The well-known statement by Peter Lynch that investment without research is like playing blind poker is based on common sense, thanks to which he became one of the greatest Wall Street investors of all time. His extraordinary abilities allowed him to increase $ 20 million to sky-high 14 billion at more than 1,000 individual positions in the Magellan Fund, which was led by Lynch.
Peter (photo below in the article) achieved this incredible success in just 13 years of being at the head of the foundation - from 1977 to 1990. Lynch has proven his investment skills. His career from a golf club porter to a Wall Street mastermind deserves great praise and admiration.
short biography
Peter Lynch was born on January 19, 1944 in Newton, Massachusetts. When he was 10 years old, his father died, and the boy had to take care of his mother himself. This was a difficult stage in Peter's life, as he was not a privileged child. He studied at a local public school. At a young age, Peter got a job at Brae Burn Golf Club, located near Boston. Golfers have an assistant caddy whose job it is to carry sports equipment. This is what Lynch did. Peter, whose biography owes much to this occasion, met people who had good knowledge of the stock market and investments. Lynch was a good student and grabbed everything on the fly. He discussed this information with a businessman who came to play golf. Gradually, when Peter learned a lot, he began to conduct market research and finally invested in the Flying Tiger airline.
Jobs at Fidelity
The young investor tasted success on the first try. But that was only the beginning of a wonderful journey. His work at the golf club allowed him to receive a Francis Wiman scholarship, and in 1965 Lynch graduated in finance from Boston College. In 1966, he trained at Fidelity Investment Company. In addition, in 1968 he received a master's degree in business administration from the Wharton School of the University of Pennsylvania. After two years of military service, in 1969, Peter became an analyst at Fidelity. By age 25, he was earning $ 16,000 a year.
Magellan Foundation
In 1974, Lynch led the company's research direction. He held this position until 1977. This year was a turning point in his life. Lynch became the head of the unknown Magellan Foundation. The all-time growth of the fund from $ 20 million to $ 14 billion is significant for all investors. This is really an example of the hard work and great skills of Peter Lynch, and he reaped a rich harvest, becoming a millionaire with $ 352 million (as of 2006). In 1990, he retired from the post of head of the Magellan Foundation to work in the field of charity. In 2007, he was appointed Deputy Chairman of the Investment Advisor to Fidelity Management & Research Co. Lynch is currently a scientific advisor to the company, and his search for new prospects continues. No wonder he has become an icon of the world of investment.
Lynch Peter: interesting facts
A successful investor is often called a "chameleon." He was awarded this title because of the dexterity with which he adapted to different investment styles, depending on the requirements of the situation.
One of its most important principles is the “invest in what you know” credo, because the investor can make a mistake if he does not have complete information. Visiting grocery stores and talking with friends are the main sources from which Lynch got most of his ideas.
Peter is a tireless promoter of company research.He said that the observations are good, but they must be accompanied by rigorous research. An investor should look for a company with strong potential and reasonable price. The company should have a good percentage of sales growth, strong cash flow and be able to manage assets well. According to him, this helps the company succeed in all types of markets.
Lynch is convinced that an investor should invest for a long time. He believed that the value of the company can be predicted for a period of at least 10 or 20 years. In fact, he drew knowledge from his companies, and as long as they were in a winning position, he did not sell them. He saw no use in predicting the nature of the stock market and said that investors should not quickly sell profitable companies. It's like watering weeds and cutting flowers, Lynch thought.
Peter loved baseball and coined the term ten-base. A measure of success in this game is the number of bases through which the player ran. An investment whose value is ten times higher than the original purchase price, now carries the name that Lynch came up with.
Peter divided the stock into six categories:
- Fast-growing are small, aggressive companies with a growth potential of about 20–25%. These are Peter Lynch's favorite stocks.
- Strong guys are blue chips that can grow. For example, Coca-Cola and Procter & Gamble.
- Slow - companies whose flowering is a thing of the past. He avoided such actions.
- Cyclical - companies rising and falling along with the economy.
- Returnees are companies that have fallen in price and are once again successful.
- Cheap assets are companies that own overlooked assets. They are very difficult to find, and investors must have knowledge in a specific field in order to classify them.
Peter Lynch worked hard 24 hours a day and 7 days a week. He loved to be in constant contact with management and managers. Lynch carefully studied the situation and tried to understand the world in the present and future. He was a great investor who became a role model for the rest.
Investment Rules
The essence of the investment philosophy of Peter Lynch can be understood from the following theses:
- Know what you own.
- It is useless to predict the economy and interest rates.
- There is always enough time to find promising companies.
- Avoid risky bets.
- Buy enterprises with good management.
- Be flexible and modest, learn from mistakes.
- Before buying, explain why you do it.
- There is always something to worry about.
Lynch Peter: personal life
Peter and his wife Caroline have three daughters. Spouses devote all their present time to charity, which for them has become a form of investment. According to Lynch, he wanted to give money to support ideas that he believed in to spread them. The family fund is engaged in by his wife. According to her, both of them were delighted with the new skateboard park along the Charles River, and were very happy to support the small park in Dundee Square. In 1976, Lynch founded the New Year's festival called First Night. City Year is a social program that was launched in Boston in 1988 and currently operates in 14 locations.
The Lynch Foundation, which totaled $ 74 million in 2003, supports education, religious, cultural and historical organizations, hospitals and medical research. The couple also contributed to the Fidelity Charity Fund.
Books on investing
Lynch wrote three textbooks on investing - “Advantage on Wall Street”, “Replaying Wall Street” and “Learn to Make Money”. New investors who want to succeed in the stock market are inspired and guided by books written by Lynch. Peter also led a column in Worth Magazine. There he wrote about his thoughts on investing, and also discussed the companies mentioned in his books.
Lynch Peter can teach a lot.He has made an incredible journey - from a simple sports equipment porter to a millionaire and stock market genius. Following his investment style, you can eliminate the risk factor and learn how to get out of critical situations. Today Lynch is a model of excellence and willpower, a source of inspiration for businessmen around the world.
Famous sayings
Invest in a business that any idiot can run - sooner or later, an idiot will do it.
To be vigilant, you can find great companies on the spot or in a nearby mall, long before Wall Street opens them.
Without many surprises, stocks become predictable over time spans greater than twenty years. But to find out whether they will grow or fall in 2-3 years is not possible - fortunetelling is like tossing a coin.
If you analyze the forecasts of the economy and the market for 13 minutes, then you spent 10 minutes in vain.
Everyone is able to follow the stock market. If someone mastered math in the fifth grade, then he can do this.
