Wednesday, March 23, 2016

Peter Lynch Lecture on Investments and How the Average Investor Can Pick Stocks

One of the greatest mutual fund managers ever Peter Lynch gave a lecture in 1994 on his stock picking technique, rules for investment and how the average investor can make money in the stock market. It's still mostly great advice on stock picking. I would disagree with him a bit on the ability to understand macro-trends, You can see in advance every detail but it doesn't mean you can't see some general trends.

(via ValueWalk)


  1. For another view of so-called "value investing" read the postscript to the fourth revised edition of Benjamin Graham's book: The Intelligent Investor, published in 1973. Referring to his partnership with Jerome Newman in the third person Graham reveals that "profits accruing from (one) single investment..." in their fund "far exceeded the sum of all the others realized through 20 years..." The moral he states " that one lucky break, or one supremely shrewd decision - can we tell them apart? - may count for more than a lifetime of journeyman efforts." In a footnote Graham acknowledges that his "asset value" covenant may have been in question regarding this investment. But "By dumb luck they (he and his partner) got what they insisted on." And so they made the investment that resulted in his fund producing an average annual return of about 17%. So the godfather of fundamental analysis produced a most successful fund by serendipity. However, his best advice is "But behind the luck...must usually exist a background of preparation and disciplined capacity." This one statement is worth the price of the book but it takes a lot of digging to get there.

  2. Bob, what are your thoughts on investing in index funds? Warren Buffet has said that this is the best way for the average person to invest.