Peter Lynch was an investor who, without a doubt, marked a before and after in the investment management industry in general, and in that of investment funds in particular. He is also one of the people who has most marked my investment style and one of the great icons of value investing. In this article I will talk about the life, investing style, books and famous quotes of Peter Lynch.
Peter Lynch's life
Peter Lynch was born in Newton, Massachusetts in 1.944. He graduated in finance at the asset plays or dairy cows. The secret of her investing style was knowing how to adapt to each situation to get the most out of it.
The Magellan fund that Lynch managed was not exactly characterized by its concentration. In fact, when Lynch left managing the fund in 1.990, he had more than 1.000 companies in his portfolio, so we are talking about an extremely diversified portfolio.
In his books, Lynch insisted on the ability that small investors have to beat professionals (I encourage you to read my article onthe 4 advantages of small investors compared to professional managers). In fact, he explained how many of his best investment ideas were not the result of his financial analysis in his office, but rather they arose based on what he observed in his family or in shopping centers.
Lynch, like other investors like Phillip fisher, went beyond financial analysis to select his investments. He spent a good part of his time talking to company managers, employees and clients to get their opinion and, in this way, find companies with sustainable competitive advantages.
Lynch coined the expression "X bagger" to refer to a stock that has multiplied its price X times. For example, a company that has tripled its price will be a “3 bagger” while one that has multiplied it by 10 will be a “10 bagger”.
Books published by Peter Lynch
Peter Lynch wrote 3 investment books:
“One Up on Wall Street ”: One of my favorite investment books. In it, he explains the bases of his investing style in colloquial language, very easy to understand. A book that can not be missing in the library of any value investor and that is part of my section of Recommended books.
“Beating the Street ”: Where he analyzes the most famous investments of his professional career. While the previous book laid the theoretical foundation for Lynch's investment philosophy, this one takes a totally practical approach. It is highly recommended to see how Lynch analyzed his investments.
“Learn to Earn ”: A book designed for beginning investors. The truth is that I have not read it, so I can not give you my opinion, although I do not rule out that one day it will be part of my library.
The problem with these books is that they are not translated from English. I understand that there is a version of "One Up on Wall Street" translated into Spanish, but it has a terrible translation. So I take the opportunity to encourage large and small Spanish publishers to get the rights to this book to translate it. But yes, it is well translated.
Famous phrases by Peter Lynch
Peter Lynch left a large number of famous quotes. I leave you with a small selection of my favorite phrases.
“Behind every action there is a company. Find out what he does "
“Everyone has enough brain to make money on the stock market, but not everyone has enough stomach. If you are one of those who is susceptible to selling your entire portfolio in times of market panic, you'd better not invest in stocks. "
"The stock market is not like golf, in the stock market amateur investors can beat professionals"
"If you don't analyze the companies, you have the same chances of success as a poker player betting without looking at the cards"
“Try to avoid buying hot stocks in hot industries. Good companies in mature industries are consistently the big winners ”
“Except in cases of big surprises, the actions are quite predictable in periods of twenty years. As for whether they will go up or down in the next two or three years, it's the same as tossing a coin. "
“Look on the street for companies that are succeeding and that you consider their products to be wonderful. With this technique you can discover excellent investment opportunities long before the professionals. "