Pan and Shovel

By Ramesh Akkineni

Peter Lynch wrote this - Usually, my favorite method for investing in high-growth areas where the competition is fierce is the pan-and-shovel technique. This technique gets its name from the 19th century owners of general stores who got rich selling equipment to the prospectors who went bust in the Gold Rush. When I see a mania, such as computers, where dozens of companies are struggling to sell the same thing, I look for a supplier who provides them all with some basic gizmo they all need.

It works in the mania but may not work when the panic starts.

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