Peter Lynch – the investment maven became the poster boy of many when Fidelity-managed ‘Magellan’ fund on his watch became the 5-star fund in the ’80s. Lynch took a voluntary retirement in the early 90s, but his investment methodologies continue to be the most sought-after in many business schools and investment arenas.
I bought ‘Beating the Street’ on pure impulse. After months of reading about geopolitics, private-equity, behavioral psychology; I wanted to read something to steer my mind in a different direction. While checking out books at a dilapidated bookstore, I stumbled upon ‘Beating the Street’, Lynch’s nerdy pic on the blurb caught my attention. It only took me a moment before I glanced through some of the content and decided to own it.
I won’t put this book in the same category as, let’s say, Benjamin Graham’s masterpiece: ‘The Intelligent Investor’. Where Graham’s book was more academic in nature and started from the bottom up, Lynch’s book is for informed investors. At least those investors who know the ropes of the stock market. It’s equally enlightening for newbies and B-school students, too.
Stories about St Agnes school and the stock-picking methodology followed by its teachers and students can induce a funny, feel-good factor in the reader. However, I am sure, in reality, neither Mr Lynch nor any of the seasoned stock-pickers would ever endorse such type of approach. The book gets down to brass-stacks when Lynch addresses the intricacies involved in retail businesses. His proclamation of parameters such as same-store sales increase, expansion plans, share of debt in capital, should be taken into account while evaluating retail stocks. Lynch also speaks in detail about his love for S&Ls and restaurant chains.
The legendary fund manager has dedicated a full chapter- ‘My Fannie Mae diary’ – to his obsession with Federal National Mortgage Association and how the stock went from a minuscule contributor to the largest stock in his Magellan fund portfolio. In the nutshell, this book is more about ‘Peter Lynch’ and the stocks he admired. Accordingly, his strategies are also confined to the sectors he invested in most, for example, S&Ls and Retail.
If you have also read this book, of late, or are planning on reading it one of these days, there is a major unintended shortcoming. A large part of the book sounds outdated. For example, some of the companies mentioned in the book either no longer exist or have merged with others.
If the non-contemporaneous nature of the book doesn’t bother you, then go ahead and get this book. Some critics have trashed ‘Beating the Street’ as a mere clone to Lynch’s first book ‘One up on Wall Street’. For those like me, who haven’t read his first book, I think ‘Beating the Street’ would qualify as a feel-good read.
My opinion is that this book is not for serious investors. Students, small-time investors and corporate newbies would definitely love this book. I would give ‘Beating the Street’ a 3-bulbs rating, anytime.
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