Peter Lynch, was one of the greatest investors of his generation. He achieved a 29.2% annualized return over 13 years at Fidelity making him the greatest mutual fund manager of all time. This is the first time anyone has achieved a high return with that large amount of money.
1. Small Investors Have a Huge Advantage
“The small investors in America have been convinced by the media, the print media, the radio, the television media that they don’t have a chance, the big institutions with all their computers & all their degrees & all their money have all the edges. It just isn’t true at all. When they’re convinced that this happens when this occurs people act accordingly. When they believe it, they buy stocks for a week, they buy options & they get results proportioned to that kind of investing. I think the public can do extremely well in the stock market on their own. I think institutions dominating the market today are a positive for small investors. These institutions push stocks on usual lows, they push it unusual highs”.
2. Know What You Own
“The single most important thing to me in the stock market anyone is to know what you own. I’m amazed how many people own stocks they would not be able to tell why they own it. They couldn’t say in a minute or less why they own it. If you press them down they’d say the reason I own this is this is going up. If you can’t explain to a 10-year-old 2 minutes or less why you own a stock you shouldn’t own it.”
3. Don’t Invest Purely On Others Opinions
“People are very careful when they buy a refrigerator, they get a consumer report they buy a microwave oven they do that, they do research. When it comes to stock they’ll put their half-life savings in it before sunset & they wonder why they lose money in the stock market.”
4. Focus On The Company Behind The Stock
“I’m trying to convince people there is a method, there are reasons for stocks that go up. Coca-Cola is earning 30 times per share which it did 32 years ago. The stock has gone up 30-fold. Stocks are not lottery tickets. There’s a company behind every stock. If the company does well the stock does well. It is not that complicated.”
5. Don’t Try To Predict The Market
“People try to predict the market. That is a total waste of time. No one can predict the stock market. They try to predict the interest rates. if anybody predicted interest rates right 3 times in a row they’d be a billionaire. Concerned there are not that many billionaires on the planet. No one can predict the economy. If you spend 14 minutes a year in economics you’ve wasted 12 minutes & I believe that.”
