During his thirteen-year stint as manager of the Fidelity Magellan Fund from 1977 to 1990, Peter Lynch managed to post 29.2% in average annual return, cleanly beating the S&P 500 stock market index by more than double over the same period. This phenomenal track record effectively cemented his position as one of history’s greatest investors.
Although also a proponent of value investing, Peter Lynch seemed more an advocate of straightforward fundamental analysis as a practice. He insisted on only investing in what you know which often meant performing the necessary legwork to research companies as thoroughly as possible.
More recently, Peter Lynch has commented on the “mistake” of passive investing, citing that he believes active investors have beat the market for years and would continue to do so.
In line with this, we have collected seven of our favorite Peter Lynch quotes on investing below.
“Stocks are not lottery tickets. There’s a company behind every stock. The company does well, the stock does well.”Peter Lynch
Neat’s Notes: In the words of our lord and savior Lou Mannheim (Wall Street, 1987): “Stick to the fundamentals. That’s how IBM and Hilton were built. Good things sometimes take time.”
“If you spend fourteen minutes a year on economics, you’ve wasted twelve minutes.”Peter Lynch
Neat’s Notes: Lynch makes reference to economics “in the broad scale” in which one attempts to discern uptrends or downtrends in whatever aspect of the economy. Lynch largely wanted to avoid “economic predictions”, preferring to stick to “economic facts” which meant actual numbers measuring things that have actually happened.
“If you can’t explain to a ten-year-old in two minutes or less why you own a stock, you shouldn’t own it.”Peter Lynch
Neat’s Notes: In the words of whomever: “Keep it simple, stupid!”.
“You can take advantage of the volatility in the market if you understand what you own.”Peter Lynch
Neat’s Notes: Lynch also pointed out that if a stock went down by a lot from when you bought it, you would be in a better place to know the best thing to do if you understood what you owned as opposed to, say, quickly selling out in a panic.
“You can’t get too attached to a stock. The stock does not know you own it.”Peter Lynch
Neat’s Notes: Yes.
“Avoid long shots. I bought about thirty long shots in my life. I’ve never broken even on one.”Peter Lynch
Neat’s Notes: We would also like to add that it is usually unwise to go headlong into something without conducting at least some sufficient amount of personal research.
“It’s always gonna be scary, there’s always gonna be something to worry about, and you just have to forget all about it. Cut it all out and own good companies and turnarounds. Study them and you’ll do well.”Peter Lynch
Neat’s Notes: We think this quote best encapsulates Peter Lynch’s whole mindset with regards to investing. Simple and no nonsense. We also hope it can help guide you towards achieving 29.2% average annual returns over the next thirteen years.
Peter Lynch’s 1994 lecture on investing may also be of interest to those keen on getting more stock-picking tips from the man himself. We at Neat’s have watched it 3,906,483,290 times—still substantially less than the USD14.0 billion Lynch was managing at one point for the Fidelity Magellan Fund.