The Fundamentals of Investing
Peter Lynch is one of the most legendary stock investors of all time. As manager of the Magellan Fund at Fidelity Investments between 1977 and 1990, Lynch averaged a 29.2% annual return, consistently more than doubling the S&P 500 market index and making it the best performing mutual fund in the world. During his tenure, assets under management increased from $18 million to $14 billion. He also co-authored a number of books and papers on investing and coined a number of well known mantras of modern individual investing strategies, such as "Invest in what you know". Lynch is consistently described as a "legend" by the financial media for his performance record, and was called "legendary" by Jason Zweig in his 2003 update of Benjamin Graham''s book, The Intelligent Investor.
Peter Lynch believes that amateur investors can outperform Wall Street experts since the best investing clues can be found at the mall, on the school playground, or at people's workplace. He explains that kids have a chance to learn about successful companies in their daily lives before Wall Street analysts find out about the companies.
The Wall Street guru says that the secret to his success is his ability to "think like an amateur." He offers a common-sense approach to stock picking: Know the "everything about a company, before buying a stock--then follow the story after buying the stock." He says, "Don't sell the stock if the story is still good whether the market is up or down."
Lynch has written (with co-author John Rothchild) three texts on investing: One Up on Wall Street (1989), Beating the Street (1994), and Learn to Earn (1996). The last-named book was written for beginning investors of all ages, mainly teenagers. In essence, One Up served as theory while Beating the Street is application. One Up lays out Lynch’s investment technique including chapters devoted to stock classifications, the two-minute drill, famous numbers, and designing a portfolio. Most of Beating the Street consists of an extensive stock by stock discussion of Lynch’s 1992 Barron's Magazine selections.
Lynch also wrote a series of investment articles for Worth Magazine that expand on many of the concepts and companies mentioned in the books.
Though he continues to work part-time as vice chairman of Fidelity Management & Research Co., the investment adviser arm of Fidelity Investments, spending most of his time mentoring young analysts, Peter Lynch focuses a great deal of time on philanthropy. He said he views philanthropy as a form of investment. Lynch prefers to give money to support ideas that he thinks can spread, such as First Night, the New Year's Eve festival that began in Boston in 1976 and has inspired similar events in more than 200 other communities, and City Year, a community service program founded in Boston in 1988 that now operates in 14 locations.