Friday, June 15, 2012, AM | Leave Comment
Peter Lynch managed the Fidelity Magellan Fund from 1977 to 1990, during which time the fund’s assets grew from $20 million to $14 billion. More importantly, Lynch reportedly beat the S&P 500 Index benchmark in 11 of those 13 years, achieving an annual average return of 29%.
Often described as a “chameleon,” Peter Lynch adapted to whatever investment style worked at the time.
It is said that his work schedule, the equivalent of what we would call today “24/7,” did not have a beginning and an end.
He talked to company executives, investment managers, industry experts and analysts around the clock.
- Know what you own.
- It’s futile to predict the economy and interest rates.
- You have plenty of time to identify and recognize exceptional companies.
- Avoid long shots.
- Good management is very important – buy good businesses.
- Be flexible and humble, and learn from mistakes.
- Before you make a purchase, you should be able to explain why you’re buying.
- There’s always something to worry about.
In picking stocks (good companies),
Peter Lynch stuck to what he knew and/or could easily understand. That was a core position for him.
He also dedicated himself to a level of due diligence and stock research that left few stones unturned.
He shut out market noise – Price and volume fluctuations that are random and meaningless – and concentrated on a company’s fundamentals, using a bottom-up approach.
He only invested for the long run and paid little attention to short-term market fluctuations.
However, having said that, becoming a successful investor takes education, patience and maybe even a little luck.
In a Nutshell
Peter Lynch moved differently at different times. But he had a keen eye for good businesses and good opportunities. It is very difficult, almost impossible, to follow him.