That wraps up our practical introduction to Peter Lynch's six stock categories;
- slow growers (sluggards),
- medium growers (stalwarts),
- fast growers,
- turnarounds and
- asset plays.
The biggest risk for investors is mis-categorising a stock.Buying a stock which you think is a fast grower, for example, only to find out a couple of years down the track that it is really a cyclical, is a chastening experience. And your own life situation and risk tolerance should dictate the weightings of each category in your portfolio.
If you've found these distinctions helpful, you might find it worthwhile heading to the source, Lynch's easy-to-read One Up on Wall Street.