Peter Lynch Lyrics: Liking the product or service is only step #1

The following notes was taken from a forum posting. If not mistaken the original writings were posted at Wallstraits.com.

Lynch Lyrics
Liking the product or service is only step #1

"However a stock has come to your attention, whether via the office, the shopping mall, something you ate, something you bought, or something you heard from your broker, your mother-in-law, or even from Ivan Boesky's parole officer, the discovery is not a buy signal. Just because Dunkin' Donuts is always crowded or Reynolds Metals has more aluminum orders than it can handle doesn't mean you ought to own the stock. Not yet. What you've got so far is simply a lead to a story that has to be developed."

"In fact, you ought to treat the initial information (whatever brought this company to your attention) as if it were an anonymous and intriguing tip, mysteriously shoved into your mailbox. This will keep you from buying a stock just because you've seen something you like, or worse, because of the reputation of the tipper, as in: "Uncle Harry's buying it, and he's rich, so he must know what he's talking about." Or: "Uncle Harry's buying it, and so am I, because his last stock tip doubled."

"Developing the story is not really difficult: at most it will take a couple of hours...It seems to me this homework phase is just as important go your success in stocks as your previous vow to ignore the short-term gyrations of the market. Perhaps some people make money in stocks without doing any of the research I'll describe, but why take unnecessary chances? Investing without research is like playing stud poker and never looking at the cards."

"For some reason the whole business of analyzing stocks has been made to seem so esoteric and technical that normally careful consumers invest their life savings on a whim. The same couple that spends the weekend searching for the best deal on airfares to London buys 500 shares of KLM without having spent five minutes learning about the company."

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