Peter Lynch
Peter Lynch
Peter Lynchis an American businessman and stock investor. As the manager of the Magellan Fund at Fidelity Investments between 1977 and 1990, Lynch averaged a 29.2% annual return, consistently more than doubling the S&P 500 market index and making it the best performing mutual fund in the world. During his tenure, assets under management increased from $18 million to $14 billion. He also co-authored a number of books and papers on investing and coined a number of well known mantras...
NationalityAmerican
ProfessionEntrepreneur
Date of Birth19 January 1944
CountryUnited States of America
The typical big winner in the Lynch portfolio generally takes three to ten years to play out.
The S&P is up 343.8 percent for 10 years. That is a four-bagger. The general equity funds are up 283 percent. So it's getting worse, the deterioration by professionals is getting worse. The public would be better off in an index fund.
Often, there is no correlation between the success of a company's operations and the success of its stock over a few months or even a few years. In the long term, there is a 100 percent correlation between the success of the company and the success of its stock. This disparity is the key to making money; it pays to be patient, and to own successful companies.
Absent a lot of surprises, stocks are relatively predictable over twenty years. As to whether they're going to be higher or lower in two to three years, you might as well flip a coin to decide.
I spend about fifteen minutes a year on economic analysis.
If you can find a company that can get away with raising prices year after year without losing customers (an addictive product such as cigarettes fills the bill), you've got a terrific investment.
The Rule of 72 is useful in determining how fast money will grow. Take the annual return from any investment, expressed as a percentage, and divide it into 72. The result is the number of years it will take to double your money.
I talk to hundreds of companies a year and spend hour after hour in heady pow-wows with CEOs, financial analysts and my colleagues in the mutual-fund business, but I stumble onto the big winners in extracurricular situations, the same way you do.
It's human nature to keep doing something as long as it's pleasurable and you can succeed at it, which is why the world population continues to double every 40 years.
The biggest winners are surprises to me, and takeovers are even more surprising. It takes years, not months, to produce big results.
I spend about 15 minutes a year on economic analysis. The way you lose money in the stock market is to start off with an economic picture. I also spend 15 minutes a year on where the stock market is going.
People have all this data and they go through it and make up their minds in four seconds, ... We're forcing people to do the wrong things. They look at what's hot. They spend so much time trying to figure out if the market is going up. That's so unimportant. It's about earnings. They need to follow the earnings.
I think Coca-Cola needs a rest. Some phases of the market, some of the big stocks are in that category.
People want to know 'what is my cost.' Period.