Peter Lynch's 8 principles for beating the market
(Why listen? He averaged 29% yearly returns running a mutual fund!!!)
1/12
1. Know what you own
This one frequently gets a "yeah, yeah" from me, but it's embarrassing how many "They do THAT?" moments I have.
Here's a test for every company you own...can you explain in detail how they make money AND how that's different than their competitors?
2/12
2. It's futile to predict the economy and interest rates (so don't waste time trying)
As I'm writing this, we're all wondering what the Fed's going to do.
You could read this a week, a month, or 10 years from now, and this would be true.
3/12
3. You have plenty of time to identify and recognize exceptional companies
Lynch mentions $WMT as an example...even way back when he wrote about it, it was a 10-bagger even if you waited 10 years AFTER its IPO.
Today, we can look at $AMZN or $NFLX.
4/12
4. Avoid long shots
LOVE this one.
It's so easy to get enamored with a stock's potential to 10-bag (e.g. hot industry, huge TAM, etc.), but we have to bump that against its chances for success.
5/12