Formative experiences of baby investors
Posted on May 24, 2008 by Richard Beddard
Filed Under Investing |
I’m re-reading Peter Lynch’s ‘One up on Wall Street‘. For me, it’s like a conversation with an old friend. I don’t usually re-read books but I’ve read this one many times. It seems like there’s an observation on every page I can relate my own investing experience to.
On page 50 he talks about his first trade as a college student. It was Flying Tiger, an air-freight company, and when the US went to war in Vietnam it went up five-fold.
If your first stock is as important to your future in finance as your first love is to your future in romance, then the Flying Tiger pick was a very lucky thing. It proved to me that the big-baggers existed, and I was sure there were more of them from where this one had come.
My first trade was Inchcape (INCH), which has done even better. I still own some of my original holding. It taught me that there is money in bombed out shares, and it probably explains why I’m most comfortable with recovery situations. Soon after I bought Dialog which burned many a dot.com investor, myself included. That probably explains why I’ve shunned speculative stocks since.
I wonder how many other investor’s attitudes were formulated by their first trades.
Also, I wonder whether the first book you read about investing is just as influential. If so, I have a lot to thank Peter Lynch for. The first book I can remember reading about investment was One up on Wall Street. It explained how the gains from an Inchcape or a Flying Tiger can wipe out the losses from many Dialogs, and that you can’t hope to distinguish one from the other unless you understand the businesses they’re in.
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