วันจันทร์ที่ 25 มิถุนายน พ.ศ. 2555

Quotes from Peter Lynch

Although it's easy to forget sometimes, a share is not a lottery ticket... it's part-ownership of a business.


Don't bottom fish.

Everyone has the brainpower to follow the stock market. If you made it through fifth-grade math, you can do it.

Go for a business that any idiot can run - because sooner or later, any idiot probably is going to run it.

I don't go near the money and the money doesn't go near me.

I think you have to learn that there's a company behind every stock, and that there's only one real reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies.

I've found that when the market's going down and you buy funds wisely, at some point in the future you will be happy. You won't get there by reading 'Now is the time to buy.'

If all the economists in the world were laid end to end, it wouldn't be a bad thing.

Improved turnout will give parliament and government the appearance of being more legitimate.
Peter Lynch

It's human nature to keep doing something as long as it's pleasurable and you can succeed at it - which is why the world population continues to double every 40 years.

Suicide is a permanent solution to a temporary problem. Suicide is a choice and I think if we work with that with kids, we'll get somewhere.

The person that turns over the most rocks wins the game. And that's always been my philosophy.

When stocks are attractive, you buy them. Sure, they can go lower. I've bought stocks at $12 that went to $2, but then they later went to $30. You just don't know when you can find the bottom.

You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets.

Here are 51 pearls of wisdom from one of the greatest investing minds of our time:

1. In stocks as in romance, ease of divorce is not a sound basis for commitment.

2. The key to making money in stocks is not to get scared out of them.

3. If you're prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won't get bored.

4. There's no shame in losing money on a stock. Everybody does it. What is shameful is to hold on to a stock, or worse, to buy more of it when the fundamentals are deteriorating.

5. In business, competition is never as healthy as total domination.

6. Your investor's edge is not something you get from Wall Street experts. It's something you already have. You can outperform the experts if you use your edge by investing in companies or industries you already understand.

7. Behind every stock is a company. Find out what it's doing.

8. Owning stocks is like having children -- don't get involved with more than you can handle.

9. If you can't find any companies that you think are attractive, put your money in the bank until you discover some.

10. If you don'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.

11. Time is on your side when you own shares of superior companies.

12. Average investors can become experts in their own field and can pick winning stocks as effectively as Wall Street professionals by doing just a little research.

13. In the long run, a portfolio of well chosen stocks and/or equity mutual funds will always outperform a portfolio of bonds or a money-market account. In the long run, a portfolio of poorly chosen stocks won't outperform the money left under the mattress.

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

15. When you start to confuse Freddie Mac, Sallie Mae and Fannie Mae with members of your family, and you remember 2,000 stock symbols but forget the children's birthdays, there's a good chance you've become too wrapped up in your work.

16. If you're lucky enough to have been rewarded in life to the degree that I have, there comes a point at which you have to decide whether to become a slave to your net worth by devoting the rest of your life to increasing it or to let what you've accumulated begin to serve you.

17. The worst thing you can do is invest in companies you know nothing about. Unfortunately, buying stocks on ignorance is still a popular American pastime.

18. I'm always fully invested. It's a great feeling to be caught with your pants up.

19. The basic story remains simple and never-ending. Stocks aren't lottery tickets. There's a company attached to every share.

20. Never invest in any idea you can't illustrate with a crayon.

21. Know what you own, and know why you own it.

22. In this business, if you're good, you're right six times out of ten. You're never going to be right nine times out of ten.

23. It's human nature to keep doing something as long as it's pleasurable and you can succeed at it, which is why the world population continues to double every 40 years.

24. The person that turns over the most rocks wins the game. And that's always been my philosophy.

25. People who want to know how stocks fared on any given day ask, "Where did the Dow close?" I'm more interested in how many stocks went up versus how many went down. These so-called advance/decline numbers paint a more realistic picture.

26. My high-tech aversion caused me to make fun of the typical biotech enterprise: $100 million in cash from selling shares, one hundred Ph.D.'s, 99 microscopes, and zero revenues.

27. It would be wonderful if we could avoid the setbacks with timely exits, but nobody has figured out how to predict them.

28. When people discover they are no good at baseball or hockey, they put away their bats and their skates and they take up amateur golf or stamp collecting or gardening. But when people discover they are no good at picking stocks, they are likely to continue to do it anyway.

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

30. You can find good reasons to scuttle your equities in every morning paper and on every broadcast of the nightly news.

31. Equity mutual funds are the perfect solution for people who want to own stocks without doing their own research.

32. If you hope to have more money tomorrow than you have today, you've got to put a chunk of your assets into stocks. Sooner or later, a portfolio of stocks or stock mutual funds will turn out to be a lot more valuable than a portfolio of bonds or CDs or money-market funds.

33. Gentlemen who prefer bonds don't know what they're missing.

34. The typical big winner in the Lynch portfolio generally takes three to ten years to play out.

35. If you can follow only one bit of data, follow the earnings -- assuming the company in question has earnings. 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.

36. During the Gold Rush, most would-be miners lost money, but people who sold them picks, shovels, tents and blue-jeans (Levi Strauss) made a nice profit.

37. All you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don’t work out.

38. Long-term investing has gotten so popular, it’s easier to admit you’re a crack addict than to admit you’re a short-term investor.

39. I talk to hundreds of companies a year and spend hour after hour in heady pow-wows with CEOs, financial analysts and my colleagues in the mutual-fund business, but I stumble onto the big winners in extracurricular situations, the same way you do.

40. Visiting stores and testing products is one of the critical elements of the analyst’s job.

41. There seems to be an unwritten rule on Wall Street: If you don’t understand it, then put your life savings into it. Shun the enterprise around the corner, which can at least be observed, and seek out the one that manufactures an incomprehensible product.

42. 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.

43. Investing in stocks is an art, not a science, and people who’ve been trained to rigidly quantify everything have a big disadvantage.

44. All the math you need in the stock market you get in the fourth grade.

45. The junior high schools and high schools of America have forgotten to teach one of the most important courses of all. Investing.

46. In our society, it's been the men who've handled most of the finances, and the women who've stood by and watched men botch things up.

47. The natural-born investor is a myth.

48. In the long run, it's not just how much money you make that will determine your future prosperity. It's how much of that money you put to work by saving it and investing it.

49. Imagine if you borrowed your parents' car without permission and ran it into a tree, how much better you'd fell if you were incorporated.

50. If a picture is worth a thousand words, in business, so is a number.

51. The simpler it is, the better I like it.

• “The typical big winner in the Lynch portfolio generally takes three to ten years to play out”
• “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.”
• “During the Gold Rush, most would-be miners lost money, but people who sold them picks, shovels, tents, and blue-jeans (Levi Strauss) made a nice profit. Today, you can look for non-internet companies that indirectly benefit from Internet traffic (package delivery is an obvious example); or you can invest in manufacturers of switches and related gizmos that keep the traffic moving.”
• “All you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don’t work out.”
• “Long-term investing has gotten so popular, it’s easier to admit you’re a crack addict than to admit you’re a short-term investor.”
• As a very successful investor once said: “the bearish argument always sounds more intelligent.” You can find good reasons to scuttle away our equities in every morning paper and on every broadcast of the nightly news.”
• “You might have assumed it’s the sophisticated and high-level gossip that experts hear around the Quotron machines that gives us our best investment ideas, but I get many of mine the way the fireman got his. I talk to hundreds of companies a year and spend hour after hour in heady powwows with CEO’s, financial analysts, and my colleagues in the mutual-fund business, but I stumble onto the big winners in extracurricular situations, the same way you do.”
• “Visiting stores and testing products is one of the critical elements of the analyst’s job”
• “There seems to be an unwritten rule on Wall Street: If you don’t understand it, then put your life savings into it. Shun the enterprise around the corner, which can at least be observed, and seek out the one that manufactures an incomprehensible product.”
• “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. If stockpicking could be quantified, you could rent time on the nearest Cray computer and make a fortune. But it doesn’t work that way. All the math you need in the stock market you get in the fourth grade.”
• “Getting the story on a company is a lot easier if you understand the basic business. That’s why I’d rather invest in panty hose than in communication satellites, or in motel chains than in fiber optics. The simpler it is, the better I like it. When somebody says, “any idiot could run this joint,” that’s a plus as far as I’m concerned, because sooner or later any idiot probably is going to be running it.”
• “You can get tenbaggers in companies that have already proven themselves. When in doubt, tune in later.”
 

"I try to stress the idea that a portfolio should have at least ten companies, with one or two providing a fairly good dividend... they have to explain what the company does. If they can't tell the class the service it provides or the products it makes, then they aren't allowed to buy."

"Over the last seventy years the market has declined forty times, so an investor has to be willing to be in the market for the long term."

"When the first shopping malls were built, Sears was in ninety-five percent of them... Now when I invest in a stock, I'll know to invest in a company that has room to grow."

"A good company usually increases its dividend every year."

"You can lose money in a very short time but it takes a long time to make money"

"The stock market really isn't a gamble, as long as you pick good companies that you think will do well, and not just because of the stock price."

"You can make a lot of money from the stock market, but then again you can also lose money, as we proved."

"You have to research the company before you put your money into it."

"When you invest in the stock market you should always diversify."

"You should invest in several stocks because out of every five you pick, one will be very great, one will be really bad, and three will be OK."

"Never fall in love with a stock; always have an open mind."

"You shouldn't just pick a stock - you should do your homework."

"Buying stocks in utility company is good because it gives you a higher dividend, but you'll make money in growth stocks."

"Just because a stock goes down doesn't mean it can't go lower."

"Over the long term, it's better to buy stocks in small companies."

"You should not buy a stock because it's cheap but because you know a lot about it."

"Hold no more stocks than you can remained informed on."

"Invest regularly."

"You want to see, first, that sales and earnings per share are moving forward at an acceptable rate and, second, that you can buy the stock at a reasonable price."

"It is well to consider the financial strenght and debt structure to see if a few bad years would hinder the company's long-term progress."

"Buy or do not buy the stock on the basis of whether or not growth meets your objectives and whether the price is reasonable."

"The dividend is such an important factor in the success of many stocks that you could hardly go wrong by making an entire portfolio of companies that have raised their dividends for 10 or 20 years in a row."

"The extravagance of any corporate office is directly proportional to management's reluctance to reward the shareholders."

"I was attracted to fast-food restaurants because they were so easy to understand. A restaurant chain that succeeded in one region had an excellent chance of duplicating its success in another."

"I always ended these discussions by asking: which of your competitors do you respect the most?"

"I always look for banks that have a strong local deposit base, and are efficient and careful commercial lenders."

"90 seconds is plenty of time to tell the story of a stock. If you're prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so that fifth grader won't get bored."

"When yields on long-term government bonds exceed the dividend yield of the S&P 500 by 6 percent or more, sell your stocks and buy bonds."

"Bargains are the holy grail of the true stockpicker. The fact the 10 to 30 percent of our net worth is lost in a market sell-off is of little consequence. We see the latest correction not as a disaster but as an opportunity to acquire more shares at low prices. This is how great fortunes are made over time."

"The best stock to buy may be the one you already own"

"It seemed to me that we were far into the economic recovery and that people who were going to buy new cars had done so, and the analysts who followed the autos were making optimistic earnings projections that my research told me were unsupportable."

"It's important to get out of a cyclical at the right time. Chrysler is an example of how quickly things can go from good to worse. The company earned $4.66 a share in 1988 and people were looking for another $4 in 1989. Instead, Chrysler earned $1 and change in 1989, 30 cents in 1990, and in 1991 it lost a bundle and fell into the red."

"The bond market is dominated by conservative investors who keep rather close tabs on a company's ability to repay the principal. Since bonds come before stocks in the lineup of claimants on the company's assets, you can be sure that when bonds sell for next to nothing, the stock will be worth even less. Here's a tip from experience: before you invest in a low-priced stock in a shaky company, look at what's been happening to the price of the bonds."

"Once you've bought a stock, presumably you've learned something about the industry and the company's place within it, how it behaves in recessions, what factors affect the earnings, etc. Inevitably, some gloomy scenario will cause a general retreat in the stock market, your old favorites will once again become bargains, and you can add to your investment."

"If you like the store, chance are you'll like the stock."

"The very homogeneity of taste in food and fashion that makes for a dull culture also makes fortunes for owners of retail companies and of restaurant companies as well. What sells in one town is almost guaranteed to sell in another."

"In double decker malls, the most popular retailers are usually found upstairs."

"As long as the same-store sales are on the increase, the company is not crippled by excessive debt, and it is following its expansion plans as described in its reports, it usually pays to stick with the stock."

"You've got to go into places where other investors and especially fund managers fear to tread, or, more to the point, to invest. As 1991 came to a close, the most fearsome places were all connected to housing and real estate."

"The price of the median house is only one of the many quiet facts that can be a great source of strength and consolation for investors willing to explore the scariest areas of the market. Other useful queit facts are the "affordability index" from the National Association of Home Builders and the percentage of mortgage loans in default."

"A technique that works repeatdly 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. (This technique isn't foolproof. In the oil and gas drilling industries, people were saying things couldn't get any worse in 1984, and they've been getting worse ever since. It's senseless to invest in a downtrodden enterprise unless the quiet facts tell you that conditions will improve.)"

"You can imagine my excitement at finding a company with very little debt and enough new orders to keep it busy for two years, its competitors dropping by the wayside, and its stock selling for one fifth its 1991 high."

"When an industry gets too popular, nobody makes money there anymore... In business, competition is never as healthy as total domination. The greatest companies in lousy industries share certain characteristics. They are low-cost operators, and penny-pinchers in the executive suite. They avoid going into debt. They reject the corporate caste system that creates white-collar Brahmins and blue-collar untouchables. Their workers are well paid and have a stake in the companies' future. They find niches, part of the market that bigger companies have overlooked. They grow fast - faster than many companies in the fashionable fast-growth industries."