Book Summary: One up on Wall street

Below you can find the main conclusions of the book “One up on Wall Street”.

Recognize the main six categories of investments.

Stalwarts: These are companies in a market that is relatively stable but still companies can make quite some profits.

Cyclicals: These companies make earnings related to their business cycle. This means that companies which are

Fast growers: High innovative markets with a lot of high profits but also a lot of risk. Return and risk go hand in hand.

Slow growers: These companies are part of industries that are not growing a lot also characterized by low innovation. Hence, there is not much room for improving earnings in these type of markets.

Turnarounds

Asset play: companies with a lot of assets which are worth more than the current stock price. These are bargains.

  • Earnings and assets make a company valuable and a worthwhile investment.
  • The value of a company comes from the earnings its assets make.
  • Steps for investments:
    • Determine the category the company belongs to (see list above).
    • Use the Price/Earnings ratio to compare with others in that category and whether it is overpriced or underpriced.
    • Investigate what the company is planning to do to increase earnings.
    • Also investigate the market it is operating in. Is it potentially going to grow or not?
    • Investigate the financial reports.