Beating the Street (Book)

Beating the Street - Peter Lynch

Snippets and Highlights

This was the perfect scenario for the disciplined stockpicker to search his or her buy lists for likely prospects. The headlines were negative, the Dow Jones average had lost 600 points over the summer and the early fall, cabdrivers were recommending bonds, mutual-fund managers had 12 percent of their fund assets in cash, and at least five of my fellow panelists were predicting a severe recession.

On style-drift and why it is dangerous

In fact, when a value fund does better than its rivals in a lousy year for value funds, it’s not necessarily any cause for celebration. (This also applies to growth funds or any other kind of fund.) It may be that the manager has gotten disenchanted with value stocks and has invested some of the money in blue chips or utilities. He or she has gotten frustrated with the value style, especially when it hasn’t been working. The manager’s lack of discipline may produce good results in the short run, but the benefits may be fleeting. When value stocks come back, this manager won’t be fully invested in them, and his or her shareholders won’t be getting what they paid for.