SPECIALS
Review: One Up On Wall Street

By Maynard Paton (TMFMayn)
August 15, 2001

Book Review: One Up On Wall Street, by Peter Lynch

If I could recommend just one book to novice stock pickers, it would be Peter Lynch's One Up On Wall Street. The real beauty of the book is how Lynch relays his proven investment talents into a punchy, no-nonsense, but light hearted read. Brimming with sensible stock market advice, anecdotal stories and the source of many famous investment quotes, Lynch's book is a must for all would-be Foolish investors.

Lynch sets the tone right from the start. Unlike most investment publications, whereby the "investing professional author" intimates they are about to identify the Holy Grail of stock picking, Lynch makes no such promise. Reassuringly (and surprisingly, following his long and successful management of a US mutual fund), Lynch kicks off with his rule number one: "Stop listening to professionals!"

Then follows a deluge of sound "think like an amateur" advice for those preparing to invest for the first time. "Invest in companies, not in the stock market", "ignore short-term fluctuations" and "predicting the economy is futile" should all be familiar notions to Foolish stock pickers.

But the real meat comes in how Lynch describes the perfect company and, importantly, how he outlines the ones to avoid. Lynch divides his stock picks into six different categories -- including asset plays, turnarounds and fast growers. It's the latter category that Lynch gives the most attention to in his book, as he stalks the "tenbagger". The companies Lynch sensibly steers clear from include "the hottest stocks in the hottest industry", "whisper stocks" and "the next something". 

In general, Lynch is a big fan of private investors doing their own company investigations. He encourages shareholders to get out and perform on-the-ground research (or "kick the tyres"). Lynch also offers plenty of robust advice on running a portfolio too. The chapter highlighting "the twelve silliest things people say about stock prices" is an absolute gem.

If there were any quibbles, they'd perhaps concern Lynch's fondness towards fast-growing US retailers. For investors looking at UK equivalents, investing danger can lurk. As UK expansion is much more limited, our domestic retailers can become unstuck by the competition years ahead of Lynch's US examples. And while he does state that he likes companies with a niche, I'd also say that Lynch doesn't emphasise the importance of a sustainable competitive advantage enough.

Those minor criticisms aside, Lynch's book should be a cornerstone of any investor's library. Plenty of Foolish advice, written in a jocular manner with plenty of humility thrown in too, One Up On Wall Street gets top marks.

Ratings (out of 5)

Content:  5
Readability:  5
Foolishness:  5

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