Peter Lynch discusses his successful 13 years of running Fidelity's Magellan mutual fund. After a short professional autobiography, he explains his methodology for selecting stocks and explores a few dozen January 1992 stock picks in detail. Lynch wrote this book in the last days before the ubiquity of personal computers and the Internet's copious and accessible financial information. Still, Lynch offers pithy investment advice (each unfortunately titled with a boldface "Peter's Principle") that transcend the book's early-1990s setting. His enthusiasm should inspire most beginning to intermediate investors for whom this material is recommended. Due to its age, used copies of this book should be widely and cheaply available.

This book is old school, but boy is it a classic. I've always been fascinated with stocks and the stock market but in the late 90s, past the apex of the day trading craze, I decided to set a small amount of money to partake in some of the action. I set up my account, started watching CNBC like a nut, and dove right in. Before doing so, I used Mr. Lynch's book as my guide and the biggest thing I learned is to stay grounded and avoid the mania and manic depression of the market. This book is not for slick, know-it-alls with pretensions of timing the market and making fast money, Vegas style. No, this book is for sober grown-ups who are willing to take a longer and more rational approach.

I think the best lesson the book offers is to stick to investing in companies you know and trust (and buy from). By following that simple advice I've been able to earn very handsome gains. In addition, the primer on how to read a balance sheet is easily worth the price of admission. There's just lots of great information presented that will make you a relatively savvy investor. This book demystifies a lot of the perceived complexity of the market and shows ordinary people how to get in on the action. It's sober and timeless advice you can use even today.

After reading this book, I felt I got everything I set out to gain from this informative book. The content is relative today as it was when it was first written, the change in mindset gained from this book has been quite extraordinary.

After managing the Fidelity Magellan fund for thirteen years, mutual fund guru Peter Lynch retired on May 31, 1990 at the age of forty-six. Since then, Lynch continues to propound his message that the amateur investor has a distinct comparative advantage in stock picking relative to Wall Street professionals. For example, mutual fund managers are restricted to investing no more than 5% of their total assets in any one stock, and they cannot own more that 10% of any one company's stock. These constraints limit their profit, but not for the average investor. Lynch adamantly chants his mantra, "Buy stocks! If this is the only lesson you learn from this book, then writing it will have been worth the trouble" (18).

One major reason for touting stocks is that they have grown by an average of 11% (i.e. 8% capital gain + 3% dividend) per/year over the last seventy-years, despite over forty market corrections. Aside from short-term stock-price fluctuations, Lynch believes that in the long-run there exists a strong correlation between the success of a business and its stock price. Therefore, anyone can successfully invest in stocks provided they use common sense observation, and proven valuation strategies that they recheck every three-months. Lynch recommends the NAIC (National Association of Investors Clubs) to neophyte investors who want to learn how to evaluate a business, and be part of an organization whose methods routinely beat the market averages. Amazingly, 75% of professional mutual fund managers fail to outperform the S&P after fees.

When searching for possible companies to invest in, Lynch visits the Burlington Mall in Massachusetts to see where everyone shops. Lynch says, "The very homogeneity of taste in food and fashion that makes for a dull culture also makes fortunes for owners" (152). When analyzing stocks Lynch looks at several prospective indicators:

Fundamental Analysis:
1) Look at for stocks whose charts show earnings above price. These businesses have value that have yet to be priced-in
2) The P/E ratio shouldn't be greater than the business' earnings growth rate
3) Particularly in retail stocks, look for an increase in same-store sales
4) Best conditions for businesses to grow earnings are in niche or regional markets where there is little competition and much room for expansion
5) Insider buying is a good sign that the business is doing well
6) Look for arbitrage opportunities where a business is selling at a discount relative to its peers despite similar composition and performance
7) When taking a "top-down" approach look at the "affordability index," median home value, and % of mortgage defaults published by the National Association of Home Builders

Technical Analysis:
1) Buy stocks on Mondays, and from October through December when historical prices are lowest

If you are looking for books that will sharpen your skills as an investor put this one on the top of your list along with books about Warren Buffett and Phillip Fisher. Peter Lynch was one of the all time greatest mutual fund managers ever during his time at the Magellen Fund. We are fortunate that he wrote several books in his retirement. This book will give you a good understanding of Mr. Lynch's investment style which include: investing only in companies you understand, use the knowledge you have of your own industry to outperform Wall Street analysts, trips to the mall are great opportunities for research by looking at which stores are the busiest, and keeping your eyes wide open to hot trends around you. Lynch believes in buying stocks at reasonable P/E ratios, and loves to buy if the P/E matches the earnings growth rate of a company. He shys away from companies when the stock price out performs the earnings and the stock becomes over priced. Lynch believes that eventually the stock price will reflect the value of a company, so it is great to get an excellent company for a low stock price.You get many examples of how he picked stocks for his Barron's round table in 1993, this gives excellent insight into how his mind works, Peter Lynch is truly a genius at stock picking for long term investment. You will receive 25 golden rules from Peter Lynch in this book, follow them and you will do very well in the market.