The Money Club for Young Adults
Video (49 minutes)
Peter Lynch's Investing Wisdom
National Press Club
Peter discusses his successful model for investing. Peter ran a mutual fund called Magellan and was one of the most successful investors of his generation.
In terms of educating investors, I put Peter Lynch in the same category as Buffett and Graham (close enough for me).
My add (and I am sure Lynch would agree): small investors have three more big advantages today compared to 1994:
1.) access to information has never been better - see my bolded point above!
2.) transaction costs have dropped significantly which increases return for investors
3.) tax advantaged accounts are now available (in Canada - RRSP, TFSA, RESP and soon to start Home Buyer Plan) which increases after-tax return for investors
Key Points
1:17 Know what you own - the single most important thing in stock investing
- if you can't explain to a 10 year old in 2 minutes or less why you own a stock you shouldn't own it.
- single biggest principle: if you don't understand it you shouldn't own it.
4:50 Think like a business owner. Stocks are not lottery tickets. There is a company behind every stock.
4:53 Don’t try predicting unknowable things: stock markets, interest rates or the economy.
6:20 Focus on facts. History matters.
8:10 Market declines are great: opportunity to buy low.
8:40 Don't rush to buy a stock.
10:07 You need an "edge" to make money.
13:21 Don’t be fooled by a declining stock price
18:08 Don’t get attached to a stock: the stock doesn't know you own it.
19:45 There is always something to worry about when investing in stocks - cut it out.
22:19 Key to success in the stock market is your stomach not your brain
24:22 Information from companies available to investors is improving.
26:29 "Volatility is terrific".
If you don't want to pick stocks buy an ETF. You will be very happy in 10 or 20 years.
27:50 Corporate profits have grown about 8% per year. If corporate profits double about every 9 years the stock market ought to double about every 9 years.
31:23 Where should you put $1k a year when investing for the long term? Buy an ETF.