Peter Lynch is a well-known American stock investor who started as an analyst. He works for the leading investment firm Fidelity Investments, Inc. and Fidelity Management & Research Company since 1969. Lynch held various positions before retiring in 1990. While managing the Fidelity Magellan Fund from 1977 to 1990, Lynch managed to grow assets worth USD 20 million to USD 14 billion, including trading results on the S&P index. 500 with an average return of 29% per year. In addition, Peter Lynch is also known as the author of the best-selling books ‘One Up On Wall Street’ (1989) and ‘Beating The Street’ (1993) which are considered mandatory books for stock investors.
Peter Lynch was born in Massachusetts, USA, in 1944. After earning a Master of Business Administration from the Wharton School at the University of Pennsylvania in 1968, Lynch worked for Fidelity Investments, Inc. as an investment analyst. From 1974 to 1977 he served as research director at Fidelity Management & Research Company before being entrusted as fund manager of the Fidelity Magellan Fund until his retirement in 1990. Due to his reputation and achievements, in 2007 Lynch was appointed vice chairman of Fidelity’s investment adviser, Fidelity Management & Research Co.
In his book ‘Beating The Street‘ Lynch revealed that from his personal investment portfolio, he has benefited greatly from the shares of Fannie Mae, Ford, Philip Morris, MCI, Volvo, General Electric, General Public Utilities, Student Loan Marketing, Kemper, and Lowe’s. Jason Zweig in his book ‘The Intelligent Investor’ (update 2003) considers Peter Lynch as a legendary investor.
Lynch is known for his ‘invest in what you know’ philosophy. According to him, most people have specific knowledge in a particular field, or have a good understanding of their profession or expertise. If they enter the stock market as individual investors, they should choose stocks that are related to their profession or work so that they know very well that the stock is too expensive (overvalued) or still too cheap (undervalued). “Choose good undervalued stocks. Take time to survey and learn. Don’t just enter before you understand properly. Invest in what you know.” he said.
He himself is not an expert in many fields, but he always conducts surveys and fundamental analysis on companies whose shares are being targeted with a bottom-up approach. “Before you enter, you must be able to explain logically why you chose this stock, why not that one. You must be able to describe it in detail. If you are in doubt, your investment returns will also be doubtful.” he explained. Lynch always holds the shares he buys for the medium or long term, he never trades for the short term.
What is his advice for novice investors or traders? “In whatever market you want to enter, you should properly understand the characteristics of the investment instrument. Don’t try to guess. If necessary, do research. Investment is serious work. If you’re an investor or stock trader, every share you buy isn’t a lottery coupon, it’s part of your business ownership,” said Peter Lynch.