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People's Daily Online>>Opinion

The natural way to pick your stocks

By Huang Xiangyang (China Daily)

15:07, December 15, 2011

Among all the legendary investors I like Peter Lynch the most, because his theories are simple.

Unlike other moneymaking masters who tout sophisticated principles and techniques, Lynch emphasizes the power of common knowledge and he chose many of his big winners the same way any individual investor could.

The Wall Street fund manager bought Taco Bell because he was impressed with their burrito on a trip. He bought Volvo because that's what his family and friends drove. He bought Hanes because his wife told him its pantyhose brand, L'eggs, was a favorite with women.

Rule No 1, Lynch says, is to stop listening to professionals, because any "normal person using the customary 3 percent of the brain can pick stocks just as well".

"When you try on the stockings or sip coffee, you are already doing fundamental analysis as professionals do," he says.

I was fascinated by these words and enthralled by the feeling that I could get a grip on my own financial future despite my still-to-be-proved investing skills, and that I could start anew after many losses. It was a sense of rebirth.

So I put Lynch's words into action. I sifted through Beijing Youth Daily regularly, not for the news, but for the advertisements it depends on. I started stockpiling the shares of Beijing Media after I saw a steady increase in the ad pages. Yet I have never made any money on them. The company's price nose-dived in 2005 after three of its managers were arrested on corruption charges.

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