The 3 Peter Lynch Books on Investing You Must Read

    Peter Lynch has been one of the most successful fund managers that have ever walked on Wall Street, and what better way to start your investing journey, than by reading Peter Lynch books.

    He is known for leading the success of Fidelity Magellan Fund, working as a portfolio manager, and developing his investment philosophy in his time there. At the present, Fidelity Magellan Fund is one of the world’s greatest and most influential mutual funds, taking its popularity from Peter Lynch’s rapid 

    Peter Lynch books are some of the finest financial literature masterpieces ever created. Take your financial advice from a man who has had experience in the stock market and other forms of investments since the 1960s. 

    Why are Peter Lynch books so popular?

    The magic of Lynch’s writing is that he conspicuously simplifies the complicated terminologies you would normally find in anything related to the finance world and the stock market. Until even a complete novice is able to understand its meaning. 

    He likes to write his books so that they are easy to read and fully understandable by any reader. The purpose of Peter Lynch books is to teach and help other investors understand the meaning of investing and provide advice on how to be smart with your money. 

    One Up on Wall StreetOne Up on Wall Street

    Co-authored by John Rothchild, a humorous and engaging freelance writer who specializes in all things finance. This Peter Lynch book will teach you how to navigate the stock market in understandable and simple words. It provides a step-by-step process on how to select stocks and gives you a glimpse into Peter Lynch’s investment strategy. 

    Peter Lynch shares his personal experience with stocks

    In the beginning, Lynch did not trust the stock market. People he knew used to tell him that the stock market was only a way to lose money and advised him to stay away. While working as a caddie, he would hear businessmen talking about their profit from investments in stocks, and that is when he realized that investing might not be a bad idea after all. 

    He bought his first stock in 1963. In less than 2 years, his investment increased 5 times. The time he was in senior high in Boston, he went to Fidelity. Having the chance to learn through researching, writing reports, and visiting companies. 

    What does One Up on Wall Street teach you?

    He explains the difference between investing in bonds and investing in stocks. Investing in stocks is proven to be more advantageous than investing in bonds. Although stocks can be risky, choosing the right stock at the right time will decrease the chance of losses. Having stock picking skills, proper research, timing, and dedication are crucial.

    He stresses the importance of financial stability while making sure that money allocated for important matters, like education, or an emergency fund is not invested into stocks. 

    Invest only in what you can afford to lose. Have the right mindset, flexibility, and patience. Being able to decide on your own, steer away from other people’s views and opinions, and be concrete on your own. 

    Investing in companies that you are familiar with is a great advantage. According to Peter Lynch, the bigger the company, the more difficult it is to grow, and that is why he suggests that you should look at smaller companies.

    According to Peter Lynch books, there are six stock categories:

    Who should read One Up on Wall Street?

    You should read One Up on Wall Street if you are interested in understanding how the stock market works, and you are thinking of starting to invest. Peter Lynch has the outstanding ability to explain complicated concepts in a simple way, and a combination of analogies that makes it easy to learn.

    Is One Up on Wall Street good for beginners?

    Yes, One Up on Wall Street is one of the best investing books for beginners, because it explains in detail how the stock market works, and how Peter Lynch picks stocks. It also provides a framework for retail investors, on how they can find and research stocks. Showing them, that they actually have an advantage over Wall Street. One Up on Wall Street remains one of the best stock market books for beginners.

    Is One Up on Wall Street still relevant?

    One Up on Wall Street remains until this day one of the most classic stock market investing books available. Its relevancy is due to Peter Lynch’s unique ability to explain how the market functions in an easy-to-understand way. Everyone that wants to start investing should read the book. One Up on Wall Street remains the most popular and relevant of all Peter Lynch books.

    Beating the Streetbeating the street

    In Beating the Street, Peter Lynch explains why stocks are the best asset class. Throughout the book, he justifies his statement and how to wittingly use your money to make great investments. In fact, he was the one who popularised the strategy, “invest in what you know”, and it remains one of the most memorable quotes by Peter Lynch.

    What is beating the Street about?

    Beating the Street is about learning and understanding how Peter Lynch picks and researches stocks, and how to build an investment portfolio following an active portfolio management strategy. By providing valuable advice on how to pick stocks, how to understand a company, and how to research the best possible investment for you. This book will help you match up with the wits of stock market experts and help you build a profitable portfolio using the experience and knowledge that you already have. 

    The Miracle of St. Agnes

    In the first chapter, conveniently labeled as “The Miracle of St. Agnes”, Lynch writes about a school in Massachusetts named St. Agnes. Part of their seventh-grade social studies class was to split into groups of four and have the students choose which stocks to buy. 

    These children, however, taught only by their teacher, outperformed the greatest investors on Wall Street with outstanding gains of 70%. Using the stocks that they chose themselves, the S&P 500 only had gains of 26% in the same span of 2 years. 

    After hearing about the success of these children, Peter Lynch invited them to his office for pizza and asked them how exactly they were able to achieve such a feat. He shares the secrets that he learned from the children and their teacher in the book. One of them is to invest in a company that you know and understand, hence the strategy, “invest in what you know”.

    The weekend worriers

    The second chapter tackles the problem of ‘weekend worriers’. These are people who waste all of their time worrying about past investments so much that they cannot see opportunities in the present or future. He further explains how weekend worrier functions, why this badly affects their portfolios, and how to avoid and stop being one. 

    In the rest of this book’s chapters, Lynch explains the different types of funds and strategies to use in the stock market. As well as handy advice, tips, and tricks on how to create a diversified portfolio. Overall, Lynch emphasizes how the stock market can help you build your financial future. 

    Beating the Street vs One up on Wall Street

    The main difference between both books is that in the first book published, One Up on Wall Street, Peter Lynch shares not only how the market, and stocks work, but also the theory behind his investment strategy. Beating the Street focuses on how to apply those theories, and how to effectively pick individual stocks, and build a portfolio.

    Learn to Earn Learn to Earn

    Learn to Earn is one of the most iconic Peter Lynch books, and it is more geared towards beginners. It contains the most basic and simplified writing on the fundamentals of investments. 

    This investing book will teach you what your school should have and give you expert advice on how to train your mind, build strategies and decide like a smart investor. 

    The problem with investors today is that they know how to invest in the market, but they don’t know the basics of investing and how to look for opportunities. By further understanding how the stock market actually works, we can increase our gains and learn how to build portfolios.

    It not only provides advice on how to invest in the stock market, but it also teaches you basic financial knowledge that is essential. However, some of the concepts explained in this Peter Lynch book are not taught in school. 

    What Learn to Earn teaches you

    Teaching you how to make decisions such as where to put your savings, how to use your money, how to invest in a retirement fund, how to put aside money for education, or how to manage your finances. Without knowing the answer to these everyday financial dilemmas, this would cause many more problems in the future. 

    Problems which may even be passed on to your children. Unfortunately, our school education does not teach us important fundamentals such as these. So Lynch writes to help his readers understand the ways of finance.

    Just like mathematics, we need to learn the basic operations first. How to add, subtract, multiply or divide. Before we can begin to learn about algebra. We need to build a foundation of knowledge before we can begin to truly understand a subject such as the stock market. Therefore, it is essential to understand how the market works if you want to be an outstanding investor, you will need to know its ins and outs. 

    Starting with the basics of the stock market, this book will teach you how to analyze confusing stock market charts and complicated sets of data such as annual reports. Throughout the book, he explains why understanding and having knowledge of the basics of investments is important. 

    He also gives substantial advice on how to not just know how to invest, but how to think like a great investor. This Peter Lynch book is a must-read for anyone in high school and older. With its easy-to-read and fully-comprehensible writing that even a 12-year-old would be able to understand. 

    This book is recommended for anyone who wants to give their children an early start in the world of finance and investments. Not only is it most recommended for high school students, but even an experienced investor can also read this book to fully master the stock market and easily understand its fundamentals. 

    In what order should I read Peter Lynch books?

    You should start by reading Learn to Earn, which is more of a personal finance introductory book, that can be read by just about anyone. You should then read One Up on Wall Street, where Peter Lynch lays down the theoretical foundation for its investment strategy, and finish with Beating the Street. Beating the Street focuses on how to apply most of the teachings from One Up on Wall StreetSince.

    To summarize, the Peter Lynch books in order:

    1. Learn to Earn
    2. One Up on Wall Street
    3. Beating the Street

    Conclusion

    Peter Lynch truly does have a way with his words, and his ability to explain complicated financial facts in the simplest words will aid both the young and old for generations to come. This is why Peter Lynch books are some of the best investment books available for beginners of every age.

    Here is one of Peter Lynch’smost insightful lectures that are certainly worth watching:

     

    Image source: WSJ

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