Thursday, 25 March 2010

Peter Lynch's 6 categories of stocks: Summing it up

Summing it up

That wraps up our practical introduction to Peter Lynch's six stock categories;

  • slow growers (sluggards), 
  • medium growers (stalwarts), 
  • fast growers, 
  • cyclicals, 
  • turnarounds and 
  • asset plays. 
These are only a guide, as companies won't always fit neatly into a single category, and the same company may move through several categories over the course of its life.

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 experienceAnd 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.


Peter Lynch's 6 categories of stocks: Sluggards and Stalwarts

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