Earlier this week, I found a video on Youtube of Peter Lynch speaking at the National Press Club back in 1994. It’s embedded below. If you’ve read Lynch before, you’ll recognize a lot of what he says.
He covers the basic ideas around how he invests: know what you own, invest in what you understand, focus on facts, study market history, take advantage of volatility in markets, and use your edge.
Here are a few of his more entertaining and useful quotes from the event:
People hear a tip on a bus in some stock and put half their life savings in it before sunset. And they wonder why they lose money in the stock market.
If you spend fourteen minutes a year on economics, you wasted twelve minutes.
You should study history…What you learn from history is the market goes down.
Once every two years, the market falls ten percent. We call that a correction. That’s a euphemism for losing a lot of money very rapidly.
Stocks are not a lottery ticket. There’s a company behind every stock.
When an industry goes from terrible to mediocre, the stock goes north. When it goes from mediocre to good, the stock goes north. When it goes from good to terrific, the stock goes north.
I learned this very early. And this might be a breakthrough for some people. It’s very hard to go bankrupt if you don’t have any debt.
This is the problem that people have. They sell stocks because they didn’t know why they bought it, then it went down, and they don’t know what to do now. Do you flip a coin? Do you walk around the block?…If you don’t understand the company you have this problem when they go down.
You can’t get too attached to a stock. You have to understand there’s a company behind it. You can’t treat it like it’s your grandchildren…A stock does not know you own it.
Avoid long shots. I bought thirty long shots in my life. I never broke even on one.
If you own stocks, there is always something to worry about. You can’t get away from it…People didn’t buy stocks in the ’50s because they were worried about nuclear war and they worried about a depression. Remember when oil went from four to forty and it was going to a hundred and we were gonna have a depression…About three years later, the same experts, oil’s now at ten, they said its going to four and we’re gonna have a depression…Remember how the Japanese were gonna own the world…and we’re gonna have a depression. About two years later we’re all worried about Japan collapsing…and people say we’re gonna have a depression.
I love volatility…I think volatility is terrific…The market is gonna go up and down. Human nature hasn’t changed much in 25,000 years.
When I ran Magellan, in thirteen years the market went down nine times. Every time the market went down, Magellan went down. I was nine for nine.
You have to say – what am I going to do when the market goes down…Everybody in the world is a long term investor, until the market goes down.
You’ll notice in the video how people still have the same questions, the same concerns, and make the same mistakes. Not much has changed in 20 years.
Last Call
- Oaktree Memo: Liquidity – H. Marks
- A Few Lessons – Farnam Street
- As Silence Falls on Chicago Trading Pits, a Working-Class Portal Also Closes – Dealbook
- What Your N.C.A.A. Brackets Teach About Investing and Bias – The Upshot
- Many Investors Could do More to Reduce Their Taxes – Vanguard Blog
- How Different Sectors of the Market Perform Once the Fed Starts Hiking Rates – Bloomberg
- Even Quiet Markets Are Risky – Investor’s Paradox
- You Won’t Know the Bull Market is Over Until the Bear is Here – Marketwatch
- A Scary Movie: Filling Your 401(k) With Company Stock – NY Times
- Notes From Charlie Munger’s Daily Journal Meeting 2015 – Market Folly
