Last week, we began a discussion of Peter Lynch's best-selling book Beating the Street, focusing particularly on the 21 "Peter's Principles" that were woven effectively throughout the pages. These anchors of philosophical insight are both amusing and thought-provoking, further proving that Peter Lynch is indeed a Fool.

We left off with principle #10, for which I sought your interpretation on our discussion boards. The response was tremendous! I enjoyed reading the various perspectives and Foolish renderings of the principle. They were all quite good. Thanks, Fools!

Let's continue now with the next axiom.

11. "The best stock to buy may be the one you already own."

This is something Drip investors know intimately. There are probably some very good reasons you own the companies that you do. Keep these in mind as you add new money to your savings. If it was the best place for your money at the time, there's a good chance it still is.

12. "A sure cure for taking a stock for granted is a drop in the price."

Investors often only keep a close eye on their companies once something goes wrong — namely, the depreciation of their money. It's always a good idea to keep on top of all your holdings, placing more emphasis on those that have grown to lead your portfolio. There may be signs of trouble ahead that you can identify before it affects your portfolio drastically. Treat each quarter as a marking period and give your holdings a grade. Parent-teacher conferences are optional.

13. "Never bet on a comeback while they're playing 'Taps.'"

One of the biggest mistakes an investor can make is thinking a stock is so low it can only go up. While not always efficient, there are reasons a company is in disfavor. Focus on the fundamentals and not the share price. Betting on a comeback from a cellar-dweller is much like putting your money on the horse that never wins because it's due.

14. "If you like the store, chances are you'll love the stock."

While it's certainly not an absolute, there likely is a correlation between the products you favor and quality of the business' management. Whether it's due to strong brand recognition, superior product quality, or huge consumer demand, the services and products that have earned your respect and loyalty are a great place to begin looking for investment ideas.

15. "When insiders are buying, it's a good sign — unless they happen to be New England bankers."

Insiders want to make money just like you. When they're putting their own moola into the company, they'll work that much harder to make the investment pay off. It also shows a confidence in the prospects of the investment going forward. Insider selling is less clear. Insiders sell for all kinds of reasons, quite often as a part of their compensation package. Don't get carried away with reading too much into occasional insider selling.

16. "In business, competition is never as healthy as total domination."

Although I feel competition does spur innovation and aggressiveness, domination can never be a bad thing. Putting your dollars into businesses that dominate their industries and show no signs of significantly losing that dominance is a no-brainer. The absolute top dogs, the elite of the business world will command a market premium.

17. "All else being equal, invest in the company with the fewest color photographs in the annual report."

Like we discussed in principle number 7, the best value for your money is a company that values the efficient use of its money. Peter called it "hostility to extravagance" and it's a tremendous quality for an entity that is essentially spending your money.

18. "When even the analysts are bored, it's time to start buying."

I disagree with this one. You may happen upon some tremendous opportunities that analysts have yet to discover, but just because they are ignoring a company or sector is not a bullish indicator. While there are good analysts and bad analysts, disregarding most of what analysts say or do, especially their "ratings," is generally the best course.

19. "Unless you're a short-seller or a poet looking for a wealthy spouse, it never pays to be pessimistic."

Despite the headlines depicting doom and carnage in the media these days, the long-term prospects of the economy and the stock market are good. Since you can never time the peaks and valleys on a consistent basis, there's no reason to hop in and out of the stock market, missing the turnarounds and paying taxes along the way. Ride the coattails of the best investment vehicle available to investors — common stocks — and do so optimistically.

20. "Corporations, like people, change their names for one of two reasons: either they've gotten married, or they've been involved in some fiasco that they hope the public will forget."

Let's face it, if you're looking to improve your name, it's because you feel it adversely affects your image. Having an image crisis probably doesn't lend itself to industry dominance.

21. "Whatever the Queen is selling, buy it."

Who wouldn't want all those nifty capes and thrones? OK, what Mr. Lynch was really talking about was finding value in the privatization of companies. He had found several in Britain throughout the '80s. Not many U.S. companies are privatized because there isn't as much to privatize here. This strategy may or may not be Foolish depending on the company. Most Fools prefer to stick with companies in the good ol' U.S. of A.

That wraps up Peter's 21 principles. A fine pouch of Foolish nuggets to hang from your belt as you journey down Wall Street. If you have any comments, or have some principles of your own, let's hear 'em on the Drip discussion boards linked below.

Drip on, Fools!

—Vince Hanks, TMF Elwood on the Fool discussion boards