Peter Lynch is one of the most successful investors and a mutual fund manager. Between 1977 and 1990, the fund he managed is regarded as the best performing mutual fund in the world which gave an average annual return of 29.2 percent. He has also authored a number of books on stock market investments including Beating the Street and One Up On Wall Street.
For stock market traders and investors, the quotes of Peter Lynch can be very helpful while picking stocks. They can also learn the basics of investing from his quotes.
1. Whenever you invest in any company, you’re looking for its market cap to rise. This can’t happen unless buyers are paying higher prices for the shares, making your investment more valuable.
2. The trick is not to learn to trust your gut feelings, but rather to discipline yourself to ignore them. Stand by your stocks as long as the fundamental story of the company hasn’t changed.
3. People who succeed in the stock market also accept periodic losses, setbacks, and unexpected occurrences. Calamitous drops do not scare them out of the game.
4. Know what you own, and know why you own it.
5. It takes remarkable patience to hold on to a stock in a company that excites you, but which everybody else seems to ignore. You begin to think everybody else is right and you are wrong. But where the fundamentals are promising, patience is often rewarded—Lukens stock went up sixfold in the fifteenth year, American Greetings was a sixbagger in six years, Angelica a sevenbagger in four, Brunswick a sixbagger in five, and SmithKline a threebagger in two.
6. If you can follow only one bit of data, follow the earnings—assuming the company in question has earnings. As you’ll see in this text, 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.
7. Go for a business that any idiot can run – because sooner or later any idiot probably is going to be running it.
8. Peter Lynch doesn’t advise you to buy stock in your favorite store just because you like shopping in the store, nor should you buy stock in a manufacturer because it makes your favorite product or a restaurant because you like the food. Liking a store, a product, or a restaurant is a good reason to get interested in a company and put it on your research list, but it’s not enough of a reason to own the stock! Never invest in any company before you’ve done the homework on the company’s earnings prospects, financial condition, competitive position, plans for expansion, and so forth.
9. This is one of the keys to successful investing: focus on the companies, not on the stocks.
10. The lesson here is: don’t spend a lot of time poring over the past performance charts. That’s not to say you shouldn’t pick a fund with a good long-term record. But it’s better to stick with a steady and consistent performer than to move in and out of funds, trying to catch the waves.