"on May 31, 1977, if people invested $1000 in Magellan, 13 years later, on May 31, 1990, I left.$1000 will become $28,000.。」

This is the transcript of "Stock Angel" Peter Lynch.

How was Peter Lynch interested in the stock market in the first place?

What's his investment secret?

What kind of person can win the game of investing?

Peter Lynch answered each of these questions in an interview in 1996, from life experience to investment philosophy, and shared an interesting story about his wife's accidental discovery of cow stocks for him in the supermarket.

If you are interested in Peter Lynch, you must not miss this most classic interview.

A few years ago, Mu Qiguo of Chuancai Securities translated this interview article.

This article is translated from an interview with Peter Lynch by PBS. PBS is short for PublicBroadcasting Service. Our email with PBS confirmed that the interview was broadcast on January 14, 1997, but inferred from the content of the interview, the interview time should be in mid-1996.

1. Views on investment:

(1) sell the losing stocks and let the profitable stocks run for a while.

(2) there are many bull stocks in the stock market, all you have to do is to find a few of them, and you must let your bull stocks make up for your mistakes.

(3) it is excellent to invest 10 times to 6 times, but impossible to invest 10 times to 9 times.

(4) in terms of investment, we can't wait until we figure it out thoroughly before we act. We have to take some risks.

(5) the largest number of people in the company will win the game of investment.

2. Views on the 1987 stock market crash:

(1) the reason for the stock market crash is that the market has gone too far, not only from historical experience, but also from all statistical indicators such as price-to-earnings ratio and dividend yield.

(2) in the 12 months from September 1986 to September 1987, the stock market rose by 1000 points and then fell by 1000 points, but people only remember to fall.

(3) the 1987 stock market crash was not scary because the fundamentals of companies were very healthy.

3. How should investors deal with the decline of the stock market:

(1) from 1900 to 1995, the US stock market experienced 53 declines of more than 10 per cent, with an average of once every two years. There were 15 bear markets with a decline of more than 25 per cent, that is, an average of one bear market every six years.

(2) the stock market will fall, and no one knows when it will fall. If investors cannot bear it, they should not enter the market.

(3) time is good for investors; investors should not worry about a temporary decline, but should consider the situation of stocks 10 or 20 years later.

Early contact with the stock market

PBS:How were you interested in the stock market in the first place?

Lynch:I grew up in the 1950s and started working as a golf caddy when I was 11 years old. In the 1950s, the stock market performed very well. I work as a caddie at a very high-end club in Newton West, where there are a lot of people, including company executives, who talk about stocks, and they mention the names of listed companies.

I would go to the newspaper to check the stock trend of these companies, a month later, a year later, I noticed that the share prices of these companies had gone up. So I started paying attention to the stock market. I didn't have the money to invest in the stock market at the time, but I remember the stock market was very strong in the 1950s, and a lot of people were talking about stocks on the golf course.

PBS:What was the first stock you bought?

Lynch:At that time, I got a scholarship to go to college, the Frances Wimen Scholarship, which was actually part of the scholarship. They gave me $1000 to go to Boston College, of which $300 was a scholarship, and the remaining $700 needed me to earn as a caddie.

So, I was able to save a little money at that time, and I also worked in winter. When I was in college, I did a little research on the air transport industry. I have my eye on a company called Flying Tiger. I invested 1000 dollars, and I remember that I thought this air transport company would be the star of the future. I bought this stock and got very lucky. The stock soared for other reasons.

At that time, when the Vietnam War began, the company transported a large number of soldiers to the front, and the stock rose tenfold. In this way, I met my first 10x stock. I sold it from $20 to $80, and the profit from this stock paid for my master's tuition.

PBS:You coined the terms "quadruple" and "quintuple". What exactly do they mean?

Lynch:I've always loved baseball. The term "10 times share" comes from baseball, and a 10-fold increase in the share price is a 10-fold share. You don't need to encounter many tenfold shares in your life. You only need to encounter a few tenfold shares.

PBS:Is that your secret?

Lynch: the secret is that if you invest in a lot of stocks, some of them are mediocre and some are okay, but if one or two of them are rising fast, your returns will be beautiful.

The usual practice is that when a stock goes up 20-30%, they sell, and they hold a stock that loses money. In fact, people should do the opposite.Sell the losing stock and let the profitable stock run a little longer.There are plenty of bull stocks in the market.

When I was managing the Magellan Fund, I wrote a book in which I listed a list of stocks that had risen more than tenfold during my management of the Magellan Fund. I had invested in thousands of stocks, but I had never bought any of them. I missed all the tenfold shares on this list, but the Magellan I managed is still doing very well.

So,There are many bull stocks in the stock market, all you have to do is find a few of them. This is my investment philosophy. You have to let your bulls make up for your mistakes.In the investment business, if you can invest 6 times out of 10 times, you will be very good. It is impossible to invest 10 times against 9 times.

Investment is different from pure science. In science, when you say "Oh, I see", you will come up with the answer. But in terms of investment, by the time you figure it out, the stock price may have quadrupled. So, you have to take some risks.

New to Fidelity

PBS:What was the stock market like when you first went to Fidelity?

Lynch:After the big rally in the 1950s, the stock market performed very well, and everyone said, "now is a good time to enter the market." "as a result, a lot of people entered the market in the early and mid-1960s, when the stock market peaked around 1000 in 1965-1966, when I came to Fidelity.

In 1966, I was a summer intern for Fidelity. There were 75 applicants competing for three opportunities, but I was a caddie for the president of Fidelity for eight years. So, this is the only interview I've ever had in my life, and it seems to be a little cheating.

When I worked as an intern at Fidelity in 1966, I remember that the market closed at 1000 points that year. 16 years later, in 1982, the market closed at 777 points. As a result, the market experienced a long consolidation after 1966.

Generally speaking, in the early 1950s, people were worried about the trend of the stock market. They watched from the sidelines and did not invest. The stock market began to soar, and finally they entered the market in large numbers in the mid-1960s, only to hit the peak of the stock market.

PBS:So people actually came in at the wrong time?

Lynch:Many people came in at the wrong time. There are a lot of people who have made a lot of money, and some people say, "well, I've made almost enough." I'm never coming in again. "they may think so, but then they may come in again.

PBS:How was your first job at Fidelity?

Lynch:My annual salary at that time was 16000 dollars. I am a researcher in charge of the textile and metal industries. I remember my salary increased to 17000 dollars the next year. You know, it was a good deal at the time.

PBS:Did you get any other job offers at that time?

Lynch:I was in the University Reserve Officer training Corps (ROTC), serving in the army for two years and then as a graduate student at the Wharton School of Business at Penn University. So I was about 25 when I joined Fidelity.

PBS:How old were you when you were in charge of Magellan?

Lynch:It was 1977, when I was 33.

PBS:What kind of fund was Magellan at that time?

Lynch:It is a small aggressive capital appreciation fund. The Magellan Foundation was basically established in the early 1960s. As can be seen from the name of the fund, it is an international fund, but shortly after its establishment in 1963, the government set a threshold and heavy taxes on overseas investment.

As a result, the fund makes very few overseas investments. It had the ability to invest overseas, but there was little interest in it at that time, and the cost of overseas investment was too high. Therefore, although the name of this fund is Magellan, it is mainly a domestic fund. When I took over it in 1977, the fund was $20 million.

PBS:Is this your first time in portfolio management?

Lynch:That's right. In 1974, I became head of research, I was still a researcher, and then in May 1977 I became a fund manager of the Magellan Foundation.

PBS:But the stock market didn't actually rise much between 1977 and 1982, but your fund did well. How did you do that?

Lynch: I think flexibility is a key factor.I mean, I buy all kinds of stocks, including union companies, steel companies, textile companies, all of which are within the scope of my investment.

I have always thought that there are investment opportunities everywhere, and I personally study the stocks I invest in. One of the first stocks I bought was Taco Bell, when people didn't even think about small catering companies like Taco Bell. So, I think we did well at that time because we looked at all kinds of companies.

I always thought,If you look at 10 companies, you may find an interesting stock, if you look at 20, you may find 2, and if you look at 100, you may find 10.The company that inspects the most people will win the game of investing. This has always been my investment idea.

PBS:How did Magellan become famous in 1982?

Lynch:In my first three years at the helm of Magellan, 1/3 of the fund's shares were redeemed by investors. At the time, the market was fine and Magellan was doing well, but people were not interested in stocks, they didn't care, they were making up for losses in the 1950s and 1960s, so they redeemed their shares.

By 1982, the market began to pick up, and people began to apply for funds in August 1982, and from then on to 1983 and 1984, the number of people who bought funds became very large.

Magellan had the best five-year record in 1982, as well as in 1983, when people usually looked for funds with the best investment records, as did newspapers and the media, and they found Magellan as soon as they looked.

PBS:Tell us about your first appearance on Louis Ruckeyser.

Lynch:I remember it was October 1982, a week or two before the stock market broke through 1000, when Chrysler's share price was $10, which was my largest position, and I recommended Chrysler on the show.

After being on the show, my relatives and friends told me, "Oh, my God, we thought you were good." But how can you recommend Chrysler? Don't you know that the company is going bankrupt? This is crazy. "however, the return on this investment is good.

More interestingly, I was on Louis Ruckeyser again in 1990, when Chrysler's share price happened to be $10 again, and the company had previously split the stock, so the stock fell back to $10, and I once again recommended Chrysler on the 1990 show "watching Wall Street with Louis Ruckeyser."

PBS:Outline the growth of the fund in the 1980s.

Lynch:In 1982, although I had been in charge of the fund for five years, the size of the fund was not very large. At the end of 1982, the market began to really power, and people began to invest in funds, and the size of the fund exceeded 1 billion US dollars in April 1983. This was very big at that time. I remember there are many zeros in the number, just like a magic number.

At that time, people were still very interested in the stock market, and many retail investors began to buy funds. They buy funds for either $3 million or $5 million, while many people buy $2000 or $5000. The inflow of money is not as violent as the tide, but it is stable, and people are buying it every day.

PBS:If I invested $1000 on your first day in charge of Magellan, how much would I get in return on the day you retire?

Lynch:On May 31, 1977, if people invested $1000 in Magellan, 13 years later, by the day I left on May 31, 1990, that $1000 would have become $28000.

PBS:Talk about the changes from 1986 to 1987.

Lynch:People's attitude towards stocks experienced a complete cycle from 1960s to 1987. At first, people hate stocks and despise them. If they know that you invest in stocks in a chat, they immediately change the subject and don't talk about your career at all.

Later, the stock market began to rise, and people began to listen carefully to you talking about stocks, and then when people knew that you were in stocks, they would ask you, "which stock do you like?" "Oh, you go to the party and everyone is talking about stocks

In the end, people will recommend stocks to me, and not only that, I look at the stocks they recommended to me, and they all go up three months later. This is a complete speculative cycle.

The stock market crash of 1987

PBS:Where were you when the stock market crashed in 1987?

Lynch:My wife and I were on holiday in Ireland for the first time in eight years. We set out on the Thursday of the week before the crash, when the stock market fell 55 points. It was our first trip to Ireland.

The next Friday, at the end of our day in Ireland due to jet lag, I called the company and learned that the stock market had fallen another 115 points. So I told my wife, "if the stock market is still falling next Monday, we'd better go home." It's already the weekend, and I'm still here on the weekend. As a result, when the stock market plunged 508 points on Monday, we went back.

As a result, my fund shrank by 1/3 in two working days. At this rate, it must have been a tough week. That's why I decided to go back, as if there was something I could do.

When I say it's like, I mean, there's almost nothing you can do in this kind of market crash. But if an investor calls and asks, "what is Lynch doing?" "I'm sure they don't want to hear the answer:" Lynch is playing golf. "I'm sure they'd rather hear that I'm watching the market and studying countermeasures.

PBS:Why did the stock market crash of 1987 happen?

Lynch:I don't think people have done enough research on the 1987 crash. I think we really have to think about this crash from the right perspective.

The stock market was 777 points in 1982 and then rose all the way to 1700 points in 1986. The stock market has risen from 777points to 1700 points in four years. Then the stock market rose another 1000 points in nine months. So in August 1987, the stock market was at 2700. The stock market rose 1000 points in nine months, then fell 1000 points in two months, and fell 500 points on the last day of the two months.

So, if the market closed at 1700, no one would worry, but the market rose 1000 points in nine months, and then fell 1000 points in two months, half of which fell in one day, and people would say, "it's over." "

The two trends are different, but the stock market is at the same level. So the real problem is that the market has gone too far, rising all the way up to prices that are incredibly high, both historically and in terms of price-to-earnings ratios, dividend yields and other statistical indicators. but people forget that the market level remained basically the same in the 12 months from September 1986 to September 1987.

The stock market rose 1000 points during this period, and then fell 1000 points, but people only remember to fall. They thought, "Oh, my God, this is a crash. It's all over. The stock market will fall to 200 points. But the stock market did not fall to 200 points.

This is a very unique situation because the company's performance is very good. When you call listed companies, they all say, "We don't understand why the stock market has fallen like this." Our performance is very good. We have plenty of orders. The balance sheet is fine. "

PBS:Is this the scariest experience of your investment career?

Lynch:1987 wasn't that scary because I focused on the fundamentals of stocks. I will call listed companies, ask about them, and study their balance sheets, business and business environment.

The stock market crash is a bit scary, but you have to ask yourself, "will the fall affect consumers?" Will it cause people to stop buying cars, houses, household appliances and eating in restaurants? "that's what you have to worry about.

The truth is that the slump of 1987 was completely different from that of 1990. In my 30 years of closely watching the stock market, the 1990 slump was by far the most frightening phase.

PBS:What's so scary about 1990?

Lynch:It was almost six years ago in 1990. In the summer of 1990, the stock market was around 3000 points. The economy was in good shape at the time. Saddam decided to invade Kuwait. We are faced with a situation where Kuwait is invaded and President Bush sent 500000 troops to Saudi Arabia to protect it.

People were very worried at that time, "will the Iraq war turn into another Vietnam war?" "many people of insight in military circles said," this is going to be an uphill war. Iraq had the fourth largest number of troops in the world at that time. They played really well in the war with Iran. The Iraqis are very tough. It will be a long and arduous war. Therefore, people are very worried about this.

In addition, we had a severe banking crisis at that time. All the big banks in New York City, Bank of America Corporation, and so on, the real cornerstones of the United States are all mired in the mud. This is a far cry from some railway companies that are in trouble. The situation in the banking industry is critical.

You have to hope that the banking system will survive, and that the Fed will understand the importance of Citibank, Chase, Manufacturers Hanover and Bank of America Corporation to the United States, and hope that these banks will survive.

In addition, the economy was in recession at that time. Unlike in 1987, when you called the company in 1990, they would say, "our business is starting to decline. Inventory began to accumulate. Our performance is not so good. "

So, at that time, you had to have confidence in all these situations, and you had to believe that there would be no major war. You really had to have confidence in the future of the United States in 1990, and the fundamentals of the economy in 1987 were good.

PBS:Is there a lot of pressure to manage so much money for others?

Lynch:The problem is not pressure, I feel no pressure, because I love this job, the company I work for is the best in the world, and my treatment is very good. I can inspect any company I want to visit.

I don't need to get approval to visit the company, and my work is very free. Stress is not a problem, the problem is that it takes too much time. I work six days a week, but that's not enough.

PBS:Tell the story of a cow stock that your wife accidentally found for you in the supermarket.

Lynch:I was lucky to run into the stock of Hengshi. At that time, they tried out a product called egg socks (L'Eggs) in three or four markets, including Boston and Columbus. My wife is very good at shopping. She bought some egg socks and told me, "this is very good." "

I did some research and found that women go to supermarkets or drugstores on average once a week and to women's stores or warehouses every six weeks. All the good socks and even pantyhose are sold in storage stores, and supermarkets and pharmacies sell rubbish.

Hengshi this company launched this product, available in various sizes, very close to the body, the price is also very affordable. This product was a great success, and the stock of the company became my largest position.

I have been worried that other companies will develop competitive products, and almost a year and a half after the egg socks went on sale, a big company called Kaiser-Roth launched a similar product called No Nonsense, which was sold next to egg socks in supermarkets and drugstores.

I said, "I have to figure it out. "so I went to the supermarket and bought 48 pairs of pantyhose of different sizes, shapes and colors. I took these socks to the office and sent a pair to everyone, and I said, "go home and put them on and tell me which egg socks are better than No Nonsense." A few weeks later, people told me, "egg socks are better. "this is fundamental research.

So I insisted on holding on to Hengshi, which rose well and was later acquired by Consolidated Foods, which is now known as Sally Group, and Hengshi is a very good sub-business. If Hengshi had not been acquired, it would have been a 30 times share rather than a 10 times share.

How should investors think and deal with the stock market?

PBS:Was the environment surprising when the bull market began in 1982?

Lynch:1982 was a very terrible period for the United States. We have experienced nine recessions since World War II, and 1982 was the worst of them all. At that time, the inflation rate was as high as 14%, the base rate was 20%, and the yield on long-term government bonds was 15%. The situation was very bad.

The economy was really in freefall at that time, and people were really worried, "is the American economy so hopeless?" Can we contain inflation or not? "there are many times when the situation is complicated and confusing, and you have to say to yourself," I have confidence, I believe in stocks, I believe in the company. They can control inflation.

This is an abnormal situation. Double-digit inflation is rare and does not happen very often. "in fact, one of our investors wrote to me," have you noticed that half of your portfolio is now losing money? "

I checked and found that what he said was right. But I'm ready for it. I mean, "once the economy returns to normal, these companies will perform very well." We have successfully weathered all previous recessions, so there is no reason why we can't make it this time. "then the economy came out of the recession, and once we got back to normal, the stock market began to rise.

PBS:No one told you there was going to be a recession?

Lynch:It would be nice to know when the recession will occur. I don't remember anyone predicting that in 1982 we would have an inflation rate of 14%, an unemployment rate of 12% and a base interest rate of 20%, the worst recession since the Great Depression.

I don't remember anyone who ever predicted any of the above. That's how the recession happened. That's the state of the economy, very bad. I don't remember anyone telling me this would happen. So, I'm not worried about all these things. I always say that if you spend 13 minutes a year financially, you will waste 10 minutes of time.

PBS:What should people think?

Lynch: people should think about what is happening, not predict the future.If you own a car stock, you should be very interested in the price of used cars. If you own aluminum stock, you should be very interested in aluminum inventory. If you own hotel stocks, you should consider how many people are building hotels.

These are all facts. People like to talk about what will happen in the future, or the average duration of a recession is two years or God knows how many years it will be. There is no reason why an economic expansion cannot last longer.

I mean, I'm thinking about facts, not predicting the future. Prediction is something like a crystal ball, which doesn't work. It's futile.

PBS:Do small retail investors have a chance to win when playing with large institutions in the stock market?

Lynch:People always say that small retail investors have no chance of winning in the stock market. There are two problems. First of all, I think small retail investors have a chance to win. Second, the question is whether they think they have a chance or not, they still invest. I mean, if they are so convinced that they have no chance of winning in the stock market, they should invest in different ways.

Small retail investors are different from others in terms of investment. When they buy a house, they will be very careful, inspecting the surrounding schools and neighborhoods, as well as the drainage system, and so on. Even if you buy a refrigerator, you will do some homework. But they are different in investment. They immediately buy a stock when they hear it. As a result, the return they get proves that the performance of small retail investors in the stock market is very poor.

If you make a mistake in buying a car or house, you don't blame the mistake on professional investors. But if you don't do your investment research well, you buy stocks with no sales revenue, no profits, and a very chaotic financial situation, and then the stock price falls, and you say, "it's all due to the stylized trading of professional investors." actually, this is because you haven't done your homework.

So, I advise people that they can invest in the stock market and get a good return, but they have to do something.

PBS:Talk about timing.

Lynch:The market itself is very unstable. The 20th century has gone through 95 complete years, and now it is mid-1996, and the stock market has fallen by nearly 10%.

In the 95 years so far, we have experienced 53 declines of more than 10%, not 53 years of decline. The market could rise 26% in a year, followed by a 10% correction. In other words, there have been 53 declines in 1995, an average of one every two years.

Of the 53 falls, 15 fell by more than 25 per cent. Such a high decline is a bear market. As a result, there have been 15 bear markets in 1995, that is, a sharp fall almost every six years.

No one seems to know when the stock market will fall, at least if they do, they won't tell anyone. I don't remember anyone who made a market forecast that was correct more than once, but people made a lot of forecasts. Therefore, a fall will happen.

If you are in the market, you must understand that the market will fall. Every few years, the market has a 10% correction. A pullback is an euphemism for losing a lot of money quickly. A bear market is a decline of 20-30%. This will happen, and no one knows when it will start to happen. If you can't bear this, don't enter the market.

Is your investment period 1 year or 10 years or 20 years? If you invest in the stock market now in order to pay for college tuition a year later, such an investment is stupid, which is the same as betting on the size in a casino, because you don't know how the stock market will go in the next year or two.

In the stock market, time is in your favor. When the stock market falls, if you have money and you are not worried about falling, you can increase your position. You should not worry about a temporary fall. What you should worry about is what will happen to 10-or 20-year-old stocks.

PBS:If you invested in the stock market in 1966, it would take 15 years to get your money back.

Lynch:The stock market was flat between 1966 and 1982. But you still get a dividend, so your return on investment is still positive. With the exception of the 1920s, this was the worst period of stock market returns in the 20th century.

So, despite a decade of stock market consolidation, companies are still paying dividends, and some have raised their dividends. The question you have to consider is, "what will the company's profits be in the future?" "

Historically, corporate profits have grown by an average of about 8% a year. Profits grow by 8% a year and double in 9 years and quadruple in 18 years. Over the past 25 years, corporate profits have increased a little more than sixfold, the stock market has risen a little more than sixfold, and the dividend yield is between 2% and 3%, so the total annual return on the stock market is about 11%.

In the long run, the correlation between corporate profits and stock market returns is unimaginably high. So, you have to ask, "what's going to happen in 10 to 20 years? Will the profits of General Electric Co, Microsoft Corp, Johnson & Johnson and other companies be higher in 10 years' time than they are now? I think so. Will there be new companies like FedEx Corp and Compaq computers in the future? I think so. "this is the kind of company you want to invest in.

People spend all their time thinking, "when should I invest in a year?" "it's a waste of time. It's useless. I once did a very interesting study, and it was a good training. In the 30 years from 1965 to 1995, assuming you are so lucky that you can capture the lowest point of the year and invest $1000 in the lowest point every year, the average annual compound return for 30 years is 11.7%.

Conversely, suppose that some people are unlucky and enter the market at the highest point of the year every time for 30 years in a row, and their average annual compound return is 10.6%. There is only so much difference in the rate of return generated by investing at the lowest and highest points of the year.

Others enter the market on the first day of each year, with an average annual compound return of 11%. The probability of catching the highest and lowest points is close to zero, but people spend a lot of time trying to figure out where the market is going and at what time of year to buy. It's not worth it.

PBS:Do they just buy and hold?

Lynch:If they are confident and are not in a hurry to spend money, they should buy, hold, and then increase their positions when the market falls. If you increase your position every time the market falls by 10%, your return will be higher than the average of 11%.

Human nature has not changed for the past 5000 years, and people's emotions still fluctuate between greed and fear. When the market goes up, no one is worried. Once there is a sudden change in the market, people begin to get nervous.

PBS:The truth is, in the United States where we live, many people feel that they have no choice and they have to enter the market. For these people, how should they invest?

Lynch: if their psychological capacity is not high enough to withstand the fluctuations of the market, they really should not enter the market.They can invest in money market funds or buy treasury bonds.

In my opinion, in the next 20 to 30 years, the return of government bonds will not be as high as that of stocks, but it will still be higher than inflation in the long run, so it will still give investors a positive real return. It's better to earn less than to lose money.

PBS:How should these people educate their children and retire?

Lynch:They have to save more. Americans do not have enough savings. Our whole system is going backwards in this respect.

If you borrow money to spend and buy furniture, these expenses are tax deductible, but if you save, your savings will be taxed. So, people have already figured out the system, and they know that savings are not rewarded.

Our system is confusing. Today's capital gains tax rate is the highest in American history. Japan's capital gains tax rate is zero, but Japan's savings rate is as high as 20%. We must increase the savings rate. But no one encourages saving.

I remember learning in college that saving equals investment. All savings will be converted into capital investment, which will increase productivity, create more jobs and improve living standards. We don't have enough savings, so we have to save more, which is the most important thing we have to do.

PBS:Many people worry that pressure from mutual funds is hurting the United States.

Lynch:I think it was the recessions of 1981 and 1982 that sounded the alarm, not the stock market, nor the fund managers of mutual funds, but competition, competition faced by all industries.

Take the telecommunications industry as an example. About 11 years ago, we split up AT & T and divided this giant into what is now AT & T and several Bell companies. 11 years ago, AT & T employed 1 million people. One in 100 Americans works for the phone company.

At & T and all Bell now employ less than 700000 people, but they handle twice as many phone calls, 20 times as many faxes, 100 times as much data traffic and 1000 times as many mobile communications as before, but the number of employees has decreased by 1000.

Is this a good thing or a bad thing for the United States? Is it a good thing that AT & T employs 2 million people? I think it's a good thing that they do a better job with fewer employees.

PBS:Why?

Lynch:This is competition because the cost of our communication system is among the lowest in the world. The most important thing is the communication system, not the highway system, and our communication costs are among the lowest in the world, which helps us to compete with other countries.

PBS:Talk about IPOs and capital flows after the start of the bull market.

Lynch:A lot of people ask me, "where did the money I invest in mutual funds end up? "

In the past three years, new listings have raised $100 billion. These are all new companies going public. A total of 2500 companies have gone public in the past three years, with more than two per trading day.

These companies now have more money to buy equipment and research and development, and their balance sheets are stronger and they can borrow more money. They will hire more people and create more jobs. The next FedEx Corp will appear in these companies. The next Compaq. This is how the economic growth of the United States comes from.

In the 1980s, the top 500 companies in the United States lost 2 million jobs. But we added 1800 jobs.

This is an age of greed, but the United States has still added 18 million jobs in this decade. During this period, 2.1 million new enterprises opened. Some new businesses unfortunately went bankrupt, but they created an average of 10 jobs per business, or 21 million jobs. Some medium-sized enterprises have grown into large companies. This is how the American economy grows.

If the stock market performs well in the next two or three years, there will be a lot of money in the market for new shares to be raised. The funds raised by listed companies flow not only into the pockets of the rich, but also into the company's finance department, which is used by the company for research and development.

Nowadays, many listed companies did not exist 20 years ago. In the 30 years from 1965 to 1995, the United States added 54 million jobs.

The population of the European Union is 100 million more than ours, but they have added only 10 million jobs. The unemployment rate in the EU is as high as 10%, and 20 million people are out of work.

We are so lucky to have so many companies going public. American companies are doing a great job. The listing of new shares in the United States is a great thing, it allows us to invest money in small and medium-sized enterprises to let them grow.

PBS:Do you think Winik has been unreasonably accused of investors' emphasis on short-term performance in the past?

Lynch:Jeff Wynnick has been in charge of Magellan for more than four years. During this period, the fund beat the market, as well as 80% of the other funds. So, if you invest in other funds, you probably invested in one of the 80% that underperformed Magellan.

The fund hasn't done so well in the past nine months, but it's like a basketball game where the game ends with a score of 105 rides 85. You can't say, "how did you play in the third quarter when you were down by 32:22 in the third quarter? "what I mean is that it is appropriate to examine the performance of fund managers in four years. I think Winik did a good job in managing Magellan.

The Magellan fund all outperformed the market when Morris Smith, Jeff Wynnick and Bob Stansky were fund managers, and the question now is whether it can continue that achievement. Magellan's size is now $50 billion, which is a large number, but its share of the market capitalization is still very small.

The total market capitalization of all companies listed on the New York Stock Exchange is $5.5 trillion, the total market capitalization of the largest 100 stocks in over-the-counter trading is $1 trillion, and the total market capitalization of the largest 200 stocks on the international market is several trillion dollars.

I mean, Magellan is not small, but it still has a small share of the investable market. To beat the market, all you have to do is find the best 100 stocks in the S & P 500, and then find hundreds more outside the S & P 500.