Let us continue with secret number two from Peter Lynch’s book One Up on Wall Street.
“Chances are, if you like to the store, you like the stock”
If you are musician, if you love fashion, if you like gardening or maybe you like dogs, you have an advantage in this niche.
We all have certain industries, products, services and niches that we have more knowledge about than the average person does
It might be that you know more about what is happening in the hotel industry because you have worked at a hotel, or your business delivers services to hotels.
That means we all have valuable information about publicly listed companies through our everyday life. The knowledge about a sector, an industry, about a market, and the numbers of what is going on in this niche in terms of profits, return on investment, estimated growth, and other key factors, are what we call fundamental analysis.
Your knowledge and experience with a certain market, industry or sector is what Wall street either doesn’t know yet, or has to put in effort, often many hours in market research to realize.
Peter Lynch said “Chances are, if you like to the store, you like the stock”
What services and products do you use and like from publicly, traded companies?
Do you own an iPhone or an iMac?
Do you listen to songs on Spotify?
Are you buying things from Amazon?
Are you interested in Porsche cars?
Do you drive a Volkswagen car?
Are you using Google or any of their other technologies in your daily life?
Do you drink Coke? Or a certain flavour of Coke? The one with cherry?
Even though you love a certain product from a company, I would not buy stocks in that company right away. We have to check that the company is fundamentally good on several key factors. We want each of our investments to match certain criteria on several factors, such as the value compared to earnings and profits, expected growth, past growth to mention a few.
After that, we need to apply a strategy. I want to the price to come down to a certain level before I invest. I never chase the price. Patience is the key.
Thanks to Peter Lynch for putting this topic to my attention.