What’s your story?


In his book One Up on Wall Street the investor Peter Lynch writes about six stories one can associate with companies.

Every investor wants a ten-bagger, a company that shoots up and multiplies their investment many times over.

Fast growers are usually small or are building a completely new market, which lets them get bigger fast.

They might have the potential to grow 20-25% a year or more for a number of years.

Stalwarts are larger companies, with a profitable market and room to build business.

They might double in a while – say five years.

Slow growers are the established companies that have pretty saturated markets.

They may grow at a little more than the growth rate of the economy as a whole.

Cyclicals experience the ups and downs of business cycles.

Commodities and shipping, for example, tend to go through cycles of oversupply and reduced investment followed by lack of supply and increased investment that makes the price of their products, and therefore their earnings, go up and down.

Turnarounds are opportunities where new management, new owners or a change in the environment make a previously unprofitable or failing company viable.

On the other hand, they might never grow at all – or have to change radically to remain relevant. Textile mills, for example, might move from cotton products to increasingly high-tech fibres now.

Asset opportunities are companies that have value hidden in places the market misses.

If that value then comes to light later, it should result in a rapid increase in valuation for the company.

Peter Lynch came up with these categories a number of years ago and used them mostly to select listed companies for a stock portfolio.

They are, however, fairly universal patterns and can be applied to a number of circumstances.

Take a career or a startup project for example.

Is it slow growing or fast growing? Is someone working on a project that, when realised, will skyrocket their value?

The point is that the story you tell will decide the investment you get.

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