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Who is Peter Lynch?
For those of you who havent heard of him, its time to get acquainted with the legendaryinvestor.
From 1977 to 1990, Lynch was the manager of the Magellan Fund at Fidelity Investments.
During his 13-year tenure, Lynch averaged a 29.2% annualized return.
Lets break down what that means.
If he made a $10,000 investment in 1977, it wouldve grown to about $280,000 by 1990.
Frankly, thats astonishing.
Today, Lynch has an estimated net worth of $450 million.
The bulk of Lynchs fortune was made through investments.
What did he do, and what can the average investor learn from his tactics?
Financial experts weighed in on the matter andprovided six crucial tips.
Like Warren Buffett, Lynch insists that you invest only inbusinesses and sectorswith which you are deeply familiar.
This is perhaps his most golden nugget of wisdom.
Learn To Read a Company Balance Sheet
Behind every stock is a company.
Find out what its doing, Lynch said.
Arguably your best bet here is to get asomewhat formal education.
You dont need to go back to school to do this.
Harvard Business School Online offers a number of finance and accounting courses to grow your investing career.
This is part of implementing the buy what you know philosophy.
Most investors arent prepared to do that.
Why, they ask?
An hour or two a day or a week?
Compare that to the professional money manager who spends eight hours a day doing the same thing.
As Lynch said, The key to making money in stocks is not to get scared out of them.
You cant invest well without both.
You Dont Need a Team of Analysts Behind You To Build Wealth From Investing
Lets be real.
Lynch, though a genius investor, didnt get to where he is completely on his own.
The accessibility of information today is exponentially higher than it was during the1980s and 1990s, Kates said.
At the time Lynch was managing money, they had to wait for investor reports in the mail.
Now investors can find nearly instantaneous data and analysis on thousands of stocks at the touch of a button.
Stock investing is a long-term project and requires constant time and attention to do well.
But that doesnt mean he seized every single awesome opportunity.
Dont expect that you will, either.
You will miss opportunities, Kates said.
Focus on consistency, and you will succeed.
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