How to Achieve a 30% Return Per Year – Peter Lynch

Peter Lynch talks about the investment strategies he used to achieve a 30% annual return in the stock market.

Notes

  • If you can’t explain to a 10-year-old of why you own the stock in 2 minutes, then you shouldn’t own the stock
  • Not true what the media says that institutional investors have all the edge and the little guys can’t complete
  • Most important lesson is to know what you own, stocks are not lottery tickets
  • No one can predict the market, interest rates, economy
  • Figure out the leading indicators to what you’re investing in: hotel stocks, want to know hotel occupancy
  • Every 2-3 years, going to have a 10% decline (correction)
  • Every 6 years, a 25%+ decline (bear market)
  • Take advantage of those declines
  • People are in a rush to buy the stock. You don’t need to do this because there’s a company behind every stock. Can play it slow to understand the company before investing in it
  • Example of a company that went from $50 to $16 and keeps going down. If you didn’t understand the company, and you bought it at $16 and it went to $10, you would have sold to derisk. But if you understood the company and knew that it had no debt, you would have sticked to your gut since it wouldn’t go out of business
  • Can’t get too emotional or connected to the stock, if fundamental slips, you have to let it go
  • There’s always something to worry about when investing in stocks, the key organ in the stock market is the stomach, not the brain