Put in the effort to learn as much as we can about the company before investing a dime. I think that this is very common sense advice. And yet, not many people do it. These companies already had their moment of glory and no longer are growing rapidly but could be considered mature companies. Their growth rate is similar to the growth of the country’s GDP since they grow simultaneously with the general economy. When it comes to fast growers , always ask yourself: Can it keep up with this growth pace? Is this sustainable? If you find that the risk is too high compared to the company’s valuation, and that the market is just going crazy over it without a reliable reason, don’t go for it.

Some of the best gains of the decade (as has been the case in prior decades) came from old-fashioned retailing. The Gap, Best Buy, Staples, Dollar General -- these were all megabaggers and well-managed companies that millions of shoppers experienced firsthand. That two small banks appear on this list shows once again that big winners can come from any industry -- even a stodgy slow-growth industry like banking. My advice for the next decade: Keep on the lookout for tomorrow's big baggers. You're likely to find one. Pay attention to the long-term. It is way more predictable than the random short-term movements of the markets. Since stepping down at Magellan, I've become an individual investor myself. On the charitable front, I raise scholarship money to send inner-city kids of all faiths to Boston Catholic schools. Otherwise, I work part-time at Fidelity as a fund trustee and as an adviser/trainer for young research analysts. Lately my leisure time is up at least thirtyfold, as I spend more time with my family at home and abroad.Peter Lynch is vice chairman of Fidelity Management & Research Company -- the investment advisor arm of Fidelity Investments -- and a member of the Board of Trustees of the Fidelity funds. Mr. Lynch was portfolio manager of Fidelity Magellan Fund, which was the best performing fund in the world under his leadership from May 1977 to May 1990. He is the co-author of the bestselling Beating the Street and Learn to Earn, a beginner's guide to the basics of investing and business. He lives in the Boston area. From my experience, fast growers tend to sell at a premium. One thing that I look out for when analyzing fast growers is the PEG ratio. I use it when I look at a fast-growing company with a high PE (price to earnings ratio). Fast growers are companies that have proven to be able to grow their earnings per share by about 25% a year on average. Most are huge companies like Kellogg, Hershey's, Coca-Cocla, P&G which probably at best give 50% in a year or two, then probably you would want to begin to think about selling

The introduction to each chapter with a different narrator is useful, though the production is dated.

See a Problem?

Slow growers are companies that usually pays dividends. The best kind of dividend-paying companies are those that pay dividends, and the dividend grows consistently year by year. These companies shine out of a recession, but on the other hand, they can lose up to 50% of value. Turnarounds

The old Wall Street adage "never invest in anything that eats or needs repairs" may apply to racehorses, but it's malarkey when it comes to houses.” examples abound in this book: la quinta motor inns, taco bell, philip morris, etc. all companies that would have led to a 10, sometimes 20 fold return on your initial investment. Different categories of companies have various risks and rewards. You can make much money by building a portfolio with stalwarts with a yield of 20 or 30% per year. Turnarounds are investment opportunity for companies that we think are currently in a bad position and is able to turn itself around.Even at lower price, the dividend yield is not high enough to attract much interest from investors. Low risk, high gain: Hidden-treasure companies (provided you’re sure of the company’s assets) and cycle companies (provided you understand the company’s cycles) Uses common sense and explains things in ways that are logical. (For example: H Assets and liabilities won’t give you a detailed view of the company’s financial standing because they only indicate what the company owns and what it owes. However, when you subtract liabilities from assets, the result will tell you if the company is generally doing well or badly: If the result is positive, the company has greater assets than liabilities, and it’s in good shape. If the result is negative, its liabilities are greater than its assets, and it’s not in good shape. This chapter is probably one of the most interesting of the book. Lynch makes a particular emphasis on earnings, of course. Companies are worth what they earn; if they earn more in the future than expected, they should be worth more.