Meanwhile, the brokerage-house computers are busily collecting a wealth of useful information about companies that can be regurgitated in almost any form for any customer who asks. Analysts are too busy talking to the institutions to worry about educating the masses. With fewer retail clients interested in such information, brokerage houses are less inclined to volunteer it.
#One up on wall street vs beating the street how to#
He or she can make these frivolous side bets in a separate account with a discount broker, which the spouse doesn't have to know about.Īs stockpicking disappears as a serious hobby, the techniques of how to evaluate a company, the earnings, the growth rate, etc., are being forgotten right along with the old family recipes. This split between serious money invested in the funds and play money for individual stocks is a recent phenomenon, which encourages the stockpicker's caprice. Somewhere down the road they get a tip from Uncle Harry, or they overhear a conversation on a bus, or they read something in a magazine and decide to take a flier on a dubious prospect, with their "play" money. This doesn't mean they stop buying stocks altogether. If you buy futures and options and attempt to time the market, it's easy to get all F's, which must be what's happened to a lot of people who have fled to the mutual funds. The stock market is the one place where the high achiever is routinely shown up. It's usually the wealthier and more successful members of society who have money to put into stocks in the first place, and this group is used to getting A's in school and pats on the back at work. So if they've gotten out of stocks, it's because they're tired of losing money. Likewise, people continue to collect baseball cards, antique furniture, old fishing lures, coins, and stamps, and they haven't stopped fixing up houses and reselling them, because all these activities can be profitable as well as enjoyable. It's human nature to keep doing something as long as it's pleasurable and you can succeed at it, which is why the world population continues to increase at a rapid rate. The fact that up to 75 percent of these mutual funds failed to perform even as well as the stock market averages proves that genius isn't foolproof.īut the main reason for the decline of the amateur stockpicker has to be losses. Rather than fight these Burberried geniuses, large numbers of average investors decided to join them by putting their serious money into mutual funds. degrees, all wearing Burberry raincoats and armed with Quotrons. Stock stars were treated like rock stars, giving the amateur investor the false impression that he or she couldn't possibly hope to compete against so many geniuses with M.B.A.
One reason is that the financial press made us Wall Street types into celebrities, a notoriety that was largely undeserved. I have tried to determine why this happened. This decline of the amateur accelerated during the great bull market of the 1980s, after which fewer individuals owned stocks than at the beginning. It bothered me when I was a fund manager, and it bothers me even more now that I have joined the ranks of the nonprofessionals, investing in my spare time. A vast army of mutual-fund managers is paid handsomely to do for portfolios what Sara Lee did for cakes. There’s no reason the individual investor can’t match wits with the experts, and this book will show you how.Īmateur stockpicking is a dying art, like pie-baking, which is losing out to the packaged goods.
In Beating the Street, Lynch for the first time explains how to devise a mutual fund strategy, shows his step-by-step strategies for picking stock, and describes how the individual investor can improve his or her investment performance to rival that of the experts. In this book, Peter Lynch shows you how you can become an expert in a company and how you can build a profitable investment portfolio, based on your own experience and insights and on straightforward do-it-yourself research. There’s a company behind every stock and a reason companies-and their stocks-perform the way they do. Legendary money manager Peter Lynch explains his own strategies for investing and offers advice for how to pick stocks and mutual funds to assemble a successful investment portfolio.ĭevelop a Winning Investment Strategy-with Expert Advice from “The Nation’s #1 Money Manager.” Peter Lynch’s “invest in what you know” strategy has made him a household name with investors both big and small.Īn important key to investing, Lynch says, is to remember that stocks are not lottery tickets.