Not many people realise it, but the most effective research can be done by just observing the things and happenings around us. When we go shopping, just by spotting out the most busiest shop, we can obtain an inference about the success of that shop. When we try a new kind of food, we are doing analysis on it to see if its something different or just the usual pass-me-by kind of food.
Peter Lynch often remarked that some of the most wonderful stocks that he has passed have often come looking for him in the first place. A good example is his wife, when the things she buys or needs are often the best companies that sell them. He often relinquishes the moment when we feels like he wasn't sensitive enough to pay attention to his wife's everyday doings. During the 1980s, when his wife was shopping and she needed Mac computers for their children, he missed the hint that Apple stock was going to be a great comeback. The same thing also happened when he missed The Limited, a shopping place his wife regularly visits and is usually crowded.
Just by general observation, one can tell whether a business is doing good or bad, or when a new product comes into the market where no one seems to be noticing its success yet. This is the edge everyday investors like you and me have over the professionals. We notice stocks that the analysts have not noticed yet. Thus the company is under-researched and is highly likely that it is undervalued too. This is the perfect bargain you can get, a wonderful company at a fair price.
So the next time you're shopping around, observe around you and you might just spot the next 10-bagger in Peter Lynch's words, that is stocks that multiply 10-fold whence you bought it, and you'd realise it isn't that difficult at all to pick good stocks. Usually, stocks that are good come looking after you rather than you looking for them. They say there are three types of people, one who learns by reading alot of books, one who learns by observing the circumstances they are in, and the other who has to pee on the electric fence first.
Subscribe to:
Post Comments (Atom)
Posts
2 comments:
Nice article.
You might want to consider human behavioral bias that Peter Lynch might have experience.
Like all of us, Peter Lynch, might have selective memory.
When he found that Apple did very well, he remembered that he once got a hint that Apple was going to make a great comeback.
However, it is also likely that he might got other hints that did not fruit accordingly. For example, he also had a hint that Orange Ltd was going to make a great comeback as well, but it didn't happen. More likely, Peter Lynch wouldn't remember that he had had this hint.
To exaggerate, he might had hints that Strawberry, Pineapple or hundreds of other companies would be a great investment while most of these hints didn't come true. But of course Peter Lynch wouldn't remember this, unless he followed the hints and made loss.
While it is possible to stumble upon a business that does really well yet underappreciated while we were shopping around, the likelihood might be very small.
Afterall, it is hard to judge if a business is a good one just by buying a product or visiting one of its store.
Nice article, though. I did hear of this story from a lecturer so this opinion might be a popular issue.
You have some sth~~ slimline wedding dresses Christian Louboutin Shoes Princess A-Line
Post a Comment