How Peter Lynch DESTROYED the Market by 2,639%
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If you have a desire to make money investing in the stock market, you need to watch this video. This isn’t coming from me. This is coming from legendary investor Peter Lynch. During the 13 years Lynch managed the Fidelity Magellen fund, he averaged a staggering 29% annual return. To put this number into perspective, a $100,000 investment with Peter Lynch would have turned into a whopping ner 2.74 million dollaras. A cumulative return of 2,639%.
Peter Lynch’s track record has gone down in history as one of the most impressive careers on Wall Street. However, Peter Lynch didn’t graduate from an Ivy League university. In fact, he didn’t even study finance or business in college! The beauty of Lynch’s strategy is in its simplicity. In this video, we are going to cover the 4 main elements of Peter Lynch’s investment strategy. Number 3 is my personal favorite. Let’s get into the list.
Believe it or not, some of Peter Lynch’s great investments were in companies that many would refer to as “boring”. However, these businesses were simple and understandable. And that is exactly why they performed so well.
Here’s an example from Peter Lynch’s career to demonstrate the concept. One of the best performing stocks in Lynch’s portfolio was a company named Waste Management. Waste Management is a “municipal solid waste company”. This is just a fancy way of saying Waste Management is a trash collection company. Talk about an unglamorous industry. Most investors didn’t even look at the company because the industry was quote unquote “boring” and not growing rapidly. While this turned most investors off, this was precisely why Lynch was interested in the name.
Lynch noticed that garbage industry was incredibly fragmented. Meaning there were thousands of small companies serving the industry. While the industry itself wasn’t growing rapidly, Lynch realized that Waste Management could grow rapidly by buying up 100s of these small companies and improving the operations of the newly acquired businesses. Waste Management stock turned out to be a big winner for Peter Lynch. The stock had increased 100 fold from when Lynch first invested to when he released his iconic book “One Up on Wall Street” in 1989. You didn’t have to have been a genius to understand Waste Management and its business model. If I would have told you Peter Lynch had a stock that increased by a factor of 100, most people would have guessed it was a high tech company in a rapidly growing industry. But nope. It was a garbage company. There’s a reason why Peter Lynch say’s to focus on simple, understandable businesses.
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