Thread on 25 GOLDEN RULES by Peter Lynch ( One rule per day)
Day 1:
Nobody can predict interest rates, the future direction of the economy or the stock market. Dismiss all such forecasts & concentrate on what's actually happening to the companies in which you've invested.
Day 1:
Nobody can predict interest rates, the future direction of the economy or the stock market. Dismiss all such forecasts & concentrate on what's actually happening to the companies in which you've invested.
Day 2 :
Owning stocks is like having children, don't get involved with more than you can handle.
Owning stocks is like having children, don't get involved with more than you can handle.
Day 3 :
Avoid hot stocks in hot industries. Great companies in cold, nongrowth industries are consistent big winners.
Avoid hot stocks in hot industries. Great companies in cold, nongrowth industries are consistent big winners.
Day 4 :
Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
Day 5 :
The observant amateur can find great growth companies long before the professionals have discovered them.
The observant amateur can find great growth companies long before the professionals have discovered them.
Day 6 :
Investing is fun, exciting & DANGEROUS if you don't do any work.
Investing is fun, exciting & DANGEROUS if you don't do any work.
Day 7 :
Behind every stock is a company, find out what it's doing.
Behind every stock is a company, find out what it's doing.
Day 8 :
Never invest in a company without understanding its finances. The biggest losses in stocks come from companies with poor balance sheets. Always look at the BS to see if a company is solvent before you risk your money on it.
Never invest in a company without understanding its finances. The biggest losses in stocks come from companies with poor balance sheets. Always look at the BS to see if a company is solvent before you risk your money on it.
Day 9 :
If you can't find any companies that you think are attractive, put your money in the Bank until you discover some.
If you can't find any companies that you think are attractive, put your money in the Bank until you discover some.
Day 10 :
With small companies, you are better off to wait until they turn a profit before you invest.
With small companies, you are better off to wait until they turn a profit before you invest.
Day 11 :
A stock market decline is as routine as a January blizzard in Colorado. If you are 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.
A stock market decline is as routine as a January blizzard in Colorado. If you are 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.
Day 12 :
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.
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.
Day 13 :
Over the past 3 decades, the stock market has come to be dominated by a herd of professional investors. Contrary to popular belief, this makes it easier for the amateur investor. You can beat the market by ignoring the herd.
Over the past 3 decades, the stock market has come to be dominated by a herd of professional investors. Contrary to popular belief, this makes it easier for the amateur investor. You can beat the market by ignoring the herd.
Day 14 :
You have to know what you own, and why you own it. “This baby is a cinch to go up!” doesn’t count.
You have to know what you own, and why you own it. “This baby is a cinch to go up!” doesn’t count.
Day 15 :
If you are thinking of investing in a troubled industry, buy the companies with staying power. Also, wait for the industry to show signs of revival.
If you are thinking of investing in a troubled industry, buy the companies with staying power. Also, wait for the industry to show signs of revival.
Day 16 :
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.
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.
Day 17:
Long shots almost always miss the mark.
Long shots almost always miss the mark.
Day 18 :
Often, there is no correlation between the success of a company’s operations & the success of its stock over a few months or even a few years. In the Long-run, there is a 100% correlation between the success of the company and the success of its stock.
Often, there is no correlation between the success of a company’s operations & the success of its stock over a few months or even a few years. In the Long-run, there is a 100% correlation between the success of the company and the success of its stock.
Day 19 :
There is always something to worry about. Avoid weekend thinking and ignore the latest dire predictions of the newscasters. Sell a stock because the company’s fundamentals deteriorate, not because the sky is falling.
There is always something to worry about. Avoid weekend thinking and ignore the latest dire predictions of the newscasters. Sell a stock because the company’s fundamentals deteriorate, not because the sky is falling.
Day 20 :
If you study 10 companies, you will find 1 for which the story is better than expected. If you study 50, you’ll find 5. There are always pleasant surprises to be found in the stock market – companies whose achievements are being overlooked on Wall Street.
If you study 10 companies, you will find 1 for which the story is better than expected. If you study 50, you’ll find 5. There are always pleasant surprises to be found in the stock market – companies whose achievements are being overlooked on Wall Street.
Day 21:
If you have the stomach for stocks, but neither the time nor the inclination to do the homework, invest in equity mutual funds. Here, it’s a good idea to diversify.
If you have the stomach for stocks, but neither the time nor the inclination to do the homework, invest in equity mutual funds. Here, it’s a good idea to diversify.
Day 22 :
Time is on your side when you own shares of superior companies. You can afford to be patient – even if you missed Wal-Mart in the first five years, it was a great stock to own in the next five years. Time is against you when you own options.
Time is on your side when you own shares of superior companies. You can afford to be patient – even if you missed Wal-Mart in the first five years, it was a great stock to own in the next five years. Time is against you when you own options.
Day 23:
If you invest $1000 in a stock, all you can lose is $1000, but you stand to gain $10,000 or even $50,000 over time if you are patient. It only takes a handful of big winners to make a lifetime of investing worthwhile (💪 of Concentrated Portfolio)
If you invest $1000 in a stock, all you can lose is $1000, but you stand to gain $10,000 or even $50,000 over time if you are patient. It only takes a handful of big winners to make a lifetime of investing worthwhile (💪 of Concentrated Portfolio)
Day 24:
Among the major stock markets of the world, the U.S. market ranks 8th in total return over the past decade. You can take advantage of the faster-growing economies by investing some portion of your assets in an overseas fund with a good record.
Among the major stock markets of the world, the U.S. market ranks 8th in total return over the past decade. You can take advantage of the faster-growing economies by investing some portion of your assets in an overseas fund with a good record.
Day 25 :
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.
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.
