H/T Value Investing Resource & Corner of Brk & Fairfax
Synopsis: (via Globes) – The so-called lost decade has not shaken legendary investor Peter Lynch’s belief that the stock market will continue to offer the best returns.
Introduction (via Globes)
The dismal returns of the past ten years have made them known as the lost decade on the US stock market, raising the question whether investment in stocks has lost its luster. Who better to answer that question than the person considered one of the best mutual fund managers in US history, Peter Lynch?Most Important Advice!!!! (via Globes)
Lynch, 66, the legendary manager of the Fidelity Magellan fund, took over the running of the fund in 1977, and from then until he left the post in 1990, he managed to beat the S&P 500 Index in 11 years out of 13. Under his management, the fund yielded an exceptional annual return of 29.2%, almost double the average for the index of 15.8%. The greatness of Lynch’s achievement can be seen from the fact that even today, 20 years after he stopped managing the fund, his books “One Up on Wall Street,” “Beating the Street,” and “Learn to Earn,” are still best sellers among investors.
“In general, stock market companies have succeeded in growing their profitability, and that’s the reason to buy shares,” Lynch sums up. “When you buy shares in a company, if it manages to produce profits, you are a partner in those profits. On the other hand, if you buy an IBM bond, after 20 years, the company will repay you the money and say ‘thank you very much.’ It will pay you the interest, but it will not be loyal to you, and you certainly will not enjoy the fruits of its success. That’s the big difference between bonds and stocks.”
You need 3-4 good stocks
What’s the right way to be exposed to the stock market today?
“The average person can get to know 5-10 companies very well, and once every few years he will come across an opportunity to make a good investment. In principle, you need 3-4 good companies to invest in over ten years. You don’t need 3-4 good stocks every week, if you are a private investor.
Click Here To Read: An Interview With Legendary Investor Peter Lynch