{"id":2180,"date":"2017-03-05T07:29:22","date_gmt":"2017-03-04T23:29:22","guid":{"rendered":"https:\/\/www.smallcapasia.com\/?p=2180"},"modified":"2017-04-11T22:51:25","modified_gmt":"2017-04-11T14:51:25","slug":"3-simple-investing-lessons-from-peter-lynch","status":"publish","type":"post","link":"https:\/\/www.smallcapasia.com\/zh-hant\/3-simple-investing-lessons-from-peter-lynch\/","title":{"rendered":"3 Simple Investing Lessons from Peter Lynch"},"content":{"rendered":"<p>Peter Lynch put together one of the greatest investing track records of all time, while serving as the portfolio manager of Fidelity&#8217;s Magellan Fund.<\/p>\n<p>A $1,000 investment in the fund on the day Lynch took over in year 1977 would have grown to $27,200 by the time Lynch stepped down 13 years later \u2013 translating into a whopping 29% compounded annual returns!<\/p>\n<p>Despite those truly remarkable returns, Lynch was a passionate believer in the notion that the <em>normal investor can pick stocks better than the average Wall Street professional<\/em>. In fact, he argued that the retail investor had numerous advantages that might allow him or her to outperform both the experts and the market in general.<\/p>\n<p>Below are\u00a0<strong>three simple lessons<\/strong>\u00a0from Lynch that will assist ordinary investors in their quest to beat the market:<\/p>\n<ol>\n<li>\n<h3><strong> Do your homework<\/strong><strong>.<\/strong><\/h3>\n<\/li>\n<\/ol>\n<p>Peter Lynch is very well known, of course, for recommending that investors\u00a0<strong>&#8220;buy what they know.&#8221;<\/strong>\u00a0In his\u00a0classic book\u00a0<a href=\"http:\/\/www.amazon.com\/gp\/product\/0743200403\/ref=as_li_qf_sp_asin_il_tl?ie=UTF8&amp;camp=1789&amp;creative=9325&amp;creativeASIN=0743200403&amp;linkCode=as2&amp;tag=kissinvesting-20\" target=\"_blank\" rel=\"noopener noreferrer nofollow\"><em>One Up On Wall Street<\/em><\/a>, he recommended that you should &#8220;never invest in any company before you&#8217;ve done the homework on the company&#8217;s<\/p>\n<ul>\n<li>Earnings prospects,<\/li>\n<li>Financial condition,<\/li>\n<li>Competitive position,<\/li>\n<li>Expansion plans and so forth.<\/li>\n<\/ul>\n<p>One good example here is <strong>QAF Limited<\/strong> (SGX:Q01).\u00a0Do you know that QAF Ltd produces the Gardenia line of bread as well as many household staple brands like Farmland, Cowhead and more?<a href=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2017\/02\/qaf-gardenia.jpg\"><img decoding=\"async\" class=\"size-medium wp-image-2182 alignright\" src=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2017\/02\/qaf-gardenia-221x300.jpg\" alt=\"\" \/><\/a><\/p>\n<p>Gardenia is currently upholds the leadership position of the best-selling packaged bread brands in Singapore, Malaysia and Philippines. It is now even moving into China and expanding with Fujian state as a stronghold.<\/p>\n<p>With lots of recurring cashflow coming from Gardenia\u2019s stable of products, it is in a net cash position and able to pay out decent dividends throughout the past years.<\/p>\n<p>All the points stated above links back to what Peter Lynch advocates &#8211; &#8220;investing is 99% perspiration.&#8221; As a rule of thumb, he believed that an investor needs to understand well in what you are owning (buying the shares).<\/p>\n<p>He also figured that a part-time stock picker probably only has time to follow 8 to 12 companies. Lastly, he warned that <em>&#8220;if you don&#8217;t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.&#8221;<\/em><\/p>\n<ol start=\"2\">\n<li>\n<h3><strong> Utilize Your Edge<\/strong><strong>.<\/strong><\/h3>\n<\/li>\n<\/ol>\n<p><a href=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2017\/02\/investment-stock-Edge.jpg\"><img decoding=\"async\" class=\"size-medium wp-image-2183 alignleft\" src=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2017\/02\/investment-stock-Edge-300x166.jpg\" alt=\"\" \/><\/a>Lynch strongly believed that everyone has an edge that can allow them to\u00a0outperform the experts. The key is to utilize your edge by\u00a0<strong>investing in companies or industries that you understand well.<\/strong><\/p>\n<p>Ultimately, Lynch felt that ordinary folks need to discover their personal edge, whether it&#8217;s a profession or hobby or even something else, like being a parent.<\/p>\n<p>Here\u2019s my personal story &amp; how I gained an \u201cEdge\u201d:<\/p>\n<p>When I started out as an investor,\u00a0I tried out many different styles of investing\/trading. Dabbling in forex, stocks &amp; CFD trading was fun, but not really my cup of tea. Despite following the trading rules zealously, I still didn\u2019t really make it. I felt that it was too much time wasted for me and I can\u2019t really concentrate at work since my mind is always on the heavily leveraged trades.<\/p>\n<p>Consequently, I put a stop to all my investing activities for a while and took a step backwards to look at the big picture. I realized that over the 10 years of my investing journey, I had the most success with small &amp; mid cap stocks.<\/p>\n<p>Intrigued by this book called <strong><em>\u201c100 BAGGERS\u201d<\/em><\/strong> by Christopher W. Mayer (you can get it free [thrive_2step id=&#8217;1969&#8242;]<strong><em>here<\/em><\/strong>[\/thrive_2step]), I managed to secure big winners such as <strong>Riverstone Holdings Limited<\/strong> (SGX:AP4) and <strong>Best World International Limited<\/strong> (SGX:5ER) and <strong>OSIM International Ltd.<\/strong> (SGX:O23).<\/p>\n<p>Being able to achieve multi-bagger gains of &gt;100% gave me the confidence to carry on what I am doing best \u2013 scouting for hidden gems that are under the radar of big asset management funds or brokerage firms.<\/p>\n<ol start=\"3\">\n<li>\n<h3><strong> Be Patient<\/strong><strong>.<\/strong><\/h3>\n<\/li>\n<\/ol>\n<p><a href=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2017\/02\/be-patient.jpg\"><img decoding=\"async\" class=\" wp-image-2184 alignleft\" src=\"https:\/\/www.smallcapasia.com\/wp-content\/uploads\/2017\/02\/be-patient-300x117.jpg\" alt=\"\" width=\"354\" height=\"138\" \/><\/a>Being patient and<strong>\u00a0<\/strong><strong>investing for the long term\u00a0<\/strong>should be the\u00a0<em>simplest investing lesson of all.<\/em>\u00a0Sadly, it&#8217;s one of those things that is easier said than done. In 1960, the average holding period for a stock was eight years; nowadays, it&#8217;s just four\u00a0<em>months<\/em>.<\/p>\n<p>Lynch often said that he had no idea what the market would do in one or two years. But he was confident about what stocks would do 10, 20, or 30 years from now. He truly believed that time was on the side of the retail investor, and that&#8217;s why he was an enthusiastic proponent of\u00a0long-term investing.<\/p>\n<p>And yes, he was aware of some long time frames where the market didn&#8217;t do well. In an interview with\u00a0<em>Frontline<\/em>, he referred to the period from 1966 to 1982 when the market was flat for the most part. But Lynch noted that you&#8217;d have still received dividends from your stocks. He also felt that corporate profits tend to trend upward, and that investors would eventually be rewarded for that.<\/p>\n<h3><span style=\"color: #ff0000;\"><strong>Conclusion &#8211; Simple is as simple does<\/strong><\/span><\/h3>\n<p>Lynch believed that it\u00a0<strong><em>&#8220;pays to be patient, and to own successful companies.&#8221;<\/em><\/strong>\u00a0He understood that there are times when there doesn&#8217;t appear to be a correlation between a company&#8217;s operations and its stock price.<\/p>\n<p>However, he also knew that &#8220;in the long term, there is a 100 percent correlation between the success of the company and the success of its stock. <strong><em>This \u2026 is the key to making money<\/em><\/strong>.&#8221;<\/p>\n<p>To end off, Peter Lynch once said,\u00a0<strong>&#8220;The simpler it is, the better I like it.&#8221;<\/strong>\u00a0In a world of faster trading and ever-increasing flows of information,\u00a0<em>keeping it simple might be the ultimate edge for the ordinary investor.<\/em>\u00a0Always remember, though, that simple doesn&#8217;t necessarily mean easy. I know I have to work a lot harder on all three of those &#8220;simple&#8221; lessons mentioned above.<\/p>\n<p>We\u2019ve released our 3 HOT growth stock picks which could skyrocket &gt;100% by the end of 2017. History has shown that getting in early on a good idea can often pay big bucks \u2013 so don&#8217;t miss out on this moment.<\/p>\n<p>Simply click [thrive_2step id=&#8217;2090&#8242;]<strong><em><u>here<\/u><\/em><\/strong>[\/thrive_2step] to receive your copy of our brand-new <strong>FREE<\/strong> report, <strong><em>\u201c3 stocks poised for explosive growth\u201d<\/em><\/strong>.<\/p>\n<p>Do <a href=\"https:\/\/www.facebook.com\/SmallCapAsia\/\" target=\"_blank\" rel=\"noopener noreferrer nofollow\"><strong>Like us on Facebook<\/strong><\/a> too as we share the latest investing articles and stock ideas for you!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Peter Lynch put together one of the greatest investing track records of all time, while serving as the portfolio manager of Fidelity&#8217;s Magellan Fund. A $1,000 investment in the fund on the day Lynch took over in year 1977 would have grown to $27,200 by the time Lynch stepped down 13 years later \u2013 translating [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":2181,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[58,1,57],"tags":[47,75,111,112,113,114],"class_list":["post-2180","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-singapore-stocks","category-blog","category-stocks","tag-peter-lynch","tag-small-cap","tag-qaf","tag-best-world","tag-riverstone","tag-osim"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/posts\/2180","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/comments?post=2180"}],"version-history":[{"count":0,"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/posts\/2180\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/media\/2181"}],"wp:attachment":[{"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/media?parent=2180"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/categories?post=2180"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.smallcapasia.com\/zh-hant\/wp-json\/wp\/v2\/tags?post=2180"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}