Peter Lynch is a distinguished American mutual fund manager, investor and philanthropist. His performance record has earned him the status of a ‘legend’ by financial media. He joined as an intern at the ‘Fidelity Investment’ wherein he initially published papers. He has been a co-authored and authored a number of papers and books on investing. ‘Invest in what you know’ and ‘ten bagger’ are few of the well-known financial planning mantras which have been coined by him. It is said that Lynch got most of his ideas while walking through the grocery shop along with his friends. Few of his notable books include, ‘Lear to Earn’, ‘Beating the street’ and ‘One Up on Wall Street’ amongst others. He also used to write a column for the magazine, ‘Worth’. Peter’s words, thoughts, strategies and views on money making, investing and stock market would leave you thinking. We have accumulated few of his words below from his work and life. Following is a collection of pearls of wisdom in form of quotes and sayings by one of the greatest investing minds, Peter Lynch.
Nobody can predict interest rates, the future direction of the economy or the stock market. Dismiss all such forecasts and concentrate on what's actually happening to the companies in which you've invested
Well, I think the secret is if you have a lot of stocks, some will do mediocre, some will do okay, and if one of two of 'em go up big time, you produce a fabulous result. And I think that's the promise to some people.
If all the economists in the world were laid end to end, it wouldn't be a bad thing.
Don't bottom fish.
I think you have to learn that there's a company behind every stock, and that there's only one real reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies.
Logic is the subject that has helped me most in picking stocks, if only because it taught me to identify the peculiar illogic of Wall Street. Actually Wall Street thinks just as the Greeks did. The early Greeks used to sit around for days and debate how many teeth a horse has. They thought they could figure it out just by sitting there, instead of checking the horse. A lot of investors sit around and debate whether a stock is going up, as if the financial muse will give them the answer, instead of checking the company.
So while I was in college I did a little study on the freight industry, the air freight industry. And I looked at this company called Flying Tiger. And I actually put a thousand dollars in it and I remember I thought this air cargo was going to be a thing of the future.
A stock market decline is as routine as a January blizzard in Colorado. If you're prepared, it can't hurt you. A decline is a great opportunity to pick up the bargains left behind by investors who are fleeing the storm in panic.
A price drop in a good stock is only a tragedy if you sell at that price and never buy more. To me, a price drop is an opportunity to load up on bargains from among your worst performers and your laggards that show promise. If you can't convince yourself 'When I'm down 25 percent, I'm a buyer' and banish forever the fatal thought 'When I'm down 25 percent, I'm a seller,' then you'll never make a decent profit in stocks.
In the long run, a portfolio of well chosen stocks and/or equity mutual funds will always outperform a portfolio of bonds or a money-market account. In the long run, a portfolio of poorly chosen stocks won't outperform the money left under the mattress.
If you can follow only one bit of data, follow the earnings - assuming the company in question has earnings. I subscribe to the crusty notion that sooner or later earnings make or break an investment in equities. What the stock price does today, tomorrow, or next week is only a distraction.
If you're lucky enough to have been rewarded in life to the degree that I have, there comes a point at which you have to decide whether to become a slave to your net worth by devoting the rest of your life to increasing it or to let what you've accumulated begin to serve you.