Anyone who got the investing itch in the ’80s or ’90s followed Peter Lynch at some point. He was the last star mutual fund manager — who left the game early and for the right reasons. Lynch was playing at another level than everyone else.
One of the best examples of this, that I’ve come across, was in the 1988 Baron’s Roundtable discussion. All these fund managers are in the same room. They’re a little jittery after the ’87 crash. They’re arguing about what’s next for the economy, interest rates, trade deficits, and “what if there’s a recession or another crash?” Basically, all the crap you hear on CNBC every day.
And then there’s Lynch — I picture him sitting quietly, smirking. Finally, he interrupts:
There’s always something to worry about. But it’s garbage to worry about these things… You have to look at corporate profits, and see what’s going on in the companies. It’s total garbage to worry about the things that’s going to drive us to a 300 Dow. It’ll be something you couldn’t imagine if you picked the brightest or dumbest people in the world and assembled them for hours.
Lynch made his point and none of it stuck because everyone went to back arguing about the economy. It’s his sarcastic, witty, cut through the noise style that really stands out and makes for some classic lines.
Here’s Lynch:
The single most important thing to me in the stock market for anyone is to know what you own. — Source
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There are economic facts and there’s economic predictions and economic predictions are a total waste. — Source
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What you learn from history is the market goes down. It goes down a lot. — Source
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If you own stocks, there’s always something to worry about. You can’t get away from it. — Source
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A lot of great companies have made a lot of decisions you haven’t heard about because they decided not to do something. Some of the best decisions they did do was to not do something. — Source
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In poker or bridge, there’s a lot of uncertainty, there’s a lot of things you don’t know. You can play a hand exactly right and lose… The stock market is much closer to poker than it is to any other game. — Source
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I’ve found that when the market’s going down and you buy funds wisely, at some point in the future you will be happy. — Source
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A correction is nothing more than a Wall Street euphemism for losing a lot of money very rapidly. — Source
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Even in good markets we have declines and trying to predict its direction over the near term is an exercise in futility. — Source
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Behind all the smoke and noise on the market’s surface, it’s important to remember that companies — small, medium, and large — make up the market’s backbone. And corporate earnings drive stock prices. — Source
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No one can predict with any certainty which way the next 1,000 points will be. Market fluctuations, while no means comfortable, are normal. — Source
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When I ran Magellan Fund, the market had 9 declines of 10 percent or more in those 13 years. I had a perfect record. All 9 times, my fund went down. — Source
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Stocks are not lottery tickets. Behind every stock is a company. If a company does well, the stock does well. — Source
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Avoid long shots. I’ve bought about 30 long shots in my life. I’ve never broken even on one. — Source
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Everyone says they’re a long-term investor until the market has one of its major corrections. — Source
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I’ve always found that if you find 10 stocks you really like and buy three, you always pick the wrong three. So I just buy all 10. — Source
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I want a company that’s simple. They don’t have to make seven brilliant decisions every six months to keep going. — Source
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The stock market has a 100% record, in the last 50 years, of predicting upturns in the economy. It’s never been wrong. It’s less than 50-50 on a downturn. — Source
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You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready. You won’t do well in the markets. If you go to Minnesota in January, you should know it’s gonna be cold. You don’t panic when the thermometer falls below zero. — Source
Last Call
- What People Say About the Economy Can Set Off a Recession — R. Shiller
- Everybody Was Kung Fu Fighting — Albert Bridge Capital
- Immutable Truths and Arguing Fools – M. Housel
- Pessimists Have It Better – Klement on Investing
- Seth Klarman’s 3 Secrets to Value Investing – Gurufocus
- The Art and Science of Knowing What You Own (pdf) – Magnetar Capital
- Short Selling Stocks Was Invented As Revenge (video) – NPR
- Being Stuck is Reasonable – S. Godin
- Face Recognition, Bad People and Bad Data – B. Evans
- How Wi-Fi Almost Didn’t Happen – Wired
