Learning from Peter Lynch

After reading the book "One up on Wall Street, Peter Lynch", I've picked up an important point which I've missed out in categorizing the stocks that we buy. By applying Peter Lynch strategy, I believe most investor can look into their portfolio and reorganize their stocks into what they buy and have a better  they should buy next to enhance their portfolio.

Peter Lynch classified stocks into 6 general categories:

1) Slow Growers: - Usually large and aging companies that are expected to grow slightly faster than Gross     Domestic Products (GDP) e.g utilities, telcos

2) Stalwarts : - Multi-million dollar hulk, faster than slow growers, usually 10-12% annual growth e.g Coca- cola, P&G

3) Fast Growers:

• Small aggressive new enterprises that grows at 20-25% per annum
• Plenty of RISK
• Look for good balance sheet and are making substantial profit
• The trick to SELL is to figure out when they'll stop growing and how much to pay for the growth.

4) Cyclicals :

• Usually expands and contracts, then expands and contracts again
• Timing is everything in cyclicals e.g commodities               

5) Turnarounds:

• Candidates that have been battered, depressed and often can barely drag themselves into   bankruptcy.
• Have to be patient, keep-up with the news and read it with dispassion.
• Stay away from companies with tragedies where the outcome is unmeasurable.         

6) Assets Plays:

• Company that is sitting on something valuable, e.g pile of free cash, real estate
• Requires patience to unlock value.              

DISCLAIMER The ideas expressed in this blog should not be used to buy or sell the securities, commodities or assets mentioned. The accuracy or completeness of the information provided cannot be guaranteed. Readers should carry out independent verification of information provided. No warranty whatsoever is given and no liability whatsoever is accepted for any loss howsoever arising whether directly or indirectly as a result of actions taken based on ideas and information found in this blog.