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The S&p Is Up 343.8 Percent For 10 Years. That Is A Four-bagger. The General Equity Funds Are Up 283 Percent. So It's Getting Worse, The Deterioration By Professionals Is Getting Worse. The Public Would Be Better Off In An Index Fund.

-Peter Lynch

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The S&p Is Up

Peter Lynch

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The S&p Is Up 343.8 Percent For 10 Years. That Is A Four-bagger. The General Equity Funds Are Up 283 Percent. So It's Getting Worse, The Deterioration By Professionals Is Getting Worse. The Public Would Be Better Off In An Index Fund.

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There Are Substantial Rewards For Adopting A Regular Routine Of Investing And Following It No Matter What, And Additional Rewards For Buying More Shares When Most Investors Are Scared Into Selling.

You Shouldn't Just Pick A Stock - You Should Do Your Homework.

Well, I Think The Secret Is If You Have A Lot Of Stocks, Some Will Do Mediocre, Some Will Do Okay, And If One Of Two Of 'em Go Up Big Time, You Produce A Fabulous Result. And I Think That's The Promise To Some People.

The Person That Turns Over The Most Rocks Wins The Game. And That's Always Been My Philosophy.

Hold No More Stocks Than You Can Remain Informed On.

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.

Although It's Easy To Forget Sometimes, A Share Is Not A Lottery Ticket... It's Part-ownership Of A Business.

In Stocks As In Romance, Ease Of Divorce Is Not A Sound Basis For Commitment.

I've Always Been A Great Lover Of Baseball.

Searching For Companies Is Like Looking For Grubs Under Rocks: If You Turn Over 10 Rocks You'll Likely Find One Grub; If You Turn Over 20 Rocks You'll Find Two.

My Method For Picking Stocks Has Never Changed. When Businesses Go From Crappy To Semicrappy, There's Money To Be Made.

When You Sell In Desperation, You Always Sell Cheap.

That's Not To Say There's No Such Thing As An Overvalued Market, But There's No Point Worrying About It.

Absent A Lot Of Surprises, Stocks Are Relatively Predictable Over Twenty Years. As To Whether They're Going To Be Higher Or Lower In Two To Three Years, You Might As Well Flip A Coin To Decide.

You Only Need A Few Good Stocks In Your Lifetime. I Mean How Many Times Do You Need A Stock To Go Up Ten-fold To Make A Lot Of Money? Not A Lot.

You Can Find Good Reasons To Scuttle Your Equities In Every Morning Paper And On Every Broadcast Of The Nightly News.

If You Go To Minnesota In January, You Should Know That It's Gonna Be Cold. You Don't Panic When The Thermometer Falls Below Zero.

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.

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.

The List Of Qualities (an Investor Should Have) Include Patience, Self-reliance, Common Sense, A Tolerance For Pain, Open-mindedness, Detachment, Persistence, Humility, Flexibility, A Willingness To Do Independent Research, An Equal Willingness To Admit Mistakes, And The Ability To Ignore General Panic.

An Important Key To Investing Is To Remember That Stocks Are Not Lottery Tickets.

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.

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.

Nobody Can Predict Interest Rates, The Future Direction Of The Economy Or The Stock Market. Dismiss All Such Forecasts And Concentrate On What's Actually Happening To The Companies In Which You've Invested

If You Can't Find Any Companies That You Think Are Attractive, Put Your Money In The Bank Until You Discover Some.

There Is Always Something To Worry About. Avoid Weekend Thinking And Ignoring The Latest Dire Predictions Of The Newscasters. Sell A Stock Because The Company's Fundamentals Deteriorate, Not Because The Sky Is Falling.

If You Spend More Than 13 Minutes Analyzing Economic And Market Forecasts, You've Wasted 10 Minutes

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.'

Twenty Years In This Business Convinces Me That Any Normal Person Using The Customary Three Percent Of The Brain Can Pick Stocks Just As Well, If Not Better, Than The Average Wall Street Expert.

I Like To Buy A Company Any Fool Can Manage Because Eventually One Will.

The More Cash That Builds Up In The Treasury, The Greater The Pressure To Piss It Away.

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.

Behind Every Stock Is A Company. Find Out What It's Doing.

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.

Stocks Are A Safe Bet, But Only If You Stay Invested Long Enough To Ride Out The Corrections.

The Most Important Organ In The Body As Far As The Stock Market Is Concerned Is The Guts, Not The Head. Anyone Can Acquire The Know-how For Analyzing Stocks.

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.

In Business, Competition Is Never As Healthy As Total Domination.

Logic Is The Subject That Has Helped Me Most In Picking Stocks, If Only Because It Taught Me To Identify The Peculiar Illogic Of Wall Street. Actually Wall Street Thinks Just As The Greeks Did. The Early Greeks Used To Sit Around For Days And Debate How Many Teeth A Horse Has. They Thought They Could Figure It Out Just By Sitting There, Instead Of Checking The Horse. A Lot Of Investors Sit Around And Debate Whether A Stock Is Going Up, As If The Financial Muse Will Give Them The Answer, Instead Of Checking The Company.

Everyone Has The Brainpower To Follow The Stock Market. If You Made It Through Fifth-grade Math, You Can Do It.

Everyone Has The Brain Power To Make Money In Stocks. Not Everyone Has The Stomach.

Investing Money

The Biggest Winners Are Surprises To Me, And Takeovers Are Even More Surprising. It Takes Years, Not Months, To Produce Big Results.

You Should Not Buy A Stock Because It's Cheap But Because You Know A Lot About It.

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.

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.

A Lot Of People Got In At The Wrong Time. A Lot Of People Did Very Well And Some People Said, "this Is It. I'll Never Get Back In Again." And They Maybe Meant It, But They Probably Got Back In Again Anyway.

If You Have The Stomach For Stocks, But Neither The Time Nor The Inclination To Do The Homework, Invest In Equity Mutual Funds.

There's No Use Diversifying Into Unknown Companies Just For The Sake Of Diversity. A Foolish Diversity Is The Hobgoblin Of Small Investors. That Said, It Isn't Safe To Own Just One Stock, Because In Spite Of Your Best Efforts, The One You Choose Might Be The Victim Of Unforeseen Circumstances. In Small Portfolios, I'd Be Comfortable Owning Between Three And Ten Stocks.

It Isn't The Head But The Stomach That Determines The Fate Of The Stockpicker.

If A Picture Is Worth A Thousand Words, In Business, So Is A Number.

Picture Is Worth A Thousand Words

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.

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.

In The Summer Of 1990, I Was Buying Stocks And I Was Probably Three Or Four Months Early There. But We Had A Great Rally In 1991.

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.

Avoid Hot Stocks In Hot Industries.

Most Investors Would Be Better Off In An Index Fund.

Active Management

When Management Owns Stock, Then Rewarding The Shareholders Becomes A First Priority, Whereas When Management Simply Collects A Paycheck, Then Increasing Salaries Becomes A First Priority.

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.

Never Invest In A Company Without Understanding Its Finances. The Biggest Losses In Stocks Come From Companies With Poor Balance Sheets.

When Even The Analysts Are Bored, It's Time To Start Buying.

Never Invest In Any Idea You Can't Illustrate With A Crayon

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.

Never Invest In Anything That Cannot Be Illustrated With A Crayon

I Spend About Fifteen Minutes A Year On Economic Analysis.

Gentlemen Who Prefer Bonds Don't Know What They're Missing.

Just Because You Buy A Stock And It Goes Up Does Not Mean You Are Right. Just Because You Buy A Stock And It Goes Down Does Not Mean You Are Wrong.

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.

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.

I've Always Said, The Key Organ Here Isn't The Brain, It's The Stomach. When Things Start To Decline - There Are Bad Headlines In The Papers And On Television - Will You Have The Stomach For The Market Volatility And The Broad-based Pessimism That Tends To Come With It?

What Makes Stocks Valuable In The Long Run Isn't The Market. It's The Profitability Of The Shares In The Companies You Own. As Corporate Profits Increase, Corporations Become More Valuable And Sooner Or Later, Their Shares Will Sell For A Higher Price.

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.

Know What You Own, And Know Why You Own It.

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.

The Typical Big Winner In The Lynch Portfolio Generally Takes Three To Ten Years To Play Out.

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.

Long Shots Almost Always Miss The Mark.

The Natural-born Investor Is A Myth.

Charts Are Great For Predicting The Past.

I'm Always Fully Invested. It's A Great Feeling To Be Caught With Your Pants Up.

More Money Is Lost Anticipating The Changes In The Overall Stock Market Than Any Other Way Of Investing.

If You Can Find A Company That Can Get Away With Raising Prices Year After Year Without Losing Customers (an Addictive Product Such As Cigarettes Fills The Bill), You've Got A Terrific Investment.

Often, There Is No Correlation Between The Success Of A Company's Operations And The Success Of Its Stock Over A Few Months Or Even A Few Years. In The Long Term, There Is A 100 Percent Correlation Between The Success Of The Company And The Success Of Its Stock. This Disparity Is The Key To Making Money; It Pays To Be Patient, And To Own Successful Companies.

You Just Don't Know When You Can Find The Bottom.

A Stock Market Decline Is As Routine As A January Blizzard In Colorado. If You're Prepared, It Can't Hurt You. A Decline Is A Great Opportunity To Pick Up The Bargains Left Behind By Investors Who Are Fleeing The Storm In Panic.

The Simpler It Is, The Better I Like It.

Spend At Least As Much Time Researching A Stock As You Would Choosing A Refrigerator.

I Don't Know Anyone Who Said On Their Deathbed: 'gee, I Wish I'd Spent More Time At The Office.'

You Can't See The Future Through A Rearview Mirror

Rearview Mirror

The Basic Story Remains Simple And Never-ending. Stocks Aren't Lottery Tickets. There's A Company Attached To Every Share.

The S&p Is Up 343.8 Percent For 10 Years. That Is A Four-bagger. The General Equity Funds Are Up 283 Percent. So It's Getting Worse, The Deterioration By Professionals Is Getting Worse. The Public Would Be Better Off In An Index Fund.

If All The Economists In The World Were Laid End To End, It Wouldn't Be A Bad Thing.

It Would Be Wonderful If We Could Avoid The Setbacks With Timely Exits, But Nobody Has Figured Out How To Predict Them.

You Have To Keep Your Priorities Straight If You Plan To Do Well In Stocks.

The Real Key To Making Money In Stocks Is Not To Get Scared Out Of Them.

Improved Turnout Will Give Parliament And Government The Appearance Of Being More Legitimate.

Never Buy Anything That You Can't Illustrate On The Back Of A Napkin.

You Have To Let The Big Ones Make Up For Your Mistakes.

Thousands Of Experts Study Overbought Indicators, Oversold Indicators, Head-and-shoulder Patterns, Put-call Ratios, The Fed's Policy On Money Supply, Foreign Investment, The Movement Of The Constellations Through The Heavens, And The Moss On Oak Trees, And They Can't Predict Markets With Any Useful Consistency, Any More Than The Gizzard Squeezers Could Tell The Roman Emperors When The Huns Would Attack.

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.

A Price Drop In A Good Stock Is Only A Tragedy If You Sell At That Price And Never Buy More. To Me, A Price Drop Is An Opportunity To Load Up On Bargains From Among Your Worst Performers And Your Laggards That Show Promise. If You Can't Convince Yourself "when I'm Down 25 Percent, I'm A Buyer" And Banish Forever The Fatal Thought "when I'm Down 25 Percent, I'm A Seller," Then You'll Never Make A Decent Profit In Stocks.

I Don't Go Near The Money And The Money Doesn't Go Near Me.

Bargains Are The Holy Grail Of The True Stockpicker. The Fact That 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 Rule Of 72 Is Useful In Determining How Fast Money Will Grow. Take The Annual Return From Any Investment, Expressed As A Percentage, And Divide It Into 72. The Result Is The Number Of Years It Will Take To Double Your Money.

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.

The Extravagance Of Any Corporate Office Is Directly Proportional To Management's Reluctance To Reward The Shareholders.

The Junior High Schools And High Schools Of America Have Forgotten To Teach One Of The Most Important Courses Of All. Investing.

Investing In Stocks Is An Art, Not A Science, And People Who've Been Trained To Rigidly Quantify Everything Have A Big Disadvantage.

Invest In Businesses Any Idiot Could Run, Because Someday One Will.

So While I Was In College I Did A Little Study On The Freight Industry, The Air Freight Industry. And I Looked At This Company Called Flying Tiger. And I Actually Put A Thousand Dollars In It And I Remember I Thought This Air Cargo Was Going To Be A Thing Of The Future.

There's Lots Of Stocks Out There And All You Need Is A Few Of 'em. That's Been My Philosophy.

There's A Company Behind Every Stock And A Reason Companies - And Their Stocks - Perform The Way They Do.

I Can't Recall Ever Once Having Seen The Name Of A Market Timer On Forbes' Annual List Of The Richest People In The World. If It Were Truly Possible To Predict Corrections, You'd Think Somebody Would Have Made Billions By Doing It.

All The Math You Need In The Stock Market You Get In The Fourth Grade.

Everyone Has The Brainpower To Make Money In Stocks. Not Everyone Has The Stomach. If You Are Susceptible To Selling Everything In A Panic, You Ought To Avoid Stocks And Mutual Funds Altogether.

Your Ultimate Success Or Failure Will Depend On Your Ability To Ignore The Worries Of The World Long Enough To Allow Your Investments To Succeed.

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.

Investing Is Fun And Exciting, But Dangerous If You Don't Do Any Work.

Owning Stocks Is Like Having Children - Don't Get Involved With More Than You Can Handle.

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.

It Only Takes A Handful Of Big Winners To Make A Lifetime Of Investing Worthwhile.

Time Is On Your Side When You Own Shares Of Superior Companies.

All The Time And Effort People Devote To Picking The Right Fund, The Hot Hand, The Great Manager Have, In Most Cases, Led To No Advantage.

Equity Mutual Funds Are The Perfect Solution For People Who Want To Own Stocks Without Doing Their Own Research.

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.

Imagine If You Borrowed Your Parents' Car Without Permission And Ran It Into A Tree, How Much Better You'd Feel If You Were Incorporated.

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.

Go For A Business That Any Idiot Can Run - Because Sooner Or Later, Any Idiot Probably Is Going To Run It.

Invest In What You Know.

I Deal In Facts, Not Forecasting The Future. That's Crystal Ball Stuff. That Doesn't Work.

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.

The Best Stock To Buy Is The One You Already Own.

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.

Visiting Stores And Testing Products Is One Of The Critical Elements Of The Analyst's Job.

Far More Money Has Been Lost By Investors Preparing For Corrections, Or Trying To Anticipate Corrections, Than Has Been Lost In Corrections Themselves.

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