What it argues
Beating the Street is Peter Lynch's second book, written after he retired from the Fidelity Magellan Fund in 1990. Where One Up On Wall Street laid out his investment philosophy in general terms, Beating the Street is more specific: Lynch walks through actual stocks he owned or researched, explains his reasoning at the time of purchase, and revisits which decisions worked out and which didn't. It is part investment memoir, part ongoing tutorial in how he actually thought about individual companies.
Lynch begins by describing the circumstances of his retirement — at 46, he decided that running one of the world's largest mutual funds was consuming more of his life than he wanted to give it — and then moves into the analytical work. A significant portion of the book covers the stocks he researched for a mock portfolio exercise he did for Barron's magazine, which lets him show the actual analytical process in real time rather than reconstructed afterward.
What it gets right
- 1.
Annual reports tell you what a company actually did, not what it hoped to do. Reading them carefully, especially the footnotes, reveals information that most investors miss.
- 2.
Different industries require different analytical frameworks. The metrics that matter for a bank are completely different from the metrics that matter for a retailer or a pharmaceutical company.
- 3.
Lynch's portfolio review is deliberately honest about mistakes. Good investors make bad picks regularly; the goal is that the winners outrun the losers, not that every pick succeeds.
What it covers
Who wrote it
Peter Lynch managed the Fidelity Magellan Fund from 1977 to 1990, growing it from $18 million to $14 billion in assets while averaging annual returns of approximately 29 percent. He retired at 46 and has since devoted much of his time to philanthropy, particularly in education in the Boston area. In addition to Beating the Street, Lynch wrote One Up On Wall Street and Learn to Earn. He remains associated with Fidelity as a vice chairman and continues to appear occasionally in public discussions of investing. Lynch is credited with popularizing the "invest in what you know" approach and bringing institutional-grade stock analysis to a general audience.
