Review of: Learn to Earn
Learn to Earn A Beginner’s Guide to the Basics of Investing and Business by Peter Lynch and John Rothchild
Peter Lynch, who grew Fidelity’s Magellon mutual fund from 18 million to 14 billion in 13 years, teamed up with author John Rothchild to write a beginner’s primer on the stock market and investing.
It is an extremely easy read with a narrative that feels like Lynch is sitting next to you just telling the story.
The 4 chapter book was first copyrighted in 1995. The authors start by demonstrating how ubiquitous companies are in America, talking about the ones behind our every day moves. Then in the intro, they cover just what a company (corporation) is and the difference between public and private ones.
In chapter one, they cover the history of capitalism from the raw beginning when no one ever bought anything; how it helped in the discovery and founding of our country – including examples of the companies that were around at the time; financial heros (Washington, Smith and our first millionaires) and what they did, up through the development of the stock market with all it’s ups and downs and on into what a typical shareholder looks like.
In chapter two, very basic investment concepts are covered. Think stocks vs. mutual funds vs. real estate and concepts such as what is a broker and how to do simple analysis of the health of a company. Unlike many books, the authors manage to impart the knowledge understandably.
In chapter three, the lives of a normal company, from startup to blue chip status (or death) are followed, showing who invests at which stage and why they do so.
Chapter four covers examples of that year’s Forbes 400 list of the richest people and how they got that way along with specific examples of how certain companies (like Coca-cola or Ben & Jerry’s) got started.
Appendix one gives a list of resources and Appendix two helps the reader understand how to decipher a company balance sheet with an eye towards investing in it.
Read this book to understand and address:
I would highly recommend this book for every high school student in the country. Parents should read too so that they can discuss it with their students. If you really don’t have a clue about economics, the market or investing, it might even help you out as an adult.
The reader will get grounded in the basic concepts needed to understand more advanced investing information.
What I liked:
The clear and engaging style makes this an interesting read. The specific examples of companies and investors makes the story real.
What I wished for:
For it’s age, the book is complete. If written today, I would expect to see more tools and resources listed and examples given as to how the young or beginner investor could use them.
From the history of capitalism chapter:
“Every school child learns how the Pilgrims risked their lives to find religious freedom, how they crossed the cruel ocean in a tiny ship, the Mayflower, how they suffered through the cold New England winters, how they made friends with the Indians, how they got their squash and pumpkin recipes, but nothing about the remarkable story of how they got their money.”
From the chapter on investing basics:
“The A plus situation is when you are saving and investing a portion of your paycheck. The C minus situation is when you are spending the whole thing. The F situation is when you are ringing up charges on your credit cards and running up a tab.”