One Up On Wall Street, by Peter Lynch

Peter Lynch is a legendary American investor, best known for being the manager of the Magellan Fund at Fidelity from 1977 to 1990. Lynch and his team turned Magellan into the best-performing mutual fund in the world by averaging an annual return of 29%.

One Up On Wall Street is not new. Published in 1989, the second and current edition is from 2000.

Although the specific stocks that Lynch uses as examples in the book are now outdated, his logic and recommendations on how to understand stocks and pick winners are solid. Also, the book is written in an enjoyable, witty style, where Lynch poses himself in foolish situations to exemplify that even professional investors may be blind to great opportunities.

An example of Lynch’s sense of humor:

The Lynch Law, closely related to the Peter Principle, states: Whenever Lynch advances, the market declines. (The latest proof came in the summer of 1987, when just after the publisher and I reached an agreement to produce this book, a high point in my career, the market lost 1,000 points in two months. I’ll think twice before attempting to sell the movie rights.)

You’ll have to wait until Chapters 13 and 14 for Lynch to get more specific about how to analyze a stock. I understand that all the preamble is necessary to set the correct expectations and make sure the reader and the author are on the same page regarding risks, markets ups and downs, and why you should have a solid story on why you’re buying or selling.

This is a solid book If you are thinking of investing on stocks on your own.