Master Stockpicker Peter Lynch: If You Only Invest in an Index, You’ll Never Beat It

johnN

Master Stockpicker Peter Lynch: If You Only Invest in an Index, You’ll Never Beat It

https://www.barrons.com/articles/master-stockpicker-peter-lynch-if-you-only-invest-in-an-index-youll-never-beat-it-51576874071

By Leslie P. Norton
Updated Dec. 20, 2019 4:24 pm ET / Original Dec. 20, 2019 3:34 pm ET
Photograph by Heather Sten

“Invest in what you know.” Those five simple words from Peter Lynch helped launch a nation of stockpickers.

His advice—along with his 13 years running the Fidelity Magellan fund (ticker: FMAGX) with great success—led to investment banter at cocktail parties, cab drivers doling out stock tips, and the rise of the star fund manager. Lynch still holds one of the greatest track records—an astonishing 29% annualized return from 1977 until 1990—nearly double what the S&P 500 index produced in the same period.

hank

“Those five simple words from Peter Lynch helped launch a nation of stockpickers.” LOL

I’m not a Barron’s subscriber at present. Could only get as far as: “Underlying Lynch’s success was a sunny belief ...“ Does it get even better? These types of articles strike me as the kind you typically see near a market top. Folks weren’t writing about “sunny beliefs” or “beating the index” as 2009 dawned.

I will agree that Lynch is one smart dude - and an excellent self-promoter as well. His skills - and a lot of good luck - ramped up Magellan’s returns. To suggest that anyone who tries to copy Lynch’s approach can become fabulously rich is laughable at best; misguided / harmful at worst.

MikeM

I've been subscribing to Barrons the past 6 months or so. I like it a lot. Just finished reading this article in my paper copy. It was a very good article about the man himself, not self promotional at all. No suggestion that any one can do it.

Sven

I tend to agree with hank. Peter Lynch was an outstanding money manager of Fidelity Magellan fund in the 80's. He managed to outperform the S&P index for a number of the years. He left his money manager role and took on other duties while staying at Fidelity. Since then Magellan have had a number of managers and the fund never recovered the old glory. I say that was a lot of luck and the timeframe of the 80's before the digital age when information was not readily available to the general public.

If you read Peter Lynch's books, they are all about how he outdo the market. Quite a contrast if you read Warren Buffet's books.

Gary1952

Hello All. If your goal is to "beat the market" then you will have to do as he says. But there is more to investing than beating the market. Such as investing for income. Personally I have a combo approach in the equity arena. Mostly index ETFs and a more aggressive managed equity OEF. While Lynch is a legend sometimes these high flyers get full of themselves.

Jim0445

I am grateful for learning about mutual thrifts from reading one of Peter Lynch's books many years ago. He listed a large number of these thrifts (usually savings and loans) in his book. I was also able to identify around 100 more on my own, and as a result I went on a mission of becoming a depositor/part owner of several thrifts that eventually went public, offering their depositors the opportunity to participate in their IPOs. I never lost money on any of these IPOs. Thank you, Peter Lynch. (Unfortunately, this game has essentially run its course now that only a handful have not gone public.)

LewisBraham

But the proviso to his statement is: If you only index, you'll never lag the market by more than a sliver or not at all if you buy a now free index fund. The vast majority of managers and would-be stockpickers lag by a lot more than that.

davidrmoran

exactly: the converse