How I’d invest like Peter Lynch


first_img I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. “This Stock Could Be Like Buying Amazon in 1997” Tom Rodgers | Wednesday, 9th June, 2021 | More on: WMT TomRodgers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Simply click below to discover how you can take advantage of this. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Source: Getty images Our 6 ‘Best Buys Now’ Sharescenter_img Peter Lynch is one of the greatest investors of all time. As a fund manager for Magellan at Fidelity, Lynch increased the fund’s size from $18m to more than $14bn. That’s like me taking a modest £5,000 and spinning it into £3.8m.So how did he do it? Peter Lynch had a certain set of rules he always followed, come rain or shine.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Sure, there are more financial products and investing methods to consider these days. CFDs, shorting, crypto trading. Crazy, risky stuff. To Peter Lynch these are just more ways to lose hard-earned money. Here are some mistakes he aims to avoid and some actions he likes to take.Buying stocks just because they’re cheapLynch always said investors had to think first about how much money they could lose. That comes long before I think about how much money I could make. Cheap stocks are sometimes cheap for good reason. They make no money and have no prospects!He said: “If your neighbour buys $10,000 worth of a stock at £$50, it plummets, and you put $25,000 in at $3, and it goes to zero, who loses the most? A lot of people cannot answer this question.”It doesn’t matter if the FTSE is at 7,000, 5,000 or 10,000. If a company’s earnings are great, if it can make a lot of profit, it will do well over the long term. If a company is unprofitable, it’s still technically possible it will succeed, but far less likely. And even Peter Lynch didn’t have infinite money to bet on every single stock that came along.  His point is that every stock, no matter how hot, or how many headlines it gets, can go to zero. But it’s more likely with stocks that are unprofitable. Companies can run out of money, just like I do towards the end of every month!Not doing enough researchOne of the first things I heard as an investor was “Invest in what you know”. Peter Lynch coined that phrase.And understanding what I’m buying is the most important part of the game.“I just buy a company to grow,” he said in 1992. “And whether it’s a textile company or a software company, you’d better understand what they do. And if they do well, the stock will do well, no matter what happens to the market.”Peter Lynch thinks long termShare prices will go up and down day to day. But if I’ve done my research, I understand what the company does. I understand how the business makes money today. And I understand how it will make money in the future.“You have to find out why you bought a stock,” says Peter Lynch, using the case study of Walmart.“You could have bought the stock 10 years after it went public and still made 500 times on your money. So you have to say to yourself: ‘In this stock, I have a 10-year story, a 20-year story’. Write that down, and follow that. That’s what I do with a company.”Physically taking a journal or a diary and writing down the reasons why you bought a stock makes it more real, says Peter Lynch. It helps keep your mind focused on the long-term.To Peter Lynch the rules stay the same. I’d follow his advice over my neighbour’s any day. Enter Your Email Address Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! How I’d invest like Peter Lynch Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. See all posts by Tom Rodgerslast_img

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