Some of Lynch's favorite (and most profitable) investments have come in the form of generally disagreeable industries, such as funeral home services and trash removal. But boredom and disinterest are two critical elements in finding the next 10-, 30-, and 50-baggers - Lynch coined the term, after all. They're not sexy, they're not hot, and they surely won't make you the center of attention in conversation. People don't care about garbage collection We tend to disregard the everyday regulars as potential investments, because no one really wants to talk about them. With a little bit of fundamental research, the rest will take care of itself. Like many Americans, he was startled by the excessive amount of refuse produced by the average consumer, so he bought Waste Management (NYSE:WMI). Lynch loved eating tacos and other treats from fast-food mover Taco Bell, so he invested in Yum! Brands (NYSE:YUM). They're the ones you encounter on a daily basis and that you can easily understand.
The best companies are most often right in front of your face. You might still catch an impressive return on that investment, popularity aside.īut Lynch seemingly isn't concerned with the companies that people are talking about near the punch bowl, or with the tip he got about that new, amazing company that will change life as we know it on planet Earth. If you find a company that's the new hot thing and, without bias, you can say that its numbers still look impressive, then go ahead and invest. Like lemmings, people naturally get caught up in the crowd and lose sight of what's really important. If companies like Celgene (NASDAQ:CELG) or RF Micro Devices (NASDAQ:RFMD) sound familiar, then pay attention. People become interested when a given stock becomes the new, hot thing or is a player in the "now" industry. Either way, he says, most people take an irrational approach to investing. Depending on how the market is doing and a few other factors, the guest with the stock tip will either be the life of the party or the guy who gets pushed to the back near the vegetable platter. Lynch believes that with a little research and steady discipline, a regular guy like me can sprint right past so-called investment gurus.ĭon't listen to the hype Lynch explains his investing style in an extended analogy to a cocktail party and the chatter that inevitably turns to the next hot stock. In his book, One Up on Wall Street, the philosophy is slightly more complex than that, but not much. If you ask Peter Lynch, the solution is quite simple. As a rookie investor, I've had the following conversation with myself: "I want to put some money into the market, but where should I start?" With stocks, funds, options, bonds, and all sorts of other alternatives abounding, the view from the top of the investing mountain can be quite intimidating.
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