Peter Lynch was the manager of the Magellan Fund at Fidelity Investments from 1977 to 1990, during which time the fund’s assets grew from $20 million to $14 billion.
What’s more, Lynch was able to consistently double the S&P 500 market index and made it one of the best performing mutual funds in the world. Below are some of Lynch’s top tips and strategies for winning investment portfolios.
1. The list of qualities [an investor ought to have] include patience, self-reliance, common sense, a tolerance for pain, open-mindedness, detachment, persistence, humility, flexibility, a willingness to do independent research, an equal willingness to admit mistakes, and the ability to ignore general panic.
2. In article by Kaushal Majmudar, a CFA at The Ridgewood Group, Lynch shares his checklist with the audience at an investment conference in New York in 2005:
- Know what you own.
- It’s futile to predict the economy and interest rates.
- You have plenty of time to identify and recognize exceptional companies.
- Avoid long shots.
- Good management is very important – buy good businesses.
- Be flexible and humble, and learn from mistakes.
- Before you make a purchase, you should be able to explain why you’re buying.
- There’s always something to worry about.
3. When stocks are attractive, you buy them. Sure, they can go lower. I’ve bought stocks at $12 that went to $2, but then they later went to $30. You just don’t know when you can find the bottom.
4. The key to making money in stocks is not to get scared out of them.
5. 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. You won’t get there by reading “Now is the time to buy.”