Go to the nearest shopping center. List the three busiest stores. Look up their tickers. If the P/E is less than the growth rate... you just beat Wall Street.
| Type | Definition | Buy Signal | Danger Signal | | :--- | :--- | :--- | :--- | | | Old, large, dividend payers (Utilities) | High dividend yield | Trying to diversify into "hot" industries. | | Stalwarts | Big, reliable brands (Coca-Cola, McDonald's) | P/E ratio below growth rate (PEG <1) | P/E gets too high (over 40). | | Fast Growers | Small, aggressive firms (20-25%+ annual growth) | Proven earnings, room to expand (e.g., 1 of 50 stores nationwide) | Company gets bloated; inventory grows faster than sales. | | Cyclicals | Auto, steel, chemical companies | High inventory levels/weak economy (buy at the bottom) | Low inventory/strong economy (sell at the top). Everyone loves them. | | Turnarounds | Near-bankrupt firms (Chrysler in 1980s) | Debt restructuring; new CEO with a plan | The debt is too high to survive a recession. | | Asset Plays | Company worth more dead than alive (Holdings of real estate, cash) | Hidden assets (e.g., a railroad owning Manhattan land) | Activist investors show up late. | Peter Lynch -- Beating The Street.pdf
Here’s an style breakdown of the book's most compelling and actionable ideas. Report: The Lynch Files – How an Everyday Investor Can Outsmart the Pros Source: Beating the Street by Peter Lynch (Fidelity’s legendary Magellan Fund manager, 1977–1990) Go to the nearest shopping center
Lynch proved that between 1977 and 1990, the average mutual fund investor lost money despite the market going up 15x, because they bought high and sold low. His report is a cure for that disease: Ignore the noise, buy what you know, check the PEG ratio, and hold on. If the P/E is less than the growth rate