Wealth Creation

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Jim Rohn, one of my greatest inspiration in wealth creation, who became millionaire from nothing but 3 simple steps which he learned from his own mentor, and Jim is the world wide famous motivational speaker.

He, in a video, breaks down the truth in simple 3 steps about becoming rich, what is special here is, he tells from his own experience of how he done the changeover from a penniless guy for buying a chocolate to a millionaire in just 6 years of his young age.

Everyone should watch this video: https://www.youtube.com/watch?v=3kRbnLhfF4o

 

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Peter Lynch's Principle Investing principle on Extravagant Top Management.

The extravagance of any corporate office is directly proportional to management's reluctance to reward shareholders.

Excellent companies are thrifty. They seek to maximize returns by running their operation efficiently and seeking to be the best at what they do. Companies that buy themselves glamorous skyscraper office towers with indoor waterfalls and gold plated toilet seats, award executives with fat salaries not linked to performance, corporate jets, massive advertising campaigns aimed purely at sprucing up the corporate image, changing a sensible old name to something flashy and techy and other such excesses are not companies you want to invest in.

To Lynch, such behavior indicates the management may well be far too concerned with self-aggrandizement rather than trying to maximize returns for shareholders. Some of the very best investments Lynch has made are cyclical companies in difficult industries that turn out to be the last man standing when all their rivals have gone broke, leaving the market all to them, and the credit goes to thrifty policies which ensure that these companies become the lowest cost competitors in the market.

 

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Peter Lynch's Principle Investing principle on Multibaggers

The best stock to buy may be the one you already own.

Many stocks which later became major holdings started out as minor purchases by Magellan. Often it is unnecessary to run around looking for the perfect stock, you may already have it in your portfolio, so buy more! It goes back to principle number 9, the number of really brilliant companies is finite, so when you do have one it might be better to buy more than to go out to find something else.

 

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Peter Lynch's Principle Investing principle on Spotting Winners

If you like the store, chances are you'll love the stock.

One of Lynch's favorite stock picking techniques is to take his wife and kids shopping at a large shopping centre. There you can see for yourself what chains are doing well, before the annual report. Many shops that are starting out as franchises have not yet been noticed by the stock market, even if they are listed. To do this kind of research he'd give his daughters some pocket money and see where they spend it, which usually led him to a discount clothing store like the Gap (an American jeans store turned popular general clothing store), which was always packed with kids making big purchases. What better operation could there be than an extremely profitable store just going franchise that is about to expand all over the country? Lynch loves these stocks, retail operations that go absolutely wild after a few years listing producing what Lynch aptly names "Ten-Baggers" - stocks with a 1000% price increase or better!

His kids also help him by telling him what drinks are popular these days, leading him often to some small operation making a niche range of products that gains similarly. Of course once he gets back to the office he always checks up on the PE ratio and debt levels, which is what stopped him investing in "The Body Shop", on a 40+ PE which was too rich for his tastes even with such rapid expansion. Clearly investing in this sort of thing beats buying some riverboat casino or speculative technology issue recommended by a generic Uncle Harry.

 

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