About Peter Lynch and His Investment Strategies

What Is Peter Lynch’s Advice For Picking Stocks?

4 Min Read |  April 27, 2021

FinnovationZ Convey
“The trick is not 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 has not changed.” - Investment quote by Peter Lynch

Past at a Glance

Peter Lynch is one of the most renowned investors and a legendary figure in the investment world. And, the one word which gained him such name and fame is nothing but 'stock market analysis' Peter Lynch was the former manager of the Magellan Fund at the major investment brokerage Fidelity. He was born in 1944 in Massachusetts. At the age of seven, Lynch‘s father expired and his mother supported the family.

Peter Lynch graduated from Boston College in 1965 and by 1968 he completed his Master’s degree in Business Administration from the Wharton School of Business from the University of Pennsylvania. At the age of 25, he started his career as a Textiles and Metal Analyst at Fidelity.

He became inclined towards the stock market when he was only 11 years old after he overheard a conversation working as a Caddy. One of his first successful investments was in an air-freight company called Flying Tiger which helped him pay for his graduate school. This is how the journey of stock market analysis of the most successful investor of the millennium inaugurated.

The major and most significant contribution of Peter Lynch in the investment world is The Magellan Fidelity Fund. It is a U.S domiciled mutual funds from Fidelity. It started in 1963. On 14th January 2008, Fidelity declared that the funds would open for the new investors. In 1977, he took over the Magellan Fund which was a small capital appreciation fund created in 1963 that held mostly domestic investments. 

The success of the fund can be judged by the fact that an investor who put $1000 into the fund the day he took over would have had $28000 the day he left. Under his management, the fund returned an average of 29% per year which was one of the greatest managing investment tracks.

Investing Principles of Peter Lynch

Peter Lynch’s investment philosophy is crystal clear. He believes in investing for the long term and choose the companies whose assets have undervalued. He believes that it’s essential to know a company, its business models and its fundamentals for successful investment. Peter Lynch is known for inventing the price-to-earnings growth(PEG) ratio which helps the investors to know whether a stock is inexpensive with its growth potential or not.

Peter Lynch tells 10 best investment tips and they are: 

  1. Invest in what you know.

  2. Focus on the company, not on the stocks.

  3. What the stock price does today tomorrow or next week is only a distraction.

  4. Investors should hold their stocks for a longer period of time for maximum benefits.

  5. The key factor is not to get frightened by headlines and mongering pundits.

  6. Give a larger span of time and invest in the elite business to compound your gains.

  7. Hold your stocks even when a company suffers ups and down as when it recovers, the investor gets the benefit.

  8. Don’t get to be perfect. Your prediction maybe 6 on 10 but it cannot be 9 on 10.

  9. Invest in one big business which changes your life instead of many small businesses.

  10. Walk away from the investment when you reach its peak instead of chasing money again.

It was Peter Lynch’s abyssal ability, observation and judgment of stock market analysis that he could unlock such intricacies of the business world so dexterously. 

If you want to learn the bullseye technique to pick stocks, click here

Invest Like Peter Lynch

AcelRx Pharmaceuticals, Teladoc, and Bristol-Myers Squibb are Peter Lynch’s most favourite stocks.  

AcelRx Pharmaceuticals-

The enterprise AcelRx Pharmaceuticals is headed by George Budwell. Peter Lynch believes in spotting undervalued stocks ahead of the Wall Street crowd and the stocks of Accel Rx Pharmaceuticals is one of them. It is basically a pain killer medication. The medication is used through a single-used, pre-filled applicator. Its target market is patients who cannot take a dose either orally or intravenously.  AcelRx's incorporates the value of approximately $215 million. This pain relief medication is supposed to give a net worth of $1billion. AcelRx's stock, in turn, should be able to produce outstanding gains for beginner’s investors. 

Teladoc-

The company Teladoc runs under the chairmanship of Keith Speights. Teladoc is a kind of online health services where one does not have to visit the doctor in person and get the medication online or over the phone. The prime advantage of the Teladoc Health services imparts is cost savings. This cost-savings angle is a big reason Teladoc has roughly 40% of the Fortune 500 in its customer base. The complete annual growth of this company is 70% over the last 5 years. The Teladoc will be one of the top healthcare stocks to buy in 2019.

Bristol-Myers Squibb-

Bristol-Myers squib is an American pharmaceuticals company in New York City. Bristol-Myers Squibb pharmaceuticals deal with therapeutic areas including cancer, HIV AIDS, cardiovascular diseases, diabetes, hepatitis,  arthritis and psychiatric disorders.

Peter Lynch Net Worth

Peter Lynch has worked as a vice-chairman of Fidelity firm and earned a heavy amount of money. The net worth of Peter Lynch (as of April 2021) is over $450 million.

His Creations

Some of the best books of Peter Lynch has are - One up on Wall Street (1989) and Beating the Street (1994) and Learn to Earn. He created Lynch Foundation to support education medicines religious organizations and many more.



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