Analysis of Beating the Street and Rich Dad, Poor Dad
Uploaded by CaseyP on Jun 02, 2018
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Analysis of Beating the Street and Rich Dad, Poor Dad
Peter Lynch’s Beating the Street
Summary of the Book
To every sane individual, the family is the most important part of their life. Unfortunately, many professionals are often too engrossed in growing own careers but at the expense of own families. In the book, Lynch acknowledges that he did not spend as much quality time as is desirable but is working on it after retirement (12). He uses the analogy of seventh grade students to underscore that anyone can make it big in financial investments but the key is keeping it simple by investing in companies that one understands how they work (Lynch 25). In the second chapter, the book cautions readers against listening too keenly on market analysts who are always pessimistic. He acknowledges that, “Even after good news is made public, Wall Street can be slow to react” (Lynch 252). Financial markets suffer crashes when stocks are valued too high but understanding the dynamics of a specific set of firms can present the perfect opportunity for an investor to buy even when it appears as the best moment to sell.
There are some financial investment options that seem popular with many American investors. Lynch cautions against following such trails by pointing out that bond funds do not offer as much returns as some readily available direct investment tools such as stocks (46-47). He points out that, “The reason that stocks do better than bonds is not hard to fathom” (Lynch 42). These ensure a definite ROI and do not require one to research or manage to profit from them. There are many mutual funds in operations across the U.S. though, many of them are duds. Lynch points out that getting a good mutual fund demands as much research as that which is necessary to ascertain a good stock option (51). However, finding a good firm is not always hard as admirable management operations are thrifty and are careful not to use resources in conducting glamorous campaigns. This implies that while stocks are better than bond funds, a knowledgeable investor will opt for shares as opposed to bonds.
Big firms were once small companies. Lynch advises readers to focus more on understanding the opportunities presented to small companies in future as they avail massive avenues for high returns as opposed to large firms with very limited chances for expansion...