{"id":8406,"date":"2013-06-28T14:24:34","date_gmt":"2013-06-28T08:54:34","guid":{"rendered":"https:\/\/www.moneyworks4me.com\/investmentshastra\/?p=8406"},"modified":"2020-03-02T18:08:17","modified_gmt":"2020-03-02T12:38:17","slug":"peter-lynchs-strategy-of-investing-in-fast-growth-stocks","status":"publish","type":"post","link":"https:\/\/www.moneyworks4me.com\/investmentshastra\/peter-lynchs-strategy-of-investing-in-fast-growth-stocks\/","title":{"rendered":"Peter Lynch Style: Making Money in the land of ‘Fast Growers’!"},"content":{"rendered":"
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\u201cThe investor of today does not profit from yesterday’s growth.”<\/strong><\/em>\u00a0Warren Buffett<\/span><\/strong><\/em><\/p>\n<\/blockquote>\n

Most of us have relatives who like to fashion themselves as \u2018stock-gurus\u2019, with their stories revolving around how they \u2018could have been\u2019 millionaires now, if only they had held their nerves. The stock that comes up frequently in these conversations is Infosys. If you had invested Rs. 9,500 to buy 100 shares of <\/strong>Infosys<\/span><\/a> in the IPO (that went undersubscribed in 1993), 12,800 shares (adjusted for bonus issues) worth princely sum of Rs. 3,15,26,400 would be in your kitty.<\/strong><\/span> But, is Infosys still the key to riches? As often repeated, past performance is no guarantee of future results. So, how does one find out the next \u2018Infy\u2019?<\/p>\n

Who are the fast growers?<\/span><\/h3>\n

A Fast Grower is a small yet aggressive & nimble firm, which grows roughly at 20-25% a year. This is an investment category which can give investors a return of 10 to as much as 200 times the investment made by them. No doubt, it remains a favourite of Peter Lynch<\/span><\/a><\/span><\/span>!<\/p>\n

History repeats itself!<\/span><\/h3>\n

In 1950s, the Utility & Power Sector were the fast growers with twice the growth rates to that of the US GDP. As people got more power-hungry gadgets for themselves, the power bills ran through the roof & the power sector surged with booming demand. Post the Oil Shock in 70\u2019s, cost of power generation became high with power tariffs going up; people learnt to conserve electricity. Demand, thus, fell and power sector witnessed a slowdown. Prior to it, similar decline was observed in the Steel Sector & Railroads. First, it was the Automobile Sector, and then the Steel, followed by Chemicals & Power Utility & now the IT Sector is showing signs of slowing down. Every time, people thought, rally in the fast growers of the age would never end, but it did end, with people losing money as well as their jobs. Those who thought differently like Walter Chrysler (founder of Chrysler Corporation), who took a pay cut and left the railroads to build new cars in the turn of the last century, became the next millionaires.<\/p>\n

The Lifecycle of a Fast Grower- From Good-Buy to Good-Bye!<\/span><\/h3>\n

Three phases involved in their life cycles, are:<\/p>\n