Peter Lynch – Investing Principles / Lessons for the Individual Investor

Peter Lynch never seems to come up on any of the “Best Investor” lists generated endlessly by various entities.  Whether it’s because he ran a mutual fund instead of a hedge fund (ran Fidelity’s Magellan Fund for 13 years averaging 29.2% returns a year), or perhaps because he retired early and dedicated his time to charitable endeavors, so his returns stopped being measured.  No matter the reason, the fact that he was able to generate almost 30% returns for +10 years, including making it through the ’87 market crash, while managing billions of dollars is a feat worthy of note.

This speech he gave offers a mountain of practical lessons for most people, especially more novice investors, and he has the unique ability among finance professionals to take “high finance” and whittle it down to resonate with the average person.  I’ve split his speech up into individual Principles/Lessons for ease of viewing and time considerations, and hopefully you’ll take as much investing knowledge from him as I have.

1. Know What You Own

2. It’s Futile to Predict the Economy, Interest Rates or the Stock Market

3.  You have Plenty of Time to Buy a Stock

4.  The 10 Most Dangerous Things People Stay About Stocks

1. “If it’s gone down this much already, it can’t go any lower.”
2. “If it’s gone this high already, how can it possibly go higher?”
3. “Eventually they always come back.”
4. “It’s $3, how much can I lose?”
5. “It’s always the darkest before the dawn.”
6.  The stock doesn’t know you own it – don’t take it personally
7. “I don’t have to worry, I own conservative stocks.”
8. “Look at all the money I lost, I didn’t buy it.”
9. “I missed that one, I’ll buy the next one.”
10. “The stock has gone up, I must be right.” / “The stock as gone down, I must be wrong.”

5. Avoid Long Shots

6.  Find a Company Any Fool Can Run, because Eventually One Will

7.  Be Flexible

8.  “Buy Lists” Don’t Work

9.  You Don’t Need Complex Math to Pick Stocks

10.  There’s Always Something to Worry About

11.  International Stocks are Worth Looking At

12.  You Sell a Stock When the Reason You Bought it Changes

13.  Pay Attention to the Industry You’re In

14.  Secondary Companies are Your Research List

15.  Di-Worsification

If you enjoyed this speech and are interested in further reading materials, his two most popular books on investing are One Up On Wall Street and Beating the Street.

Let us know what you think about his ideas in the comments below!