This week we are covering chapter 3 of the iconic investment book "One up on Wall Street. by Peter Lynch" New episodes/chapters every week
One up on Wall Street is one of the greatest investment books of all time and a must-read for every beginner investor. Over the next coming weeks, we will be converting this amazing book into short bite-sized videos to help us become better investors. The goal is to get to the trunk of his argument in every chapter to help support his overall thesis which is to invest in what you know!
I absolutely love this book and it gave me the confidence to venture out on my own and invest in singular stocks (companies) and compete with the street. I have had some success so far and I'm striving to be better. I hope to help you along the way and help educate the millennial and Z investor. I believe in what he says, what you currently know and the products you use can give you an edge to invest in companies that can be 10 baggers. Let's do this thing.
_________________________________________
RESOURCES & LINKS:
_________________________________________
Binge Learn: https://binge-learn.com
Binge Learn Financial Statements: https://binge-learn.com/courses/the-ultimate-guide-on-financial-statements/
SEC GOV website: https://www.sec.gov/edgar/searchedgar/companysearch.html
Chris Haroun GAAP & NON-GAAP: https://www.youtube.com/watch?v=U5zumZ8pm-o&t=2s
_________________________________________
VIDEO SUBJECTS
_________________________________________
- how to invest in stocks for beginners
- Investing for beginners
- stock market for beginners
Transcript:
What up fam, its Payton and today we are going over chapter 3 of "One Up on Wall Street" where we go over the question, "Is investing in the stock market actually gambling?"
The short answer is yes, it is a gamble, but it is a gamble worth taking. Let me explain and flesh out this argument. Peter Lynch mentions a lot about the bond market and how it compares to stocks...but currently the bond market is not a viable option due to the fact that it doesn't even match inflation, so I won't cover it.
The other topic I want to cover is savings. Yes savings is great, but only for emergencies, a rule of thumb is 3-6 months of needed expenses... the longer it sits in your savings account, the longer it loses value due to inflation. To give an example of inflation to my friends that don't understand it, the FED aims to have a 2% inflation rate, that means that each year where the FED hits their 2% inflation goal, whatever you have sitting in cash or in your bank account is worth 2% less than you had the previous year. I'll draw it out. So if you had a $1000 and it is sitting in your bank account. After a year it is worth $980, the following year $960, pending inflation stays at 2%, which a lot of people argue that it is much higher than 2% today but we won't go over that.
In the book Peter Lynch said since 1927, common stocks have recorded gains of 9.8 percent a year on average, as compared to 5% for corporate bonds, 4.4 percent for government bonds, and 3.4 percent for Treasury bills. And this is outdated, government bonds are much lower, yields go from .05% for 3 month bonds and a 2.00% return for 30 year bonds. If you account for inflation of 2% you are either losing money or have not made any return on the investment. In spite of crashes, depressions, wars, recessions, and different presidential administrations, stocks in general have paid off fifteen times as well as corporate bonds, and well over thirty times better than Treasury bills.
He goes on to say that yes there are risks, but the risks have more to do with the investor not know what they are doing than with the different business you can invest in. This is not Peter Lynch but one of the best investment advice ever given was by Warren Buffett where he talks about pitches in baseball. Link up here, but the concept is that in investing, we are in the "no strike business", we can look at pitch after pitch after pitch and not swing, we only need to swing at what is in our "strike zone", what he calls the circle of competence. In other words, you don't have to invest in businesses you don't understand, wait for a business that is in your circle of competence. Going back to Peter Lynch, he said all you have to do to have an amazing portfolio is have 6 out of 10 stocks be winners. Ds get degrees in investing, thats legit.
In closing, clearly, the stock market has been a gamble worth taking and in the coming weeks, we will be getting taught by Peter Lynch on how to invest properly. If you want to take this journey with us please like and subscribe it will mean a lot. Also if you have gotten this far I am also the CEO of an e-learning website where we are curating high-quality education that has already been produced around the internet and putting it in one place. Check out this free course on what is the stock market. As always I love you and believe in you, peace! ✌️
0 Comments