Bar, >> Peter Lynch <<
Yes, Lynch and Buffett are the obvious stock pickers to follow. Also, I think Charlie Munger played a key role in Buffett's success since he provides a reality check on Buffett's somewhat flighty nature. Munger is blunt and pragmatic, and together the two personalities made for a winning combination.
Years ago I read Peter Lynch's book 'One Up on Wall Street' (audio book), and it's excellent. He breaks down the types of investments into 6 categories -
Slow Growers - earnings growth rate of 1-4%
Stalwarts - earnings growth rate of 10-12%
Fast Growers - growing 20% or more/yr
Cyclicals
Turnarounds
Asset Plays
I especially liked his 'dull and disgusting' criteria, ie - if a company's business is dull and unglamorous, its stock is likely to be undervalued. If the business is also disagreeable or disgusting in some way, that's even better. Waste management is one example. Lynch also cites one of his best all time investments was a company that owned a rock quarry.
Here are 13 questions that a "Lynchian" investor will ask about a company:
1. Does it sound dull or, even better, ridiculous?
2. Does it do something dull?
3. Does it do something disagreeable?
4. Is it a spinoff?
5. Is it disregarded and not owned by institutions/not followed by analysts?
6. Do rumors abound involving toxic waste and/or Mafia ownership?
7. Is there something depressing about it?
8. Is it a no-growth industry?
9. Has it got a niche?
10. Do people have to keep buying it?
11. Is it a user (not producer) of technology?
12. Are insiders buying it?
13. Is the company buying back shares?
