The Book Wall Street Doesn’t Want You to Read: One Up On Wall Street Book Review

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Peter Lynch’s One Up On Wall Street should be a staple in every investor’s library. It combines Lynch’s investing philosophy with the basics of fundamental stock analysis and value investing. 

With a record like Lynch’s, nobody can ignore the fact that he was willing to share his strategy with any amateur investor who was curious enough to read his New York Times bestseller. 

His book is practical and easy to follow for anyone who is new to investing. It is a perfect place to start if you are interested in learning about stock picking, or to get the inside scoop on how Wall Street functions.

Who is Peter Lynch?

There are many books that are thrown around as the “must reads” for anyone serious about investing. Why read his book? Well, Peter Lynch was the manager of the Fidelity Magellan Fund. From 1977 to 1990 he was able to beat the returns of the S&P 500 market index, averaging 29.2% annual returns during this time.

To put this into perspective, fewer than 10% of investors are capable of beating the S&P 500 over a long period of time. Lynch produced double the returns of this index while managing large sums of money under Fidelity. It is only natural to want to learn from someone with a record like Lynch’s.

You might think that his investment strategy would have to be extremely complex in order to generate such returns, but Lynch’s book is tailored for amateur investors who don’t have all day to do stock research.

Without any further ado, let’s jump right into what you can expect when you purchase Lynch’s book.

One Up On Wall Street

Lynch’s book is broken up into three main sections: Preparing to Invest, Picking Winners, and The Long Term View. Each section provides the reader with a different kind of investing advice.

Introduction

Lynch begins his book with an introduction, where he recaps what it was like to live through the Dotcom Bubble. His main message in this section is that investors need to learn resilience. The worst thing that investors can do is get caught up in market-hype, good or bad. He emphasizes that staying rational is key for any investor who wants to be successful.

Preparing to Invest

This is one of the more overlooked aspects of Lynch’s success: his sound mind. Lynch points out that it is crucial to make sure you are ready to purchase stocks by passing what he calls the “Mirror Test”. 

The Mirror Test consists of the following questions:

• Do I own a house?

People always research their house before buying. They tour, look up the area, and compare pricing with similar properties they are considering. Lynch believes that if most people researched their stocks like they did their houses, then their profits would sky-rocket compared to their peers.

• Do I need the money?

Stocks are very volatile investments. Unlike bonds or many index funds, a stock isn’t truly predictable for the next 5 years. Lynch goes as far as to say that it is hard to see what a stock will do in the next 20 years. It is crucial that we only invest what we can afford to lose.

• Do I have the personal qualities needed?

 Lynch says that there are three “C”s that will kill an investor. We should avoid concern, complacency, and capitulation within our own investments. Additionally, we need to be able to “snore” through market swings. Lynch is adamant about never attempting to predict the market.

There is more to Lynch’s section about preparing to invest, including why amateurs have an edge on Wallstreet professionals and what investing in stocks actually entails.

However, the main takeaways are simple. Try to take advantage of what you already know without overestimating professional wisdom or skills. Amateurs are always going to be ahead of the game when it comes to discovering opportunities that haven’t been discovered by Wallstreet. 

Along with his encouragement, Lynch notes that common stocks aren’t for everyone. If you aren’t keeping a long term mindset while avoiding the ordinary pitfall of predicting the market, then you aren’t investing, you are gambling.

Picking Winners

This is the longest part of the book, where Lynch dives into his best tips and tricks for picking good stocks while also giving guidance on how to research a stock using a fundamental analysis approach. 

This is probably this most interesting and the most helpful section in Lynch’s book, where he covers the 6 general categories of stocks, the 13 attributes of a perfect stock, stocks to avoid, and the “Famous Numbers” needed when researching a stock.

Lynch goes in depth into each of these categories, explaining how to find good stocks in the market while breaking down why these stocks have the highest potential to be successful. He also gives a long list of general pointers at the end of this section which re-cap what he had covered.

Lynch wants investors to find the right company by understanding what they own. This is done by really digging into the numbers and recognizing the signs of a healthy stock. Lynch breaks down investor-mindset and behavior into simple terms that help the reader understand where most people go wrong. 

I won’t go too deep into what Lynch says in each sub-section because there is too much content to cover, but it is beautifully laid out when you read this part of his book.

The Long Term View

In this final section Lynch goes into what it takes to design a successful portfolio and how to manage one. Lynch is against portfolio diversification for its own sake, often calling it “diworseification”. Along with this Lynch includes a list of the 12 most dangerous sayings about the stock market. 

It is also in this section where Lynch includes his famous quote,

“Selling your winners and holding your losers is like cutting the flowers and watering the weeds.”

Lynch’s portfolio strategy tends to be a little unconventional, but then again, you don’t get to be a legendary investor by being conventional.

His Most Impactful Lesson

One of the biggest takeaways from One Up On Wallstreet is that Lynch believes in amateur investors. Despite the fact that ~90% of investors are not beating the S&P 500, Lynch stands firm that if done properly, picking stocks is a great and natural way to invest your money.

Lynch says that the key is to “use your edge”, meaning that we ought to be using the things that we already know to our advantage. There are certain pieces of information that will reach normal people before professionals. Lynch says that everyone has an edge, either through their occupation, history as a consumer, or just as someone who pays attention to trends and what is popular.

Lynch doesn’t want us investing in things that we don’t understand. Instead, by combining your amateur edge with practical research (or “pulling on the shower curtains”, as Lynch did), we can capitalize on many opportunities that are right in front of our eyes.

Who Should Read This?

This is a great book for investors with the time and the money it takes to research and invest into individual stocks. If you are curious about alternatives, check out my post: Index Funds vs. Individual Stocks. 

Lynch does a great job detailing what it takes to invest in stocks, and he describes the challenges and benefits that come with it. This is important to understand knowing that there are alternatives to stock picking that may suit certain people better. 

This book may not be of use to someone who isn’t interested in learning how to research stocks. You have to be willing to do the work and put in effort in order to see results using Lynch’s methods. This may not be for everyone, and that is okay. Investing into index funds is a completely reasonable decision for many people, and serves as another great option for those who want to put their money to work.

Where Do I Get This Book?

If anything in this review resonated with you, I can’t recommend picking up a copy enough. One Up On Wall Street is one of those books that genuinely changes the way you think about investing, and the price of a paperback might make it your best investment of the year.

You can grab a copy on Amazon using the link below:

[One Up On Wall Street, Peter Lynch] (https://amzn.to/4v4LvgK)

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