Peter Lynch lecture on Investments and How the Average Investor can pick Stocks

Peter Lynch giving a lecture in 1994. He speaks of his stock picking technique, rules for investment and how the average investor can make money in the stock market.

Interview date :1994

Video segments below

0:16 Introduction
4:12 Peter lynch introduction
9:10 Start of Peters lecture
11:18 Single most important thing
14:20 Method of investing
14:53 You can’t predict the future
17:11 Study the history of the market
18:43 Plenty of time to buy stocks
20:06 Investors edge
23:19 Rules for investing
28:10 Don’t get emotionally attached to a stock
28:50 Avoid long shots
29:46 Always something to worry about
33.00 Questions
33:09 Do you pay attention to congress?
34:40 How useful in financial reporting in the press?
36:49 Concerned about volatility?
38:45 When will Dow hit 4000 ?
41:50 What fund and stocks should I buy?
49:29 Banks selling mutual funds?
52:15 FCC Proposals?
55:09 Fannie mae stock?
57:40 What do Bachelors do?

4:27Lynch is always on the prowl for a good stock one friend says that if you came
4:34to him with the best widget in the world and the Queen of England were sitting on
4:38one side of him and Cindy Crawford on the other he would ignore them and
4:43inundate you with questions about the widget measures management is intense
4:49interest in anything that would produce a good return is one reason few people
4:54have had a greater impact on the investment world in fact the market
4:59dropped about 40 points 1 day when a compressed version of his market views
5:04went over an online computer service he had said that if you looked at markets
5:10over a twenty-year period there were ups and down but that got translated into
5:16the headline lage predicts market correction
5:22legend is based more on what he had done what he has said he helped transform
5:34investing by giving individuals access to a mutual fund that steadily
5:39outperform the market and competitors for more than a decade his performance
5:46at Magellan earn the appreciation of many Americans who paid for their kids’
5:53college
5:54magellan’s grow when mister lynch became portfolio manager for Magellan in 1977
6:01it had less than 20 million in assets by the time he retired in 1992 spend more
6:09time with his family
6:11the challenge was the largest mutual fund in the world with more than one
6:16million shareholders and approximately fourteen billion in assets it’s easy to
6:24see what attracted shareholders to magellan the share price had risen
6:29twenty eight fold since Mr Lynch had taken the house with annual increases
6:36averaging 29 percent even more remarkable nope it funds are supposed to
6:44have more difficulties than smaller
6:48outperforming the market in the last five years of mister lynch’s stewardship
6:53magellan outperformed 99% of all given it his golden child it’s no surprise
7:04that books one up on wall street and beating the street I have one here have
7:12been best sellers this message is really rather me to paraphrase it anyone can
7:23get rich in the stock market if they do two things
7:27use their powers of observation
7:29and do their homework
7:33Mr Lynch knows how to lose money to the magellan fund lost about two billion
7:40dollars maybe more in a single day in 1987 when the stock market crash I
7:47personally
7:49hosted mister lynch once before few years ago and he was discussing his
7:55views on the stock market not had time to give me some examples of stocks like
8:00that the time changed remarkably the past few years and he also recommended
8:18Texas Air which dropped crash to nothing so I think it was great that need is not
8:26infallible to native of mister lynch’s a 1965 graduate of Boston College and
8:34received his MBA from the University of Pennsylvania’s Wharton School of
8:38Business Administration he served as a lieutenant in the Army before coming to
8:43fidelity in 1969 he currently serves as vice chairman of fidelity sits on the
8:51boards of mars Doutzen and WR grace is heavily involved in charity were you
8:57please welcome mr. Peter latest
9:02thank you very much it’s a pleasure to be here
9:12of this town and it’s a thrill to be here with Jim Johnson did so much anime
9:19and there was the greatest single stock of my life and it’s still my largest
9:23position and I want to talk about how to make money held by more Fannie Mae and
9:29Freddie Mac that was too and Marquis went to Boston College and also bus goes
9:35law school and it’s done a great job and congress everybody in this country but
9:40especially the people in his district in massachusetts but great honors that my
9:44wife Carolyn right near my sweetheart my great stock vector and legs and other
9:52good stocks are trying to do today
9:54briefly as I write this gallery I know try and say some words on the things
10:04I’ve used over the years when I was a mature and I’m a Magellan I still use
10:10today I think they make sense I think they make a lot of sense for investors
10:15and i frankly think it’s a tragedy in america that the small investor has been
10:22convinced by the media print media radio television media that they don’t have a
10:29chance they don’t the big institutions all the computers and all their degrees
10:34and all their money
10:35have all the edges just isn’t true at all and when they’re convinced when this
10:39happens when this occurs
10:42act accordingly when they believe it may buy stocks for a week and thereby
10:47options by the chill a fun this week and next we could see Argentina funded and
10:51they get results
10:52a portion of that kind of investing and that’s very bothersome I think the
10:56public should do extremely well this target on their own I think the fact
10:59that institutions dominate the market today is a positive response festers is
11:04institutions Bush talks unusual lows unusual highs someone who can sit back
11:09and have your own opinion on something but industry this is a positive
11:14so that’s what I want to talk about and the single stock market for anyone is to
11:22know what your own I’m amazed how many people own stocks they would not be able
11:28to tell you why they own they couldn’t say in a minute or less why they were
11:32actually really pressing down that say the reason on this is the suckers going
11:36up and that’s the only reason that’s the only reason they own it and if you can
11:41explain upstairs you can’t explain her 10 year old and two minutes or less
11:44while you’re on a stock you should know it and that’s true I think about eighty
11:48percent of people in on stocks and this is the kind of stock
11:52people like to own this is the kind of company people adore only is a
11:55relatively simple company and make a very narrow easy-to-understand product
12:00they make a one megabit SRAM CMOS bipolar is floating point data i/o array
12:06processors optimizing compiler 16 dual port memory I double diffuse
12:12metal-oxide-semiconductor monolithic logic chip in the plaza matrix vacuum
12:17fluorescent display it has 16 bit dog memory units operating system for
12:24whetstone make a flop polysilicon emitter high bandwidth it’s very
12:27important
12:286 gigahertz metallization communication protocol in a sickness backward
12:33compatibility for a for a bus architecture for waving to leave memory
12:37change backplane and it doesn’t 15 nanoseconds capability if you own a
12:44piece a crap like that
12:46you will never make money along with more wet stones or less wet stones were
12:52bigger mega plop plop you don’t have the foggiest idea what’s happened and people
12:57buy this junk all the time I made money in Dunkin Donuts I can understand it
13:04when the recession that have to worry about what was happening I could go
13:09there was still there I don’t have to worry about low-priced Iranian ports and
13:12I just did you know I can understand it and you laugh I made ten or fifteen
13:18times my money and I don’t it’s the kind of stocks I can understand if you don’t
13:23understand it doesn’t work this is the single biggest principle it bothers me
13:27that people are very careful the money to buy refrigerator that a consumer
13:32reports by my brother they do that they asked people what’s the best kind of
13:37radar range what kind of car to buy a new research partners and I gotta go on
13:44a trip to wyoming mobile travel guide or California when they go to Europe they
13:48get the Michelin travel guide people here at tip on a bus and some stock now
13:53put half their life savings before sunset and they wonder why it was funny
13:59the stock market and when they lose money they blame it on the institutions
14:02of program trading it is a delicate balance sheet and that’s what you get
14:08for it and that’s what we were being driven to get self-fulfilling does
14:13terrible things they say they don’t have a chance because that’s the way they
14:18were acting like trying to convince people there is a method for reasons for
14:23stocks go up
14:24coca-cola this is very magical fairy magic number remember nicole is running
14:3030 times per share what they did
14:33thirty-two years ago has gone up thirty fall unless needed thirty years ago the
14:41stock is half its price of thirty years ago
14:44stocks are not lottery tickets as a company behind her as far as well as
14:50well it’s not that close again
14:52you get too carried away and the stock market that is a total waste of time
14:59no interest rates and this is a very good pic interest rates right three
15:07times roll
15:09billion there’s not that many billionaires on the planet by Jaques
15:15isolationism in Boston College they can be lots of billionaires and don’t
15:22predict the room around in 1981 and 82
15:2720% prime rate double-digit inflation double digit unemployment I remember
15:33anybody tell me in 1981 about it so I’m trying to tell you is very useful to
15:43know what the trick to know the Dow Jones average your ex full-scale
15:49recession or interest rates can be 12% that’s useful stuff you never know just
15:55don’t get to learn if you spent fourteen minutes here and economics you’ve wasted
16:0112 minutes and I i really believe that now I have to be happy to hear I’m
16:08talking economics of the broad-scale predicting the downturn for next year
16:12the up Turner and wanted him to three be at all these exams the talk about
16:18economics scrap prices when I don’t know what’s happened used car prices used car
16:25prices going up there could indicate when I will tell us our chemical stocks
16:31went up the price of these are facts trees down five straight months that’s
16:36relevant I can do it at home affordability I wanna know about housing
16:43sports fans
16:45economic predictions and economic predictions are a total waste and
16:52interest rates alan greenspan’s very honest guy he would tell you that he