Peter Lynch: 25 rules for gold investing that beat Wall Street

富途綜合 ·  Apr 16, 2022 23:45

Source: comprehensive from "beat Wall Street" p282 25 golden rule for stock investment and related information online

Author: Peter Lynch

Editor's note: there is no doubt that Peter Lynch is an outstanding equity investor and a permanent long holder. As people of the last century, some of its investment methods may seem out of date, but the essence of its value investment is worth learning from each and every one of us.

For example, start with the company's own business, study the fundamentals, and don't chase the ups and downs. These simple principles Lynch explained to us with humorous language, worthy of our side again and again to taste, ponder, on the investment road, we encourage.

1. Investment is interesting and exciting, but it can be dangerous if you don't study the fundamentals.

two。 As an amateur investor, your advantage is not to get so-called professional investment advice from Wall Street investment experts. Your advantage lies in your own unique knowledge and experience. If you make full use of your unique strengths to invest in companies and industries that you fully understand, then you are sure to beat those investment experts.

3. Over the past 30 years, the stock market has been dominated by a group of professional institutional investors, but contrary to popular belief, I think this makes it easier for amateur investors to achieve better investment performance. Amateur investors can ignore this group of professional institutional investors and still beat the market.

4. There is actually a company behind every stock, and you have to figure out how the company operates.

5. It often happens that in the short term, for example, for months or even years, a company's performance has nothing to do with its stock price performance, but in the long run, a company's performance must be completely related to its stock price performance. Figuring out the difference between the correlation between short-term and long-term performance and stock price performance is the key to making money by investing. At the same time, this difference also shows that patient holding will pay off, and the investment can be successful only if you choose the stocks of successful companies.

6. You need to figure out the fundamentals of the company you own, and you need to figure out what the reason for holding the stock is. It's true that children will grow up eventually, but stocks don't always rise.

7. Thinking that once you win a bet, you will make a lot of money, and you will often lose a lot of money.

8. Think of stocks as your children, but you can't have too many children. I advise amateur investors not to hold more than five stocks at any time. An amateur investor, even with all the spare time available, can only study and track 8-12 stocks at most, and can only find opportunities to buy and sell if conditions permit. So I advise amateur investors not to hold more than five stocks at any time.

9. If you can't find a stock of a listed company worth investing in. Then stay away from the stock market and put your money in the bank until you find a stock worth investing in.

10. Never invest in a company that you don't know about its financial situation. Before buying stocks, be sure to check the company's balance sheet to see if the company is solvent enough and there is no risk of bankruptcy.

11. Avoid the hot stocks. Outstanding company stocks in unpopular industries and non-growing industries tend to become the most profitable stocks.

twelve。 For small company stocks, you'd better wait until these small companies start to make a profit before it's too late to consider investing.

13. If you plan to invest in an industry that is in trouble, be sure to invest in companies that can pull through and wait for signs of recovery. But industries such as horse-drawn whips and electronic tubes have no hope of recovery.

14. If you invest 1000 yuan in a stock, even if you lose only 1000 yuan, but if you hold it patiently, you may earn 1000 yuan or even 50000 yuan. As long as you find a few bulls and concentrate on investing, amateur investors will spend far more time and energy than they deserve.

15. In any industry, amateur investors who usually watch will find outstanding high-growth companies, and they will find that they are much earlier than those professional investors.

16. Stock prices often fall sharply in the stock market, just as snowstorms often occur in the northeast in the depths of winter. If you make full preparations in advance, there will be no damage at all. When the stock market falls, those unprepared investors will be frightened, hurriedly cut meat at low prices and flee the stock market, and many stocks will become very cheap, which is an excellent opportunity for investors who prepare in advance to buy at a low price.

17. Everyone has the knowledge needed to make money by investing in stocks, but not everyone has the courage to invest in stocks. Only with knowledge and courage can they make a lot of money in stocks. If you are easily influenced by others in the panic of the biggest market crash, and you are scared to sell all your stocks, you'd better not invest in stocks or equity funds.

18. There's always something to worry about. Don't worry, the sky won't fall. Unless the company's fundamentals deteriorate, never panic to sell good company shares.

19. Ignore any future interest rate, macroeconomic and stock market forecasts and focus on what is happening to the company you are investing in.

20. There are always surprises in the stock market, that is, good company stocks that perform well but are ignored by professional institutional investors.

21. Buying stocks without studying the fundamentals of the company is like playing cards without looking at cards. there is little chance of making money by investing.

twenty-two。 When you own shares in a good company, time will be on your side, and the longer you hold it, the greater your chances of making money. Patiently holding good company stocks will eventually yield good returns, even if you miss the big rise in the first five years of excellent companies like Walmart Inc, there will still be good returns for long-term holdings in the next five years. But if you hold stock options, time will be on the opposite side of you, and the longer you hold it, the less likely you are to make money.

23. If you have the courage to invest in stocks, but do not have the time or interest to do homework to study the fundamentals, then your best choice is to invest in equity funds. You should diversify your investments into different stock funds. The investment style of fund managers can be divided into growth type, value type, small-cap stocks, large-cap stocks and so on. You should invest in several different styles of stock investment funds. Note: investing in six stock funds with the same investment style is not a diversification. Investors who switch between different funds will pay a huge price and have to pay a high capital gains tax. If one or more of the funds you invest in perform well, don't abandon them casually, but hold them firmly for a long time.

24. Over the past decade, the average return on investment in the US stock market has only ranked eighth in the global stock market, so you can buy funds that invest in overseas stock markets and perform well, thus sharing the high growth of stock markets in other countries outside the United States.

25. In the long run, investing in an investment group of carefully selected stocks or equity funds will certainly perform much better than a portfolio of bonds or bond funds, but it is safer to invest in a portfolio of randomly selected stocks than to put money under the bed.

Edit / lambor

The translation is provided by third-party software.

The above content is for informational or educational purposes only and does not constitute any investment advice related to Futu. Although we strive to ensure the truthfulness, accuracy, and originality of all such content, we cannot guarantee it.
    Write a comment