Peter Lynch Quotes

The trick is not to learn to trust your gut feelings, but rather to discipline yourself to ignore them. Stand by your stocks as long as the fundamental story of the company hasn’t changed.

Know what you own, and know why you own it

People who succeed in the stock market also accept periodic losses, setbacks, and unexpected occurrences. Calamitous drops do not scare them out of the game.

Go for a business that any idiot can run – because sooner or later any idiot probably is going to be running it.

Remember, things are never clear until it’s too late.

When you sell in desperation, you always sell cheap.

Big companies have small moves, small companies have big moves.

Whenever you invest in any company, you’re looking for its market cap to rise. This can’t happen unless buyers are paying higher prices for the shares, making your investment more valuable.

Our favorite holding period is forever. We are just the opposite of those who hurry to sell and book profits when companies perform well but who tenaciously hang on to businesses that disappoint. Peter Lynch aptly likens such behavior to cutting the flowers and watering the weeds.

The old Wall Street adage "never invest in anything that eats or needs repairs" may apply to racehorses, but it's malarkey when it comes to houses.

The secret of his success is that he never went to business school. Imagina all the lessons he never had to unlearn.

Find something you enjoy doing and give it everything you've got, and the money will take care of itself.

If you can follow only one bit of data, follow the earnings—assuming the company in question has earnings. As you’ll see in this text, I subscribe to the crusty notion that sooner or later earnings make or break an investment in equities. What the stock price does today, tomorrow, or next week is only a distraction.

The typical big winner in the Lynch portfolio (I continue to pick my share of losers, too!) generally takes three to ten years or more to play out.

A person who owns property and has a stake in the enterprise is likely to work harder and feel happier and do a better job than a person who doesn

Look for small companies that are already profitable and have proven that their concept can be replicated. • Be suspicious of companies with growth rates of 50 to 100 percent a year.

Stocks you trade, it's wives you're stuck with.

When looking at the same sky, people in mature industries see clouds where people in immature industries see pie.

stick with a steady and consistent performer

Understand the nature of the companies you own and the specific reasons for holding the stock. (“It is really going up!” doesn’t count.)

It takes remarkable patience to hold on to a stock in a company that excites you, but which everybody else seems to ignore. You begin to think everybody else is right and you are wrong. But where the fundamentals are promising, patience is often rewarded—Lukens stock went up sixfold in the fifteenth year, American Greetings was a sixbagger in six years, Angelica a sevenbagger in four, Brunswick a sixbagger in five, and SmithKline a threebagger in two.

The stock is selling at a p/e of 30, while the most optimistic projections of earnings growth are 15–20 percent for the next two years.

History is the view from the cheap seats. Distance from the action provides a unique perspective; one can recognize the plays and appreciate the totality of certain events.

This is one of the keys to successful investing: focus on the companies, not on the stocks.

Actually Wall Street thinks just as the Greeks did. The early Greeks used to sit around for days and debate how many teeth a horse has. They thought they could figure it out by just sitting there, instead of checking the horse. A

Here are some pointers from this section: • Understand the nature of the companies you own and the specific reasons for holding the stock. (“It is really going up!” doesn’t count.) • By putting your stocks into categories you’ll have a better idea of what to expect from them.

Peter Lynch doesn’t advise you to buy stock in your favorite store just because you like shopping in the store, nor should you buy stock in a manufacturer because it makes your favorite product or a restaurant because you like the food. Liking a store, a product, or a restaurant is a good reason to get interested in a company and put it on your research list, but it’s not enough of a reason to own the stock! Never invest in any company before you’ve done the homework on the company’s earnings prospects, financial condition, competitive position, plans for expansion, and so forth.

Moderately fast growers (20 to 25 percent) in nongrowth industries are ideal investments. • Look for companies with niches. • When purchasing depressed stocks in troubled companies, seek out the ones with the superior financial positions and avoid the ones with loads of bank debt. • Companies that have no debt can’t go bankrupt. • Managerial ability may be important, but it’s quite difficult to assess. Base your purchases on the company’s prospects, not on the president’s resume or speaking ability. • A lot of money can be made when a troubled company turns around. • Carefully consider the price-earnings ratio. If the stock is grossly overpriced, even if everything else goes right, you won’t make any money. • Find a story line to follow as a way of monitoring a company’s progress. • Look for companies that consistently buy back their own shares.

Invest in What You Know.

There are five basic ways a company can increase earnings*: reduce costs; raise prices; expand into new markets; sell more of its product in the old markets; or revitalize, close, or otherwise dispose of a losing operation.

If you find a stock with little or no institutional ownership, you’ve found a potential winner. Find a company that no analyst has ever visited, or that no analyst would admit to knowing about, and you’ve got a double winner. When I talk to a company that tells me the last analyst showed up three years ago, I can hardly contain my enthusiasm. It frequently happens with banks, savings-and-loans, and insurance companies, since there are thousands of these and Wall Street only keeps up with fifty to one hundred.

The more cash that builds up in the treasury, the greater the pressure to piss it away.

While catching up on the news is merely depressing to the citizen who has no stocks, it is a dangerous habit for the investor.

Queen. So, do you have a name, boy-who-can-think-for-himself? You're my favorite friend, with my favorite everything. If I had a packet of Rolos right now, I'd give you my last one. Don't worry, Peter Pan. I'll be your Wendy. It's okay. Just concentrate on us. I love you, Joey Lynch. Ride or die, Joe.

A technique that works repeatedly is to wait until the prevailing opinion about a certain industry is that things have gone from bad to worse, and then buy shares in the strongest companies in the group.

Your ultimate success or failure will depend on your ability to ignore the worries of the world long enough to allow your investments to succeed. It isn’t the head, but the stomach that determines [your] fate. —Peter Lynch, Beating the Street

If the p/e of Coca-Cola is 15, you’d expect the company to be growing at about 15 percent a year, etc. But if the p/e ratio is less than the growth rate, you may have found yourself a bargain. A company, say, with a growth rate of 12 percent a year (also known as a “12-percent grower”) and a p/e ratio of 6 is a very attractive prospect.

Most individual investors would be better off in an index mutual fund.

Investing without research is like playing stud poker and never looking at the cards. For some reason the whole business

You have to keep your priorities straight, if you plan to do well in stocks.

Primes are the atoms of the number system: every whole number is a product of primes.

The best way to handle a situation in which you love the company but not the current price is to make a small commitment and then increase it in the next sell-off.

more than eight hundred thousand Americans file for personal bankruptcy every year.

Ultimately it is not the stock market nor even the companies themselves that determine an investor's fate. It is the investor.

My diaries are full of such missed opportunities, but the stock market is merciful—it always gives the nincompoop a second chance.

Debt is saving in reverse. The more it builds up, the worse off you are.

I’m always on the lookout for great companies in lousy industries. A great industry that’s growing fast, such as computers or medical technology, attracts too much attention and too many competitors.

In stage four, once again they’re crowded around me—but this time it’s to tell me what stocks I should buy. Even the dentist has three or four tips, and in the next few days I look up his recommendations in the newspaper and they’ve all gone up. When the neighbors tell me what to buy and then I wish I had taken their advice, it’s a sure sign that the market has reached a top and is due for a tumble.

People reject the cross because it contradicts historical values and expectations—just as Peter challenged Jesus for saying, “The Son of Man must suffer”: “Far be it from You; this shall not happen to You.” But Jesus rebuked Peter: “Get behind me, Satan!” (Mt 16:21; Mk 8:31, 33). “In the course of a few moments,” Peter went from being “the mouthpiece of God” to a “tool” of Satan, because he could not connect vicarious suffering with God’s revelation. Suffering and death were not supposed to happen to the Messiah. He was expected to triumph over evil and not be defeated by it. How could God’s revelation be found connected with the “the worst of deaths,” the “vilest death,” “a criminal’s death on the tree of shame”?[15] Like the lynching tree in America, the cross in the time of Jesus was the most “barbaric form of execution of the utmost cruelty,” the absolute opposite of human value systems. It turned reason upside down. In his sermon-lecture “The Transvaluation of Values” in Beyond Tragedy, Niebuhr turns to Paul to express what it meant to see the world from a transcendent, divine point of view.

If my favorite Internet company sells for $30 a share, and yours sells for $10, then people who focus on price would say that mine is the superior company. This is a dangerous delusion. What Mr. Market pays for a stock today or next week doesn’t tell you which company has the best chance to succeed two to three years down the information superhighway.

company and for similar companies in the same industry. • The percentage of institutional ownership. The lower the better. • Whether insiders are buying and whether the company itself is buying back its own shares. Both are positive signs. • The record of earnings growth to date and whether the earnings are sporadic or consistent. (The only category where earnings may not be important is in the asset play.) • Whether the company has a strong balance sheet or a weak balance sheet (debt-to-equity ratio) and how it’s rated for financial strength. • The cash position. With $16 in net cash, I know Ford is unlikely to drop below $16 a share. That’s the floor on the stock. SLOW GROWERS • Since you buy these for the dividends (why else would

My goal is not to fail fast. My goal is to succeed over the long run. They are not the same thing.” “To do original work: It’s not necessary to know something nobody else knows. It is necessary to believe something few other people believe.” “Andy Grove had the answer: For every metric, there should be another ‘paired’ metric that addresses adverse consequences of the first metric.” “Show me an incumbent bigco failing to adapt to change, I’ll show you top execs paid huge cash compensation for quarterly and annual goals.” “Every billionaire suffers from the same problem. Nobody around them ever says, ‘Hey, that stupid idea you just had is really stupid.’” “‘Far more money has been lost by investors trying to anticipate corrections, than has been lost in corrections themselves.’—Peter Lynch

In college, except for the obligatory courses, I avoided science, math, and accounting—all the normal preparations for business. I was on the arts side of school, and along with the usual history, psychology, and political science, I also studied metaphysics, epistemology, logic, religion, and the philosophy of the ancient Greeks. As I look back on it now, it’s obvious that studying history and philosophy was much better preparation for the stock market than, say, studying statistics. Investing in stocks is an art, not a science, and people who’ve been trained to rigidly quantify everything have a big disadvantage

He learned that we should keep our eyes on the goal and not on the ground. He learned so much about the Burger King’s operations that later when he was running the Investment Bank and was looking for high-profile American billionaires to sit on his Board of Directors, he met Joe Antonius, Chairman of the 32-billion-dollar conglomerate. The first thing they had in common was that Antonius ran that corporation where Mir once cleaned bathrooms. He went up to him, introduced himself, “Hi Joe! I am Mir Mohammad Ali Khan, founder and Chairman of KMS Investment Bank and my first job in America was washing bathrooms at one of your restaurants.” Joe burst out laughing and all top notch people – Bill Gates, Warren Buffet, and Peter Lynch – could not believe what the young man was saying. Joe took him aside and said, “Tell me honestly what did you like about cleaning bathrooms.” “Ammonia,” replied Mir. “Why?” Mir said, “I hated my job and it hurt my ego. I hated it so much that I cried throughout the first week and every time somebody saw me crying, I would tell them that it was because of ammonia. Ammonia helped me shelter my ego.” Later Antonius joined the Board of Mir’s bank for NO COMPENSATION and also brought 6 top people from Forbes, Yoblon, Mario, Andretti, and others. In the first meeting of the Board Antonius said, “I joined this board because if this immigrant kid can come from a family background that he has, compromise with his ego, wash bathrooms and smile and tell us in a corporate meeting of leaders that he is proud of it, then it means that he will go far in life. At 29 he owns a bank, imagine what he will do at 49.

Avoid hot stocks in hot industries. • Distrust diversifications, which usually turn out to be diworseifications. • Long shots almost never pay off. • It’s better to miss the first move in a stock and wait to see if a company’s plans are working out. • People get incredibly valuable fundamental information from their jobs that may not reach the professionals for months or even years. • Separate all stock tips from the tipper, even if the tipper is very smart, very rich, and his or her last tip went up. • Some stock tips, especially from an expert in the field, may turn out to be quite valuable. However, people in the paper industry normally give out tips on drug stocks, and people in the health care field never run out of tips on the coming takeovers in the paper industry. • Invest in simple companies that appear dull, mundane, out of favor, and haven’t caught the fancy of Wall Street.

Only invest what you could afford to lose without that loss having any effect on your daily life in forseable future.

In other words, I continue to think like an amateur as frequently as possible. GOING IT ALONE

So while the smaller fast growers risk extinction, the larger fast growers risk a rapid devaluation when they begin to falter.

Real estate is a powerful investment tool for anyone seeking financial independence or freedom. It is a unique investment tool. Yet every time I mention real estate as a vehicle, I often hear, “I don’t want to fix toilets.” That’s what Peter Lynch calls noise. That’s what my rich dad would say is the cynic talking, someone who criticizes and does not analyze, someone who lets their doubts and fears close their mind instead of open their eyes.

Actually Wall Street thinks just as the Greeks did. The early Greeks used to sit around for days and debate how many teeth a horse has. They thought they could figure it out by just sitting there, instead of checking the horse. A lot of investors sit around and debate whether a stock is going up, as if the financial muse will give them the answer, instead of checking the company.

By the way, the odds against making a living in the day-trading business are about the same as the odds against making a living at racetracks, blackjack tables, or video poker.

developed a passion for making ten times my money early in my investing career.

But rule number one, in my book, is: Stop listening to professionals!

Beyond that, I’m still harboring an ample supply of clunkers that sell for considerably less than the price I paid. I’m not keeping these disappointment companies because I’m stubborn or nostalgic. I’m keeping them because in each of these companies, the finances are in decent shape and there’s evidence of better times ahead.

If you own a retail company, another key factor in the analysis is figuring out whether the company is nearing the end of its expansion phase—what I call the “late innings” in its ball game. When a Radio Shack or a Toys “R” Us has established itself in 10 percent of the country, it’s a far different prospect than having stores in 90 percent of the country. You have to keep track of where the future growth is coming from and when it’s likely to slow down.

a cheap stock can always get cheaper. Someday, Bethlehem Steel may rise again. But assuming that will happen is wishing, not investing.

It’s true that interest rates are lower today than they were in 1989, so you’d expect yields on bonds and dividends on stocks to be lower.

People are advised to think long-term, but the constant comment on every gyration puts people on edge and keeps them focused on the short term.

small investors tend to be pessimistic and optimistic at precisely the wrong times, so it’s self-defeating to try to invest in good markets and get out of bad ones.

If you can’t convince yourself “When I’m down 25 percent, I’m a buyer” and banish forever the fatal thought “When I’m down 25 percent, I’m a seller,” then you’ll never make a decent profit in stocks.

One obvious sell signal is that inventories are building up and the company can’t get rid of them, which means lower prices and lower profits down the road. I always pay attention to rising inventories. When the parking lot is full of ingots, it’s certainly time to sell the cyclical. In fact, you may be a little late.

share of stock is not a lottery ticket. It’s part ownership of a business.

The lesson here is: don’t spend a lot of time poring over the past performance charts. That’s not to say you shouldn’t pick a fund with a good long-term record. But it’s better to stick with a steady and consistent performer than to move in and out of funds, trying to catch the waves. Another major issue is what happens to a

Consider the size of a company if you expect it to profit from a specific product.

By putting your stocks into categories you’ll have a better idea of what to expect from them.

The p/e ratio can be thought of as the number of years it will take the company to earn back the amount of your initial investment—assuming, of course, that the company’s earnings stay constant.

To peruse Larry Flynt's flagship is to encounter laughable facets of necrophilia, dildo-strapped nuns, ambulatory turds, walking anuses, the perceived discrepancy in penis size between black and white males, vaginas large enough to envelop an entire man, physical intimacies with anthropomorphic pets, lesbian love rituals, the ills and quirks of male homosexuality, the corrosive effect of vaginal discharge upon automobile upholstery, the danger that freshly licked African-american lips will accidentally adhere to some glasslike surface, bar sluts, gang-bangs, wastebasket fetuses, flatulence anal and vaginal, the handicapped, Ku Klux Klansmen, lynching, anal sex, prison romance, naked females whose faces are covered by paper bags, sex crimes of the rich and famous, sex in full-body traction, retards as playthings, practical jokes committed by Saint Peter, suicide, consanguinity, animal husbandry in the connubial sense, erectile dysfunction, voyeurs, panty-sniffewrs, menstruation, STDs and philosopher houseflies delivering piquant sophistries while nibbling on corn-studded nuggets of shit.

First, you find the “market capitalization” (“market cap” for short) by multiplying the number of shares outstanding (let’s say 100 million) by the current stock price (let’s say $100 a share). One hundred million times $100 equals $10 billion, so that’s the market cap for DotCom.com.

That's destiny. It wasn't something Peter could manipulate, coerce, or talent his way into. It's up to God, and it involves His glory, your fulfillment, and the welfare of others.

The old Wall Street adage "never invest in anything that eats or needs repairs" may apply to racehorses, but it's mlarkey when it comes to houses.

The great joke is that the next time is never like the last time, and yet we can’t help readying ourselves for it anyway. This all reminds me of the Mayan conception of the universe.

A reporter covering the event—mostly out of bemusement—went on to identify the lexicographer and language columnist Ben Zimmer, editor of the pathbreaking Visual Thesaurus, as “a major geek.” In some circles that might have led to a libel suit, but most of the DSNA participants embraced the nerdiness of the event, even performing dictionary-related songs at the conference-ending banquet. Peter

No wonder people make money in the real estate market and lose money in the stock market. They spend months choosing their houses, and minutes choosing their stocks. In fact, they spend more time shopping for a good microwave oven than shopping for a good investment.

if you are undecided and lack conviction, then you are a potential market victim,

In fact, most great investors I know (Warren Buffett, for starters) are technophobes. They don’t own what they don’t understand, and neither do I.

To my mind, the stock price is the least useful information you can track, and it’s the most widely tracked.

A decline in stocks is not a surprising event, it’s a recurring event—as normal as frigid air in Minnesota. If you live in a cold climate, you expect freezing temperatures, so when your outdoor thermometer drops below zero, you don’t think of this as the beginning of the next Ice Age. You put on your parka, throw salt on the walk, and remind yourself that by summertime it will be warm outside. A successful stockpicker has the same relationship with a drop in the market as a Minnesotan has with freezing weather. You know it’s coming, and you’re ready to ride it out, and when your favorite stocks go down with the rest, you jump at the chance to buy more.

Houses, like stocks, are most likely to be profitable when they’re held for a long period of time. Unlike stocks, houses are likely to be owned by the same person for a number of years—seven, I think, is the average. Compare this to the

To me, an investment is simply a gamble in which you’ve managed to tilt the odds in your favor.

To make this spectacular showing, you only had to find one big winner out of eleven. The more right you are about any one stock, the more wrong you can be on all the others and still triumph as an investor.

This taught me not only that it’s difficult to predict markets, but also that small investors tend to be pessimistic and optimistic at precisely the wrong times, so it’s self-defeating to try to invest in good markets and get out of bad ones.

That’s not to say there’s no such thing as an overvalued market, but there’s no point worrying about it.

Corporate profits are up fifty-five-fold since World War II, and the stock market is up sixtyfold. Four wars, nine recessions, eight presidents, and one impeachment didn’t change that.

My advice for the next decade: Keep on the lookout for tomorrow’s big baggers. You’re likely to find one.

It’s when you’ve decided to invest on your own that you ought to try going it alone. That means ignoring the hot tips, the recommendations from brokerage houses, and the latest “can’t miss” suggestion from your favorite newsletter—in favor of your own research. It means ignoring the stocks that you hear Peter Lynch, or some similar authority, is buying.

This is investing, where the smart money isn’t so smart, and the dumb money isn’t really as dumb as it thinks. Dumb money is only dumb when it listens to the smart money.

To all the dozens of lessons we’re supposed to have learned from October, I can add three: (1) don’t let nuisances ruin a good portfolio; (2) don’t let nuisances ruin a good vacation; and (3) never travel abroad when you’re light on cash.

In general, if you polled all the doctors, I’d bet only a small percentage would turn out to be invested in medical stocks, and more would be invested in oil; and if you polled the shoe-store owners, more would be invested in aerospace than in shoes, while the aerospace engineers are more likely to dabble in shoe stocks. Why it is that stock certificates, like grasses, are always greener in somebody else’s pasture I’m not sure.

Show me an incumbent bigco failing to adapt to change, I’ll show you top execs paid huge cash compensation for quarterly and annual goals.” “Every billionaire suffers from the same problem. Nobody around them ever says, ‘Hey, that stupid idea you just had is really stupid.’” “‘Far more money has been lost by investors trying to anticipate corrections, than has been lost in corrections themselves.’—Peter Lynch

If you can’t figure out what category your stocks are in, then ask your broker. If a broker recommended the stocks in the first place, then you definitely ought to ask, because how else are you to know what you’re looking for? Are you looking for slow growth, fast growth, recession protection, a turnaround, a cyclical bounce, or assets?