Peter Lynch became an investing legend managing Fidelity’s Magellan Fund during the 1980s, chalking up average gains of +28.5% per year for the entire decade. His 1989 book, One Up on Wall Street, became an instant classic.
In this excerpt, he explains (with a good dose of wit) why he recommends focusing on the quality of specific stocks (or mutual funds) rather than looking at “the market” as a whole. The illustrations he cites may be dated, but Lynch’s insights offer wisdom for newer investors and valuable reminders for the more experienced.
During every question-and-answer period after I give a speech, somebody stands up and asks me if we’re in a good market or a bad market. For every person who wonders if Goodyear Tire is a solid company, or well-priced at current levels, four other people want to know if the bull is alive and kicking, or if the bear has shown its grizzly face. I always tell them the only thing I know about predicting markets is that every time I get promoted, the market goes down. As soon as those words are launched from my lips, somebody else stands up and asks me when I’m due for another promotion.
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