Peter Lynch's Investing Secrets To Success

Peter Lynch’s Investing Secrets To Success

Legendary fund manager of Fidelity, Peter Lynch, ran the highly successful Magellan mutual fund from 1977 to 1990. He had one of the best investing return rates in the entire investing industry at a 29.2% compounded annual rate of return for 13 years that he ran the fund.

In a recent interview with his former employer Fidelity, Peter Lynch shared lessons about how to have the right investing mindset when it comes to investing in stocks, how to gain an edge as an average investor, and how to pick stocks.

I’ll share my reflections on what he said in these clips and what was also on the transcript.

In order to be a good investor, you should figure out what your investing temperament is like. This means you know how you are going to react or behave when and if the stock market is going in a direction you don’t like — usually down.

You don’t want to panic if the stock market is going down 10-30%+, you want to figure out what actions you’re going to take (or not) if you’re seeing red in your portfolio. Maybe you’ll sell or buy even more stocks as the market is going down.

Generally, the stock market has been one of the best places to be, with much better average rates of return at 7-10% compared to the 3-5% in bonds or real estate.

If you’re worried about having too much money in the stock market, you could always deposit some of it into a money market account or fund (they are different vehicles), or a Series I savings bond which is currently giving a return rate of 9.62% guaranteed for 6 months.

You should know what companies or assets you are capable of understanding before you were to invest, which is called a circle of competence as Peter talks about.

I thought it was especially noteworthy to mention Peter’s answers to the biggest mistake he sees individual investors making and how do you know when to sell a stock.

These lessons will go a long way to helping us be better investors since Peter Lynch doesn’t often give interviews or publish much anymore.

For his seminal work on investing strategies, check out his One Up On Wall Street book, which I also did a book review on that you can watch here.

If you’re interested in learning how to take control of your finances and start becoming an investor like Warren Buffett, check out my free PDF guide.

I look forward to making more investor friends! Add me on Insta: michellemarki