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 played at a higher level than everyone else.
One of the best examples of this, that I’ve come across, was in the 1988 Baron’s Roundtable discussion. Ten fund managers gathered in the same room to start the year. You might recognize a few — Mario Gabelli, Paul Tudor Jones, John Neff, Michael Price, Jim Rogers, and, of course, Peter Lynch.
It’s three months after the ’87 crash. They’re jittery. They argue about what’s next for the economy, oil prices, interest rates, inflation, trade deficit, and the stock market. Six hours of “what if there’s a recession or another crash?” Basically, 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 took a shot at the Roundtable itself and made his point. There’s always something to worry about in investing. But it’s a waste of time and energy because we won’t predict it correctly.
Investors become myopic when things aren’t going our way. Our focus shifts to the short term.
We worry. We second guess our portfolios. We change it up because it feels better than doing nothing. We do it again and again. It’s human nature. We lose sight of what matters.
Over the long run, a basket of solid businesses somehow overcome these brief moments of worry. If we stop focusing on the next month and think about the next ten years, we should expect that collective basket to have higher revenues, higher earnings, and stock prices that have gone up roughly at the same rate. It’s not rocket science. Yet, somehow we find a way to make investing harder than it needs to be.
Of course, Lynch’s interruption failed to sink in. Everyone resumed arguing about how horrible things would get at the macroeconomic level.
It’s Lynch’s sarcastic, witty, cut-through-the-noise style that really stands out and makes for some classic lines.
Almost everybody on this planet has the brain power to make money in the stock market. The question is whether you have the stomach for it and whether you’re willing to do a little bit of work? Those are the key elements. — Source
The single most important thing to me in the stock market for anyone is to know what you own. — Source
There are economic facts and there’s economic predictions and economic predictions are a total waste. — Source
What you learn from history is the market goes down. It goes down a lot. — Source
It’s worth reminding ourselves from time to time that gyrations in a stock price may tell us absolutely nothing about the prospects of the company involved. — Source
If you own stocks, there’s always something to worry about. You can’t get away from it. — Source
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
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
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
A correction is nothing more than a Wall Street euphemism for losing a lot of money very rapidly. — Source
Even in good markets we have declines and trying to predict its direction over the near term is an exercise in futility. — Source
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
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
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
Stocks are not lottery tickets. Behind every stock is a company. If a company does well, the stock does well. — Source
Avoid long shots. I’ve bought about 30 long shots in my life. I’ve never broken even on one. — Source
Everyone says they’re a long-term investor until the market has one of its major corrections. — Source
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
I want a company that’s simple. They don’t have to make seven brilliant decisions every six months to keep going. — Source
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
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
Check out more Peter Lynch quotes.
This post was originally published on September 13, 2019.
- Why Stocks Rally When Everything Else is Getting Worse – S. Ro
- The Power of Not Having a View – Behavioural Investment
- Morgan Housel: Little Rules About Big Things (podcast) – The Long View
- Growth Investing for Sceptics – Behind the Balance Sheet
- Revisiting the Case Against Value Investing – ValIdea
- Tipping Points – Klement on Investing
- The Messy True Story of the Last Time We Beat Inflation – Vox
- The Hype Cycles of Venture Capital – Investing 101
- The Great Progression 2025-2050 – Big Think
- How Genes Can Leap From Snakes to Frogs in Madagascar – Quanta