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

by Peter Lynch

If you take anything with you at all from this last section, I hope you’ll remember the following: • Sometime in the next month, year, or three years, the market will decline sharply. • Market declines are great opportunities to buy stocks in companies you like. Corrections—Wall Street’s definition of going down a lot—push outstanding companies to bargain prices. • Trying to predict the direction of the market over one year, or even two years, is impossible. • To come out ahead you don’t have to be right all the time, or even a majority of the time. • The biggest winners are surprises to me, and takeovers are even more surprising. It takes years, not months, to produce big results. • Different categories of stocks have different risks and rewards. • You can make serious money by compounding a series of 20–30 percent gains in stalwarts. • Stock prices often move in opposite directions from the fundamentals but long term, the direction and sustainability of profits will prevail. • Just because a company is doing poorly doesn’t mean it can’t do worse. • Just because the price goes up doesn’t mean you’re right. • Just because the price goes down doesn’t mean you’re wrong. • Stalwarts with heavy institutional ownership and lots of Wall Street coverage that have outperformed the market and are overpriced are due for a rest or a decline. • Buying a company with mediocre prospects just because the stock is cheap is a losing technique. • Selling an outstanding fast grower because i...