 Good day, fellow investors! Peter Lynch turned $1,000 into $28,000 over 13 years when he was the fund manager at Magellan. When he retired in 1990, he was asked to write a book about how he did it and this is the book, one upon Wall Street. This is probably the best book and a book that every investor should have on his bookshelf and that's why for this Christmas I decided to re-read it again and in the process I decided, okay, I'll write notes and I'll make videos and summarize the book so that you can read the book and then also look to the videos and have all the knowledge that Peter Lynch writes here explained, systematized and structured so that you can use it forever and understand the book better. So the first two videos will discuss the introduction, who is Peter Lynch, what is he doing and how to behave in stock market crashes. That is a very hot topic and also discussed here. It's a little bit all over the place the introduction, the first 43 pages so I decided to split it in two videos, take the important pieces from the pages and structure them into two lessons. The first lessons that I'm going to discuss in this video will discuss Peter Lynch's summary on the current market. Yes, I know the book was written 40 years ago, this is the millennial edition but it's very, very similar to the conditions we are currently in, especially the 1990 commentary. Then we are going to discuss how to find those great stocks, what is the key when it comes to investing and how to invest even in the current market. Each page of this book is a gem, there is so much to learn so I really hope you'll enjoy this series. Don't forget to like this video, subscribe and click that notification bell so that you get notified and see whether a video is interesting for you or not as we do a lot of stock market videos from education to reel in that sector analysis and stock analysis. Thank you. So let's first start, who is Peter Lynch? He was the investment manager of the Magellan fund from 1977 to 1990 where he turned $1,000 into $28,000 over 13 years for a yearly return of 29.2%. He delivered the return that was more than twice what the SAP 500 did in the period and he tells us that we can do this too and he tells us how in his book. The book is really a gem so we better start with it. Let's start with his commentary on the current market. The millennial book edition that I'm reading now and that I'm summarizing was written in 2000 at least the introduction commentary about the book and we are in a similar market situation. The 1990s were extremely positive for stocks, it was all about dotcoms, the internet and people were paying whatever price to own parts of those businesses. However there were also other great businesses that were relatively cheap. Similarly today the SAP 500 did amazingly over the last 10 years. There are some exuberantly priced stocks, stocks that have no fundamentals while there are good stocks that are reasonably priced. Comparing 1999 to today in Lynch's words there were stocks that had no profits, no profits and would reach a billion dollar in market capitalization. For Lynch that was something crazy but if we look at today's market there are stocks with no profits that reach 50 billion dollars on market capitalization. So the billion dollars aren't relevant anymore but Uber for example has 50 billion dollar market capitalization without profits and then you have to think okay if I'm Peter Lynch I want to invest in businesses that are able to deliver 10x returns over the next 10, 5, 10 years and for that to happen for Uber the market capitalization needs to go to 500 billion dollars and then when investing you have to see okay what's the likelihood for Uber to go from 50 billion to 500 billion what has to happen to their earnings to their business model. Let's say they have to reach 25 billion dollars in stable yearly earnings and then on top of that have a 20 price to earnings ratio to give you 10x returns over the next 10 years and then you have to estimate the risk and reward of that actually happening. So Lynch is famous for his 10 baggers for stocks that go up 10x when you invest in it that's a baseball analogy but that's actually something that long-term investors should strive for finding a business company that you can invest in and that goes up 10 times. Lynch had a lot of 10 baggers, 25 baggers, 50 baggers, 150 baggers in his portfolio and those allowed him to beat the market over his investment management career and reach returns of 29.2% per year. That's really something amazing and it's really amazing that he synthesizes his knowledge in this book. Now it's not just about finding those 10 baggers it's also about avoiding the big losses. So we have Amazon that did amazingly over the last 20 years but then you could also invest in WebWan that didn't do as amazingly. A few years ago 3D printing was taking over the space it would be the biggest revolution in industry. Stocks didn't do that good then we had I don't know GoPro was another technology company that wanted to change the world but you have to avoid those losers and find those really good companies that will deliver and Peter Lynch old-fashioned investor he calls himself an old-fashioned investor says we have to focus on fundamentals because sooner or later earnings will make or break an investment in equities. One of Lynch's comments is on dividends and how the dividend yield of the SAP 500 fell below 1% at a certain point in 1999 when dividends are so low in comparison to what the market is willing to pay there isn't much room for growth similarly the current dividend yield is 1.79%. So this is a topic growth how to grow how to grow fundamentals where can fundamental growth come is something that we're going to touch more in that over the summary of this book. Peter Lynch loved unloved industries unloved sectors that have big opportunity for growth. I'm currently analyzing the waste management sector and that is a typical Peter Lynch example. In 2012 nobody liked waste management companies were trading at price earnings ratios between 10 and 12 15 good companies with modes you can't build a new landfill now and since then those companies have increased earnings the market started liking them and have delivered amazing returns over the last six seven years and I'm now analyzing the sector I'll make a video about that too in the following week. So that's an example but now it's exuberant to invest in those companies because further growth is unlikely or risky however in 2012 when nobody liked them it was a great investment and that's why Peter Lynch says you have to wait between three and 10 years for a good investment to deliver its returns and to quote him it's all about long-term investing and it's pretty simple corporate profits are up 50 fold since world war two and the stock market is up 60 fold and then to finish this video how you can find great investments and beat the market over the long term and that's the message Peter Lynch gives through the whole book and his message is that we as individual investors can beat the market can achieve great returns but we have to be focused on the right things. His message is that you should not listen to professionals because you don't know what they are doing and why they have a position nor when they're changing their mind smart money isn't so smart and dumb money is dumb money only when it follows smart money you can outperform the market by thinking for yourself and use the common knowledge you have look around you and within your business your circle of competence and then analyze the stocks you can understand the tools on how to do it will be shared through this book summary. A very interesting example of how you can beat the market is that you have to own the right stock even if it makes just 10% of your portfolio it can be great for you. The example if you have 10 stocks that do like the market and the market goes up 50 percent let's say your 100 dollars turn into 150 dollars over five years but if you have 11 stocks where 10 do like the market and one becomes a 10 bagger your 91 dollars become 136.5 50 up like the market but the 11th stock that you invested just nine dollars becomes a 10 bagger thus nine dollars turn into 90 and your return suddenly for the portfolio is 226.5 dollars thus you have destroyed the market the market is up 50 percent you are up 100 percent and that's is Peter Lynch's message invest for the long term so that you find those 10 baggers that make the difference within your portfolio. We're going to continue with this summary of the book tomorrow I'm putting a video about Peter Lynch's explanation of stock market crashes how to behave and how did he behave in the 1987 stock market crash which is another similar situation to what can happen in 2020 because the stock market performance back then and now is similar don't forget to subscribe like click that notification bell also if you have any question comments whatever please put them in the comment section below thank you for watching and looking forward to seeing you in the next video