7 Rules Of Investing That I Learned From Peter Lynch

1. Know what you own

- If you own a stock that you don't understand then you're have no right to own it.

- You should be able to explain why you own a particular stock in less than 2 minutes to a 10 year old.

- Don't own the stock just because the sucker is going up.
2. Don't invest purely on others opinions

- Never buy a stock just because someone suggested you that this stock will go up.

- Do your own research.

- Even when you buy a phone, you always do your research then why aren't you doing it while investing in stocks.
3. Focus on the company behind the stock

- The price of a stock is directly related to the performance of the company behind it.

- If the company is doing good, the stock will go up.

- If the company is doing bad, the stock will go down.

- Stocks are not lottery tickets.
4. Don't try to predict the market

- No one can predict the stock market.

- If you spend 14 minutes a year in economics and predicting the market, you have wasted 12 minutes.

- Instead of predicting the economy, start doing industry analysis.
Ex: If the company you own is in steel business,

- Learn about the steel prices
- Look at the scrap prices
- Look at steel demand all over the World
5. Market Crashes are great opportunities

- About once every 2 years, market falls by 10%.

Ex: If you liked a stock at $100 and it falls by 30% then you should buy it.

- You are getting the same stock you liked at 30% discount.
6. You have plenty of time

- As soon as people hear some tip about a stock they rapidly run to dump their life's saving in that stock.

- Be smart, and do your research first.
- Before investing your money in some stock blindly, research the company first and learn the fundamentals of the company.

- There should be no rush in buying the stocks.
7. You need an edge to make money

- Suppose, you work in a pharmaceutical company.

- Recently, they launched a new drug that just took off.

- Now, you know the drug is effective and it's making a lot of money to the company.
- So, instead of buying the companies you don't understand, buy the stocks of company you work in.

- You have an edge over big institutions because you know the drug is doing good and company is doing good too.
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