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What's Up Guys Welcome Back To Our YouTube Channel. Do you know Peter Lins? You must have heard of Peter Lins. If you are in the world of investing then you must know Peter Lins. If you don't know then it is very important. Get to know him because let me tell you that every big investor, be it Ramesh Damani or anyone else, definitely talks about Peter Lynch.
It should be done because he is the only person who took his fund of Rs 14 million to Rs 14 billion, sorry yes Rs 14 billion. And his capital gain was 29%, his fund was compounded at 29% throughout his life, which is far greater than what Warren Buffett has, his thinking is even ahead of Warren Buffett and he is very smart and his story is very interesting, in fact we will try to understand, not his story, but we will try to learn what he wants to teach us, what are the investing principles of Peter Lynch, he has also written a very interesting book like One Up One Up on Wall Street.
The second is Beating the Street. So there are many such books. There are many interesting books which you must read. In fact I started with One Up on One Up on Wall Street. When I started my investment journey, I ordered his book. That is a very interesting book. And today I am going to tell you some lessons from that also.
The first important lesson that Peter Lynch teaches is invest in what you know. That means don't jump into something you don't know. Friend, if you understand that business, if you understand it as a business then you can jump into it early. Peter Lynch also shows this example of his. Beating Upon Wall Sweet says in the book itself that if you jump into it that makes sense to you.
That is, the kind of business you see. For example, you may go to a shop and see Colgate. You see that everyone buys Colgate. Every man buys Colgate. Everyone's favorite is Colgate. And ask the shopkeeper which toothpaste is selling the most ? And he said Colgate. So you get a very fair idea by going into the public domain as to what is selling the most.
Similarly, Peter Lins invested in Dunkin Donners very early on, understanding that Americans are increasingly turning to fast food, and the way Americans are turning to fast food, Dunkin Donners has the potential to grow very quickly. Right? In this way, he made his first investment in Dunkin Donuts.
The second important thing is that do your own research, that is, instead of going by someone else's research, you should do your own research. Majority of the time you depend on other's research. The person you thought might be smarter than you, and 90% of the time, the person you thought would be better.
In fact, that is why many big managers and big analysts say that do your own research and then sit down. In fact, there is a very interesting person, like Livermore. You must have heard about him. He is very famous and was a very powerful trader. At one point, he became the richest man in the world.
What he used to do was place his trade and then go out and sit on the seashore so that he would not hear any noise, that is, he would not hear people's opinions. Because he did not want anyone's opinion to dominate his research and he would take decisions accordingly. That is why Peter Lin says in his book, "Do your own research.
Find out the sentiment and fundamental value of the stock and trade accordingly." Similarly, when he started, he did very good research on his own and he took a decision to invest in a company called Hayes. Do you remember Hayes' underwear and garments? Very quickly, he became disinterested in the Indian market and he left.
Jockey Stead and Jockey are still available with us today. Jockey is a stock brand of Page Industries. Yes, it is a brand of Pe Industries. The Jockey Page Industries which was based in India. But the company that existed gradually became extinct. But he invested in the company by Mr. Peter Lins very early on by doing his own research and not thinking about what the market was thinking about at that time.
Ok? The third thing is look for 10 beggars. This is the concept of 10 beggars. This was discovered by Peter Lynch. Peter Liss is saying that people should do 10 beggars. That means, bet on such stock which does not increase by one, two or four times. Just multiply it by 10. 10 beggar means to be 10 times.
To be 10 folds. So he said, do it on 10 fold. Because if even one or two of your stocks become 10 times then you understand what yours is called? Your overall portfolio returns will increase substantially. Therefore you should always bed at 10 beggars. And in the same way, Peter Lynch had bet on Ford Motor Company in the very beginning, which was Ford Motors, which was manufactured by Ford Company, and he did this thinking that the auto sector is very sick.
I am going to talk about that further also and the auto sector is cyclical and they saw that there is a huge slump in the auto sector and at that time when the auto sector was badly beaten, no one was investing, so bet on Ford Motors and after that their stock increased 10 fold from there and even more, in fact, this example was seen in the book Beating the Speed that if you aim towards 10 beggars on 10 beggars then your overall portfolio will automatically give you good returns.
Next thing is that they say that different stock categories require different strategies, that is, every stock moves in a different way and we are going to talk about this which we told you last time, just next in the previous point I told you that every stock is different like auto sector like FMCG sector, all these are cyclical.
So you will see that gradually they will grow and then they will rotate. In fact, steel metal sector, all these sectors are very cyclical. It will run for some time and then cool down. These run for some time and then cool down for some time. So in this way he created different categories and said that many different categories of stocks exist in the stock market.
He said Stalwats to someone, he named them Stallwards. Gave the other one fast growers. Gave the third one cycles. The fourth gave turnarounds and the fifth gave asset pledges. That is, you are already understanding the turnaround, how the market suddenly some stock might be falling, some business might be falling but how the story changed in it and there was a turnaround and after that its business grew again, right, there are many such turnaround stocks and it is also said asset place, right, let us move ahead in this and the fifth point is ignore market predictions, ignore market predictions, it is very common that you ignore the market predictions because the predictions in the market are often very shallow.
They are on a very shallow basis. And they say if you spend more than 13 times analyzing economic and market forecasts, you have listed 10 minutes. This means that you should not do any analysis or market forecast for more than 3 minutes. Because this is almost impossible. It is almost impossible for you to predict the market.
And you should not get involved in all these things. Rather you should have your own conviction. You have to make your own conviction. Do your own research and sit on it. Sixth is patience and long term, which comes from the fact that if you sit on a stock for a long time, you will see that you can create better wealth.
Because it often happens that when a stock doubles or triples in value, our tendency to sell it increases. But they say that unless you sit long you will make 10 folds and there is no point in sitting on that stock. In the same manner he said he had purchased Walmar. Right from the beginning, he did not leave it until it became a huge powerhouse.
Right? The seventh point is what they call avoid over diversification. Will over-verify. That means if you buy too many stocks then the problem is that your returns get diluted a lot. Therefore, you should not invest in too many such stocks. If you over-diversify, you will find that even if one of your stocks rises sharply, it wo n't make much difference to your portfolio because the funds allocated to that particular stock are very less.
So don't buy too many stocks. He said that if an individual investor has 20 to 25 stocks, it is enough and he should play his diversification in that only. Right? Let's go ahead and they say check the story behind the stock. For this, the interesting thing to say is that if you understand the story of any company, what is its story, what is it like for example, many people have bet on Apple, it is not because Apple makes very good computers, makes very good systems, everyone knows that, but the story behind Apple, people are more motivated by it, people are more emotional because of it and because of this, Apple is always the apple of the eye of the consumer and that is why the investor knows that Apple will remain the apple of the eye of the consumer and that is why if you invest in it, then you should know the story, what is the story behind this business?
What is the thinking behind this business turning around or what kind of work is being done in it right now ? What is its story? Similarly, he invested in Taco Bell when he believed that Americans would eat more and move more, and he loved the Taco Bell story. How that business started and he saw a lot of growth potential in it.
Brother, he said this in his ninth point in the book One Upon a Time Speed, Be Skeptical About the Hot Tips. List has cautioned every investor to stay away from those who are giving hot tips because often these hot tips are so hot that they often burn the investors, so you should avoid hot tips, if anyone is trying to motivate you or influence you through Twitter or small videos saying that buy this stock, it is very good, then avoid them because brother, such people try to steal their goods and often the retail investor gets trapped in these things by becoming a fool.
Let's move ahead and talk about the last thing, the 10th point which is amateur has an age. Amateurs have an age, that is, an individual investor like you and me has an age compared to big fund houses. Why? Because an amateur person is in the market. He knows more about the market sentiments as compared to big fund houses.
Big fund houses read thick books, read thick journals and newspapers and form their opinion based on what is happening in the market as per the media. But you, as an individual investor, live in the market. You know what's happening, what's selling the most, what people are thinking, what's the public sentiment?
You have a greater edge to understand it. That's why they say that those who live among the public, among the general public, have a greater edge to understand what the general public wants. Fund houses, sitting in their big, luxurious offices, know what's happening in the newspapers, what the media is showing them, and exactly what's the story going on among the people.
You know more about it because you're among the people. In the same way, they adopted companies like Dunkin' Donuts and Walmart. So, consumers who invested in these things in the beginning felt that a lot of people are eating Dunkin' Donuts, so let's do it too, or I like Dunkin' Donuts more, or I like Walmart more for shopping.
So, if someone thought about this in the beginning and they started investing a lot from there. He used to do a lot of shopping and he enjoyed it a lot in the beginning. It was a very good experience and had he invested accordingly, he would have created a good amount of wealth on Walmar. So this is what they say that if you are an amateur then it is a bigger age than any big fund houses and in their voice they should stay away from their shows and do your own research.
So that's it for this video. I hope you liked these 10 lessons from Peter Lynch. Do let us know in the comments section. And I will see you in the next video. Thank you so much for watching. Bye bye.
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