While discussing the power of shared knowledge, he explains that to get spectacular returns, one has to sell and buy at the right time. But that's not the case, and there are numerous ten-baggers in respectable companies like Dunkin Donuts, Stop & Shop, etc who have given handsome returns. One may have thought that a ten-bagger can only happen with some stock in a weird company, which generally investors avoid. Lynch writes that the more right a person is about one stock, the more wrong they can be on all others and still end up triumphing as an investor. He mentions that there are three good reasons why people should ignore what Lynch himself is buying: These reasons basically apply to all those who blindly follow famous investors or analysts.Ģ) Even if he is right, one doesn't know when he might change his mind about a stockģ) One has better sources to refer to, and it is all around them. He says that it is a wonderful avenue for people who do not have sufficient time or inclination to 'test their wits against the stock market.' It is also fit for those who seek diversification and have small amounts of money to invest. The author says that when a person picks a stock of their own, they should outperform the experts. Investing is not rocket science, instead, it is about smart money.
The first rule of this book, is that people should stop listening to professionals, because after spending twenty years in the market, any regular person who uses at least 3% of their brain's capacity, can understand and pick stocks efficiently just like an average expert on Wall Street.
One Up On Wall Street by Peter Lynch provides a holistic knowledge on investing in stocks. Introduction: The Advantages of Dumb Money