Is Peter Lynch's investing model redundant? - Views on News from Equitymaster

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Is Peter Lynch's investing model redundant?

Nov 15, 2013

Here is today's recommended reading list from Equitymaster...

Behavioural approach to investing

The effect of human behaviour and thinking on our investment decisions is quite pronounced. Our behaviour tends to lend bias in many of our investing decisions like anchoring bias, confirmation bias, etc. But our behaviour also decides our approach to investing. This article discusses some famous approaches to investing that are actually a product of human behaviour. Read on to find out what they are... FT Adviser

Is Peter Lynch's investing model redundant?

Peter Lynch has one of the most famous successful fund managers in the world. One of his famous models of investing was the GARP model. Though the acronym sounds complicated, the basic philosophy was a much simpler one. It meant investing in "Growth at a Reasonable Price". It combined two well-known investment philosophies - growth investing and value investing. By investing in growth, the investor looked at companies that were growing at rates superior to that of the industry. But the value investing bit meant that the investor would buy only those growth stocks that had attractive valuations. However as times have evolved and the world and companies have become more technology centric, one would wonder if GARP still exists or not. The following article questions and answers this in a simple way. Global Financial Community

Value investing during market highs

One of the basic principles of value investing is to buy stocks of fundamentally strong companies at cheap valuations. When markets are sluggish, it is relatively easier to find such opportunities. But when markets are in a euphoric state and are touching new highs, such opportunities become scarce. So what is it that an individual investor who follows the value investing philosophy should do? The article shares the thoughts of Wally Weitz, a value investor who manages the US$ 1.1 bn Weitz Value Fund. Guru Focus

Is seeking financial advise insane?

Most individual investors tend to rely on 'financial experts' and 'financial advisors' to decide where to invest. Various forms of advise include looking at the stars accorded to a mutual fund by a ranking agency, use of consultants and so on. Whether the process yields good results or not, becomes irrelevant. The investors tend to use the same process over and over again expecting better results each time. The following article terms this behaviour's similarity to insanity. Read on to understand the author's rationale for calling this process insane... Money Watch

Using PE to find out a stock's target price

The Price to Earnings multiple or PE is one of the most commonly used valuation multiple. It can be used to figure out whether a stock is trading expensive or cheap relative to its earnings. But it can also be used as a tool to understand what the target price for a stock could be. The following article not just gives some formulae to use PE for finding the target price but also discusses some interesting stock screeners that are based on this popular multiple. Kapitall Wire

Devanshu Sampat

Devanshu Sampat (Research Analyst) has a degree in commerce and nearly 5 years of experience in equity research. He draws inspiration from successful value investors across the globe and constantly endeavours to refine his own unique stock picking approach. While a firm advocate of the principles of value investing, he believes in adapting a versatile investing strategy in response to varying market conditions. Devanshu contributes to our Megatrend investing service The India Letter.

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