Friday, December 6, 2013

Peter Lynch on Investing

Investment legend Peter Lynch appeared was interviewed by Charlie Rose earlier this week.

Peter Lynch, of course, produced one of the best investing records of our generation when he ran the Magellan Fund for Fidelity.  From 1977 to 1990 Magellan produced an annual compound return of over +29% per annum.

Lynch retired in 1991 to focus more time on his family and philanthropic activities.  However, he still remains one of the most astute and thoughtful investment voices in the business.

The interview runs almost 24 minutes, but it is well worth your time.

Lynch was always a proponent of "invest in what you know".  As he discusses in the interview, if you truly understand the business any declines in prices are viewed as opportunities rather than cause for concern.

He dismisses any idea that successful investing in stocks can be gleaned from a careful reading of economic data - focusing on company fundamentals is the path for success.

Towards the end of the interview Rose asks Lynch for his views on the current market. 

His answer was fairly simple:  stock prices follow earnings, and earnings should continue to grow at +7% to 8% for the next few years.  While he said he had no idea what the market would do in the next couple of years, investors with a longer time horizon would be well-served to simply stay invested.