Peter Lynch is a famous U.S. Wall Street stock investor who started with Fidelity Investments an intern in 1966. He officially began his career there after receiving his M.B.A. from the Wharton School at University of Pennsylvania in 1968. Mr. Lynch remained with Fidelity for his entire career and still serves as research consultant for the organization.
In 1977, Fidelity named the up-and-comer the manager of an obscure portfolio called the Magellan Fund. From that year through 1990, Mr. Lynch managed the fund, achieving historic results. Assets that started at $20 billion increased to $14 billion by 1990. Even more impressive was the fact that Mr. Lynch beat the benchmark S&P 500 Index in 11 of the 13 years he managed the fund, resulting in a 29 percent average annual return.
Industry followers describe this investor as a “chameleon” due to his ability to adapt to various investment styles. When selecting stock, Mr. Lynch adhered to eight fundamental principles. These are: know what you own, avoid long shots, identify, recognize, and buy good businesses, explain reasons for buying before making a purchase, consider it futile to predict interest rates and the economy, be humble, flexible, and learn from mistakes, and recognize that there is always something to worry about.
Mr. Lynch invested in companies that did what he was familiar with or could understand easily. He focused on fundamentals of the company and invested for the long-term. His beliefs and advice are captured in his books, which include Learn to Earn, One Up On Wall Street, and Beating the Street.
In 1993’s Beating the Street, Mr. Lynch discussed gold, writing that it has not likely “seen its last hurrah.” He predicted that supply would dwindle and the fact that exploration was restricted would create a nice situation, though he predicted it to come a bit earlier. Increasing inflation would lead people to buy gold coins and jewelry as a hedge, he wrote.