by Peter Lynch
Lynch Law, 47, 51, 53
McDonald’s, 13, 14, 72, 75, 88, 95, 193, 214, 246, 261
bonds of, 71
competition and, 223–24
growth of, 128, 223
p/e of, 170–71
rising stock prices of, 261
as stalwart company, 228
MacKenzie, Spuds, 223
Mafia, 137
Magellan Fund, see Fidelity Magellan
Maine Sugar, 53
Manhattan, Borough of, 67–68
Manhattan Fund, 51
Manufacturers Hanover, 34
Marcor, 154
market-capitalization rule, 13–14, 64
Marlboro, 142, 152, 218
Marriott, 88, 157, 240, 246
as fast-growing company, 118
overpriced stock of, 164
stock chart of, 168
Marshall’s, 155
Martin-Marietta, 141
Masco Corporation, 134, 164, 261, 280
Masco Screw Products, 164
Massachusetts, Commonwealth of, 159
Mayan mythology, 86–87
MCI, 26, 135
Medtronic, 26
Mellon, Andrew, 67
Melville, 155–56
Merck, 34, 88, 124, 155, 220, 246
stock chart of, 266, 267
mergers, 135, 279, 284
see also acquisitions
Meridian Bank, 190
Merrill Lynch, 38, 41, 201
Mesa Petroleum, 39
MGF oil, 158
Micron Technology, 204
Microsoft, 16, 25, 26
Miller, William, 250
Miller Brewing, 218
MMM, 118
Mobil Oil, 154
Monday effect, 282
money-market funds, 30, 62, 72
advantages of, 69–70
interest rates of, 69–70
stocks vs., 69–70, 88
Monsanto, 142, 211
Montgomery Securities, 158
Montgomery Ward, 154
Ms., 51
multibaggers, 32–33, 118
municipal bonds, 68
Murdock, David, 279
mutual funds, 10, 31–32, 51, 59, 65, 96, 135
early 1980s boom of, 102
regulations of, 63–64
returns of, 76
NASDAQ, 21
Nash Motors, 71
National Broadcasting Corporation (NBC), 109
National Convenience, 54
National Health Care, 158
Natomas, 134
Navistar, 145, 146, 230, 264
NBTY, 26
Neff, John, 56
Nelson’s Directory of Investment Research, 136
Nestlé, 279
Newhall Land and Farming, 125
Newhall Ranch, 125–26
Newsday, 141
newsletters, 32, 38, 81
Newton, Isaac, 51
New York Stock Exchange, 37, 125, 144, 153, 208
frequency of trading on, 79, 281
trading hours of, 278
New York Yacht Club, 50
Nifty Fifty, 22
Nikkei average, 55, 278
Nixon, Richard M., 277
Noble, George, 212
Nucor, 90, 110
NutraSweet, 211
Nynex, 135
Odyssey Partners, 279
oil services industry, 151, 264
One Potato, Two, 158
OPEC, 277
options, 270–73, 280
cost of, 271
expiration of, 271–72
as insurance, 272–73
put, 273
Orion Pictures, 96
OshKosh B’Gosh, 193
over-the-counter exchange, 279
Owens Corning, 34
Pacific Telesis, 135, 213
Pampers, 107–8, 198
Pan Am, 89
Paramount, 96
Paramount Famous Lasky, 71
patents, 141
Paychex, 25, 26
PBS, 40
Pebble Beach, 40, 102, 125, 140, 209
Penn Central, 128, 134
as asset-play company, 126, 209
bankruptcy of, 122, 207
book value of, 207, 209
as turnaround company, 122, 124, 213
Pennzoil, 205
pension funds, 59, 64
pension plans, 217
People, 60
People Express, 42, 89, 269
Pep Boys, 59, 95–96, 131, 145, 190, 192, 214
Pepsi-Cola, 284
p/e ratio, see price/earnings ratio
percent of sales, 198
Perot, Ross, 14, 170
Petrie, Milton, 248
Phelps Dodge, 34, 187
Philadelphia Electric, 288
Philip Morris, 129, 214, 246, 281
growth, history of, 217–18, 261
Kraft bought by, 133
negative-growth industry and, 152, 217–18
stock chart of, 262–63
Photronics, 24
Pickens, Boone, 257, 279
picks and shovels strategy, 14
Pic ’N’ Save, 59, 95, 110, 192
Piedmont Airlines, 42, 269
Pier 1 Imports, 36, 193, 247
Pizza Time Theater, 158
plastics, 119, 133
Polaroid, 49, 98n, 171–72, 254, 259, 274
portfolios:
diversity of, 59–60, 239, 240
insurance for, 272–73
minimizing risk in, 241
multibaggers and, 32–33
rotating stocks in, 242–43
size of, 40, 239–41
stop orders and, 244
Postum, 71
Potter, Beatrix, 194
Premark International, 134
Prepaid Legal Services, 26
pretax profit margin, 220–21
Priam, 158
Price, Michael, 56
Price Club, 153, 268
price/earnings ratio, 165–69, 199
dot.com stocks and, 12–13
of finance companies, 200
growth rate and, 199, 218, 219
high, 165–69, 170–71
interest rates and, 172
levels of, 169, 170–71, 172
meaning of, 169
overpricing of stocks and, 168, 171–72
relativity of, 170
of stock market, 172
Primerica, 281
Pritzkers, 257
Procter and Gamble, 107–8, 109, 129, 187, 198
earnings of, 217–18
as stalwart company, 112, 115, 118
stock chart of, 115
products, demand for, 142, 254
profit margin, calculation of, 220–21
Radice, 89, 208–9
raiders, 284
see also acquisitions
Ralston-Purina, 112, 118, 129, 162, 207
random-walk hypothesis, 52
Ranger Oil, 53
Raymond Industries, 212
RCA, 71, 72, 264
real estate:
advantages of, 77–80
houses and, 77–80
recession of 1981–82, 86
recession of 1990, 23
Reebok, 193
Reichmanns, 256, 279
Reliance electric, 154
Remington Typewriter, 71
reports, analysts’:
on Internet, 16–17
see also S&P reports
reports, of companies, 194–97
see also annual reports; balance sheets
Reserve Fund, 69
Resorts International, 275
restrictions, trade, 64
Retin-A, 108
Reynolds Metals, 106, 187
Rite Aid, 281
Robitussin, 142, 209
Rockefeller, John D., 66, 204
Rogers, Jimmy, 56
Rogers, Will, 54
Rukeyser, Louis, 279
Safety-Kleen,
132, 133, 137, 145, 159
sales, percent of, 198
S&P reports, 17, 21, 27, 69, 74, 123, 136, 170, 184, 197, 199, 238
Santa Fe Southern Pacific, 126, 210
Sara Lee, 37
savings accounts, 69
savings-and-loan stocks, 17, 54
savings bonds, U.S., 69
savings rates, U.S., 285
Sceilig Hotel, 28, 29
Schlumberger, 13, 34, 98, 100, 201
SCI Systems, 160
Scotty’s, 268
Scudder, Stevens and Clark, 65
Seagram, 212
Searle, 211
Sears, 59, 62, 110, 223
Securities and Exchange Commission, 64, 143
Sensormatic, 161, 223, 229–30
Service Corporation International (SCI), 35, 36, 58, 116, 137–38, 139–40
service sector, U.S., growth of, 283
7-Eleven, 42, 54, 59, 181
Seven Oaks International, 62–63, 64, 66, 131
Seven-Up, 218
shares:
buybacks of, 144–45, 153, 157, 197
insider buying of, 135, 142–43
insider selling of, 143–44
see also companies; stock
Shearson, 58
Shelley, Percy Bysshe, 184
Shoney’s, 116, 131, 164, 168, 261
Shop and Go, 54
shorting stocks, 273–75
Siliconix, 24
Singer, 134
Singleton, Henry E., 144
Smith, Morris, 127
SmithKline Beckman, 97–98, 99, 100, 110, 141, 187, 266
Smith Labs, 157, 158
Sorg Paper, 51
Soros, George, 56
Southland, 54
Southmark, 207
Southwestern Bell, 135
Spectrum Surveys, 136
Spielberg, Steven, 96
spinoffs, 133–36, 159
splits, 34n
Sprague Tech., 134
Sprint, 135
SPUD, 158
Squibb, 281
SS Kresge, 280
SSMC, 134
Staples, 25, 26
Star Wars, 163
Steinberg, Saul, 256, 257
Sterling Drug, 108, 187
stock, indexes, 280
stock charts, 98n, 112, 164
of Avon, 166
of Bristol-Myers, 116–17
of Chrysler, 147
of Con Ed, 206
of Dow Chemical, 165
of Dreyfus, 103
of Ford Motor, 120–21
of Genesco, 156
of Home Shopping Network, 150
of Houston Industries, 113
of The Limited, 168
of Marriott, 168
of Melville, 156
of Merck, 267
of Navistar, 146
of Philip Morris, 262–63
of Procter and Gamble, 115
of Shoney’s, 168
of SmithKline Beckman, 99
of Wal-Mart Stores, 114
stock market:
breaks in, 246
bullish vs. bearish, 22–23
cause and effect in, 50
distrust of, 48, 73
fluctuations of, 29–30, 82
individual stocks vs., 89–91
interest rates and, 85
Japanese, 55, 278
in 1980s, 278
of 1987–88 vs. 1929–30, 22, 282–283
in 1990s, 9, 10
in October, 1987, 29–30, 69, 86, 278, 280, 282
October, 1988 recovery of, 30
overvaluation of, 90
p/e ratio of, 172
predictability of, 84–88
preparedness for, 86–87
random-walk hypothesis of, 52
as stud poker game, 74–75, 76
theories of, 52
trading hours of, 278
turnover in, 281
volume of, 281
weak, 33
world events and, 276–80, 283
see also investment; stocks
stocks:
annual gain of, 72, 85
approved lists of, 59–60
average return of, 237–38
bargain, 261–64
blue-chip, see blue-chip stocks
bonds vs., 69–70, 88, 112, 237
cash flow and, 214
charts of, see stock charts
choosing, 95–97, 98, 231–33; see also investment
classification of, 110–27
comebacks of, 264
common misconceptions of, 258–69
conservative, 265; see also blue-chip stocks
diluting of, 145
dividends and, see dividends
dot.com, see dot.com stocks
efficient market hypothesis of, 52
falling of, 259–60, 269–70
fluctuations of, 29–30, 82
frequent trading of, 238–39
hot, 149–52
initial public offering (IPO) of, 159
insider buying of, 135, 142–43
insider selling of, 143–44, 180
institutional ownership of, 55, 57, 136, 142–45, 179
Internet and, 10–12
length of ownership of, 112, 115, 266
market vs., 89–91
money-market funds vs., 69, 88
overpricing of, and p/e ratio, 168, 171–72
portfolios of, see portfolios
public attitude toward, 47–48, 73
real estate vs., 78–80
rising of, 260–61, 269–70
risk of, 71–76, 80
shorting of, 273–75
summary evaluation of, 227–33
whisper, 157–59, 280
see also companies; investment; stock market
stock tables, 165–68
Stop & Shop, 59, 128, 163, 261
stock, return of, 33
stop orders, 244
Storer Communications, 101–2, 256
street lag, 57–60, 101–2
Student Loan Marketing, 247
Subaru, 33, 34n, 36, 58, 95, 115, 251, 260
Sullivan, D. George, 49, 50
Sunshine Junior, 54
Sun World Airways, 158
Superior Oil, 154
Sweeney, Thomas, 133
Swift and Co., 71
switch funds, 281
synergy, 156–57
Taco Bell, 36, 89, 90, 163, 181, 190, 243, 284
history of, 118
Tagamet, 97–98, 100, 141, 187, 266, 271
takeovers, 135, 240
see also acquisitions
Tambrands, 35–36, 37, 95
Tampa Electric, 128
Tampax, 35–36
Tandon, 160, 191
Tandy, 134
taxes:
breaks of, 213, 214
deductions of, 78, 285
dividends and, 19
exemptions of, 78–79
loss carryforward of, 126, 213, 257
profit margin and, 220–21
savings and, 285
shelters of, 279
Teamsters union, 66
tear sheets, 136
Telecommunications, 126–27
Teleco Oilfield Services, 212
Teledyne, 72, 134, 134n, 145, 246
telephone companies, 135–36, 205, 213
Televideo, 42, 158, 191
Temple Inland, 134
Templeton, John, 55
tenbaggers, definition of, 32–33
10-year financial summaries, 196–97
Texaco, 205
Texas Air, 129, 224–26
Texas Instruments, 128, 230–31
textile industry, 188–89
Theragenics, 24
Thom McAn, 155
Three Mile Island, 75, 123–24, 206, 255
Tiffany, 155
Time, 131
Time, Inc., 134, 231
Times Mirror, 141, 155
Tisches, 1
55
Tobias, Andrew, 239
Tom Brown, 151–52
Tonka, 134n
Toys “R” Us, 33, 42, 56, 124, 133, 153, 159, 192, 247, 268
growth of, 248
trade deficit, U.S., 284
trade restrictions, 64
Transamerica, 134
Transunion, 134
Treasury bills, 70
Treasury bonds, U.S., 68
T. Rowe Price New Horizons Fund, 57
Trump, Donald, 257, 279
TRW, 201
Tsai, Gerry, 51
Tupperware, 133
Twain, Mark, 186
Twentieth Century-Fox, 125, 140
Tyco Labs, 48
Tylenol, 142
UAL, 160, 211–12
Underwood, Neuhaus, 58
unemployment, in U.S. vs. Europe, 23–24
Unilever, 279
Union Carbide, 124, 133
Union Oil, 98, 104
Union Pacific, 126, 210
unions, 59, 63, 66
Uniroyal, 190, 288
United Airlines, 211
United Drug, 71
United Inns, 176
US Gypsum, 134
U.S. Industries, 155
U.S. Leather Preferred, 71
USPCI, 212
U.S. Steel, 109, 276
US West, 135
USX, 109, 217
Value Line Investment Survey, 17, 136, 143, 170, 184, 197, 199, 222
Vanderheiden, George, 137
Vector Graphics Microcomputers, 158
Vercoe & Co., 57
Vicker’s International Holdings Guide, 136
Vicker’s Weekly Insider Report, 143
Victor Talking Machine, 71–72
Vietnam War, 50, 52
Viskase, 133
Volvo, 36, 70, 212, 251
Vonnegut, Kurt, 60
Vulcan Materials, 141
Wall Street:
caution of, 59–60
lag of, 57–60, 95, 101–2
standard industry classifications of, 59
see also stock market; stocks
Wall Street Journal, 17, 38, 77, 143, 167
Wall Street Week, with Louis Rukeyser, 279
Wal-Mart Stores, 12, 33, 59–60, 66, 129, 219, 247
as fast-growing company, 112, 114, 118
stock chart of, 114
Wang Laboratories, 101
Wards, 153
Warehouse Club, 153, 268
Warner Communications, 247–48
Washington Post, 141
Washington Public Power Supply System, 72
Waste Management, 110, 137, 145, 246, 281
Weinberg, Harry, 256
Welch, Jack, 18
Wendy’s, 223
Wesray, 279
Westernbank/Puerto Rico, 26
Westin Hotels, 211
West Point-Pepperell, 90, 188–89
Wexner, Leslie, 57
Wharton College, 52
What’s Wrong with Wall Street, 281
whisper stocks, 157–59
White, Weld, 57
Wilson, Robert, 275
Winchester Disk Drives, 38–39
Windex, 62
Wojnowski, Tom, 194
Woodfield Mall, 57
Worlds of Wonder, 158
W. R. Grace, 34
Wright Aeronautical, 71
Xerox, 62, 63, 64–65, 88, 152, 160
Yom Kippur War, 277
York Int., 134
Zantac, 98
Zapata, 269
Zion’s Bancorp, 26
