p>Lynch claims you should <strong>buy stocks when you feel 1) the company\u2019s strong and 2) that you\u2019re paying a fair price for what you\u2019re getting.&nbsp;<\/strong><\/p>\n\n\n\n<p>Additionally, there are specific occasions when stocks come at a bargain. The first is at the end of the year, when companies sell off many of their stocks and you can snap them up cheap. The second is whenever the stock market\u2019s doing badly. Though you might be tempted to sell at such times to minimize your losses, counteract your instincts and buy while stocks are cheap.<\/p>\n\n\n\n<p>When it comes to selling stock, try to avoid selling too soon whenever possible. Lynch lists many instances in which he took poor advice and sold a stock that continued growing.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-take-your-own-counsel-on-how-to-manage-your-portfolio\"><strong>Take Your Own Counsel on How to Manage Your Portfolio<\/strong><\/h4>\n\n\n\n<p>Lynch\u2019s final advice on <a href=\"https:\/\/www.shortform.com\/blog\/managing-your-portfolio\/\">managing your portfolio<\/a> is to avoid selling just because prognosticators recommend it. Instead, rely more on your research and your continued check-ins on the company to inform your selling decisions. Only when you know specifically that an external circumstance will negatively affect the company should you do something about it.&nbsp;<\/p>\n\n\n\n<p>Similarly, don\u2019t heed platitudes or beliefs about when to buy and sell (things like, \u201cIt\u2019s always darkest before the dawn,\u201d or \u201cIf it\u2019s this low, it can\u2019t possibly go any lower\u201d). There simply is never a single rule that works in every circumstance, so you\u2019re better off using your knowledge of the company acquired through research.&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What is Peter Lynch&#8217;s One Up on Wall Street about? What is the key message to take away from the book? In One Up on Wall Street, Peter Lynch describes a no-nonsense approach to the stock market. Rather than following the complex predictions of so-called professionals or leaping on the latest and greatest overpriced stock, he advises you to keep your own counsel, be self-reliant, and see yourself as your greatest resource.\u00a0 Below is a brief overview of the key takeaways from One Up on Wall Street by Peter Lynch.<\/p>\n","protected":false},"author":7,"featured_media":18186,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[40,31],"tags":[742],"class_list":["post-78568","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-books","category-money","tag-one-up-on-wall-street","","tg-column-two"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.3 (Yoast SEO v24.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Peter Lynch: One Up on Wall Street (Book Overview) - Shortform Books<\/title>\n<meta name=\"description\" content=\"In his book One Up on Wall Street, Peter Lynch describes a no-nonsense approach to stock market investing. Here is a brief overview.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.shortform.com\/blog\/peter-lynch-one-up-on-wall-street\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Peter Lynch: One Up on Wall Street (Book Overview)\" \/>\n<meta property=\"og:description\" content=\"In his book One Up on Wall Street, Peter Lynch describes a no-nonsense approach to stock market investing. Here is a brief overview.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.shortform.com\/blog\/peter-lynch-one-up-on-wall-street\/\" \/>\n<meta property=\"og:site_name\" content=\"Shortform Books\" \/>\n<meta property=\"article:published_time\" content=\"2022-09-20T22:59:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-09-23T17:14:53+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/s3.amazonaws.com\/wordpress.shortform.com\/blog\/wp-content\/uploads\/2020\/11\/financial-capital-technological-revolutions-scaled.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2560\" \/>\n\t<meta property=\"og:image:height\" content=\"1920\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Darya Sinusoid\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Darya Sinusoid\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"16 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.shortform.com\/blog\/peter-lynch-one-up-on-wall-street\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/peter-lynch-one-up-on-wall-street\/\"},\"author\":{\"name\":\"Darya Sinusoid\",\"@id\":\"https:\/\/www.shortform.com\/blog\/#\/schema\/person\/0421cce75bc249b11e2517b3a91f9c46\"},\"headline\":\"Peter Lynch: One Up on Wall Street (Book Overview)\",\"datePublished\":\"2022-09-20T22:59:00+00:00\",\"dateModified\":\"2022-09-23T17:14:53+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/peter-lynch-one-up-on-wall-street\/\"},\"wordCount\":3671,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/#organization\"},\"image\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/peter-lynch-one-up-on-wall-street\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.shortform.com\/blog\/wp-content\/uploads\/2020\/11\/financial-capital-technological-revolutions-scaled.jpg\",\"keywords\":[\"One Up On Wall Street\"],\"articleSection\":[\"Books\",\"Money\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.shortform.com\/blog\/peter-lynch-one-up-on-wall-street\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.shortform.com\/blog\/peter-lynch-one-up-on-wall-street\/\",\"url\":\"https:\/\/www.shortform.com\/blog\/peter-lynch-one-up-on-wall-street\/\",\"name\":\"Peter Lynch: One Up on Wall Street (Book Overview) - Shortform Books\",\"isPartOf\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/peter-lynch-one-up-on-wall-street\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/peter-lynch-one-up-on-wall-street\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.shortform.com\/blog\/wp-content\/uploads\/2020\/11\/financial-capital-technological-revolutions-scaled.jpg\",\"datePublished\":\"2022-09-20T22:59:00+00:00\",\"dateModified\":\"2022-09-23T17:14:53+00:00\",\"description\":\"In his book One Up on Wall Street, Peter Lynch describes a no-nonsense approach to stock market investing. 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