One Up On Wall Street: How To Use What You Already Know To Make Money In

by Peter Lynch

Electric utilities and telephone utilities are the major dividend-payers. In periods of slow growth they don’t need to build plants or expand their equipment, and the cash piles up. In periods of fast growth the dividends are lures to attract the enormous amounts of capital that plant construction requires.

In my view it’s best to own as many stocks as there are situations in which: (a) you’ve got an edge; and (b) you’ve uncovered an exciting prospect that passes all the tests of research. Maybe that’s a single stock, or maybe it’s a dozen stocks. Maybe you’ve decided to specialize in turnarounds or asset plays and you buy several of those; or perhaps you happen to know something special about a single turnaround or a single asset play. There’s no use diversifying into unknown companies just for the sake of diversity. A foolish diversity is the hobgoblin of small investors.