16 Brilliant Peter Lynch Quotes | Investing Strategy |

Peter Lynch is a Legendary Investor who believes the average retail investor can get “one up on Wall street” which was the name of his famous book. 

As the manager of the Magellan Fund at Fidelity Investments, Lynch averaged an incredible 29.2% annual return! Between 1977 and 1990.

This was consistently more than double the S&P 500 stock market index and thus this was the best-performing mutual fund in the world.

Peter Lynch is also a great teacher similar to Warren Buffett . Lynch has the incredible skill of being able to simplify an investment strategy enough for anyone to understand.

In this post, i’m going to reveal Peter Lynch’s top 16 quotes for wealth and wisdom.

16. The More you LEARN the More you EARN

Self Education is the only true pathway to extreme wealth. Don’t expect any college or university to give you the secrets for wealth. Those intuitions are designed to create cogs for the system not pioneers. Think of all the great billionaires who dropped out of college from Bill Gates to Mark Zuckerberg! 

Now I do believe College has it’s place (I went myself) but I believe self education really is vital. 

Charlie Munger calls this being a “Continuous Learning Machine” and Warren Buffett states “The Best investment you can make is in yourself”, the “More you LEARN, the more you EARN” . Thus I recommend reading this entire post till the end to really get the benefit. You can even bookmark it for future reference. 

15. “KNOW WHAT YOU OWN”

Peter Lynch calls this is number one rule of investing. He is shocked and amazed by how many investors don’t understand the stock they own. This is very similar to Warren Buffett only choosing to invest in his “circle of competence”.

For example, the legendary investor Buffett doesn’t even invest into technology companies as he states he doesn’t understand them. This takes incredible self awareness and courage to do. 

14. “The simpler the stock, the more I like it”

Peter Lynch is famous for investing into simple businesses he understands and stated he “made more money in Dunkin donuts stock then any high tech chip company”

The real issue I find is if you don’t understand what you buy, then when the stock crashes you don’t understand if it’s noise or a fundamental issue with the company. Be like Peter Lynch and understand what you buy.

13. Have an Information Edge

Peter Lynch is famous for believing we all have an “INFORMATION EDGE” and need to use that to beat the stock market. Lynch believes our information edge could come from our career, our lifestyle or experience. 

For example, a stay at home mom may know more about a certain baby product which is selling out in the all the stores and people are raving about, long before a stuffy wall street analyst.  

12. “Avoid Hot stocks in Hot Industries”

Capitalism is brutal, any “hot stock” or “hot industry” with lot’s of demand and high returns on capital will attract competition till it becomes not so hot and the returns are squeezed.

Combine this with a sky high valuation and you usually have a receive for disaster think “dot com” bubble in the late 90’s where many internet companies with no revenues had sky high valuations.

Lynch is famous for investing into “boring companies in boring industries” from Funeral companies to the bottle cap makers (crown, cork and steel). No hot MBA comes out of Harvard or MIT saying “i’m going to takeover the funeral game.”

These means established players in this space often have high margins and high returns on capital with minimal competition. 

11. “The person who turns over the most rocks wins the game”

Finding great investing opportunities is not easy, most investing ideas you review will not be good investments. Thus the person who turns over the most rocks, wins the game. 

When the legendary investor Warren Buffett was asked how to find winning stocks, he stated “start with the A’s” this was meant in jest but also he was being serious! 

Buffett used to manually screen stocks but reading through thick moody’s manuals starting with the A’s then moving down the list. 

Buffett is extremely disciplined and often compares investing to baseball but with “no called strikes” you can watch “pitch after pitch” go by (referring to investment opportunities before deciding to invest. After all not investing is still a decision. 

10. Hold Stocks Long Term

Once you’ve chosen your investment, holding long term to ride out corrections is the best way to ensure you achieve gains. Many people sell out of fear when stocks crash and buy at the high’s, when of course we should do the opposite. 

9. Your Investing Process Matters

If you buy stocks and they go down, then that doesn’t always mean you were wrong and vice versa. Investing is about your PROCESS  & time horizon not just the initial results.

If you invested into a stock randomly because your liked the name and it went up, then best not to consider yourself a genius as this is survivorship bias. But the opposite is also true if you utilised a great investing strategy but the stock went down then you don’t need to kick yourself. But of course of this consistently happens over a long period then you need to change the strategy.

8. “Stocks aren’t lottery Tickets”

If you feel like your gambling or picking stocks are random then this isn’t investing but pure speculation.

7. No One can predict the Economy

I believe the above quote may have been slightly paraphrased but in a famous speech Peter Lynch stated,  “Nobody can predict the economy”, “if anybody can predict interest rates three times in a row they would be a billionaire” and “considering there aren’t that many billionaires then it is not possible to predict this consistently”

He also stated “if you spend more than 15 minutes a year on economic analysis, you’ve wasted 10 minutes!” [Crowd laughs]

6. “If you like the product, you may like the stock”

This is similar again to Peter Lynch’s “INFORMATION EDGE” as a consumer we are around new products daily. If you see a specific product selling out, people lining up around the block to buy it then it would be a good starting point to find out about the company! 

Lynch notices this phenomenon with house wife’s recognising many famous products.

5. “You know something Wall Street Doesn’t”

Similar to the above Peter Lynch believes you have an “Information Edge” and know something Wall Street doesn’t. For example, if your a car mechanic you may no more about a popular oil which all garages use. But if your in a stuffy office on Wall Street that information will be hard to recognise early.

4. Buy Low and Sell High

“The key to making money in stocks is to not get scared out of them”  . When the stock market crashes, fear grips us and the temptation is to sell at the bottom (when really we should be buying as stocks are cheaper).

3. Do you have the Stomach to invest?

Peter Lynch QUotes. Credit: www.Motivation2invest.com/Peter-Lynch-QuotesPeter Lynch says the most important organ in our body when investing is not the brain but our stomach. Do you have the stomach to watch your stocks drop by 50%? and continue to hold? 

2. When to sell your stocks?

Peter Lynch believes selling winning stocks is like “trimming the flowers and watering the weeds” and if you invest into great companies just let them keep compounding. 
The Legendary Investor Nick Sleep (20.8%) compounded returns calls these stocks “long term compounders” . Read more in Nick Sleeps Letters the Holy Grail of investing.

1. Invest into simple businesses

Great Management is one of the key factors Peter Lynch looks for when investing. But you also have to think about the risk with management. A simple company which could “be run by an idiot” often makes for a very safe long term investment, think Coca Cola and Warren Buffett. As opposed to a complex biotech company.

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16 Peter Lynch Quotes | Wealth & Wisdom Gallery