Summary and Personal Opinion on Peter Lynch and John Rothchild Learn to Earn - Essay Example

economics, mathematics and literature, but are not taught the roles that innovations and companies have played. "Every school child learns (only about) how the pilgrims risked their lives to find religious freedomin a tiny ship The Mayflower" (page 25) Following the 'Preface' and the 'Introduction' are the main chapters. Chapter One traces the history of capitalism. "For much of human history capitalism was an alien concept, for the bulk of the world's population never got their hands on money" (pg 21).

We find how stocks got started in Europe centuries ago. We also learn how, more than a hundred years ago, Europeans invested in the then emerging market: The United States. "While optimists paid higher and higher prices for the shares of the Dutch East India Companypessimists bet against the stock through a clever maneuver called shorting". The optimists proved right and made unimaginable profits. Alexander Hamilton, father of the financial system, realized that the country couldn't get along without money, and to have money, it needed banks.

Adam Smith understood the basics of how a free market works. Whenever there's a demand for a new product, competitiveness enters the scene. This competition is very good for all consumers, because it forces the product makers to improve their product and cut prices. Without competition, complacency would set in. History of capitalism also speaks about the American economy which alternately moves from ecstasy to panic and back again. "In the euphoric periods, when prices were rising and jobs were plentiful, speculators would spend their last paycheck, hock their jewelry, go into debt, do anything to buy stocks, or bonds, or land, and get in on the action.

Then, in the panics, collapses, and depressions, the speculators got their come uppance and people sobered up". We have seen many such stock market crashes in the great depression of 1853 and again in 1857, 1929, 1973, 1981 and 1987. One interesting description here is about what Lynch terms the robber barons. The robber barons were not robbers or lawbreakers in the traditional sense. They were high-end speculators, who struggled, connived, and strong-armed their way to the top of American industry.

When you are an owner of a company, you only make money if the company succeeds. This is the risk of buying stocks: The Company you own may turn out to be worthless. It is for tacking this risk that people are rewarded so handsomely if they pick the right companies to invest in. This is also the most humorous chapter in the book After an elaborate first chapter, Chapter Two covers the basics of investing. The discussion here is mostly intended for people who can invest money for a long time.

The basic points here are that you should start invest early, and that stocks are the best performers among various investment options. Lynch proves how investors and corporations are true heroes of our great American Republic. Chapter Three outlines the lives of a company. It helps the investor to begin to think like the owner of a company. Chapter Four tells the stories of many companies which he calls the invisible hands. The Invisible Hand keeps the supply and demand of everything from bubblegum to bowling