Common Sense Investing: Accuracy and Peter Lynch’s 10-Baggers
I’ve been an investor since before college, and I’ve been a successful investor for almost as long. I talk to other investors, I do research, and I browse the online investing communities. And through all that, I’ve noticed that there is one similarity that you can see in all successful investors: They don’t have 100% accuracy.
My accuracy is around 75% at most, but thats it; and I’m considered an All-Star in the online investing communities. That means generally, 75% of the stocks I pick do better than the S&P. It also means that 25% of them won’t be winners. But, I do my due diligence, I stick to well managed companies that have fast earnings growth, relatively high insider ownership, low P/E for the industry, good returns, and the 7 out of 10 that do beat the S&P beat it by a lot. That’s the key. When you get into investing, you have to have thick skin, you can’t cut and run when a stock goes down and you can’t get discouraged when half of your stocks aren’t beating the market. That’s just how it goes.
Remember Peter Lynch’s theory on 10 baggers:
Say you pick 5 stocks, and you’ve done all the research you can and you’re sure these are solid companies. Well some of them might go down, but even if 4 of the 5 are losers, if you hit just one 10 or 20 or 200 bagger, it makes up for the rest (a 10 bagger is a stock that increases 10 times in value). Look for 10 baggers, look for quality, and you’ll win out every time.
In case you don’t know who he is, Peter Lynch’s Fidelity Magellan fund (FMAGX) returned 29% on average, annually, during Lynch’s 13 years at the helm.
So, if you’d like to learn more about Peter Lynch’s style of investing, check out his book, One Up on Wall Street. It really is one of the best books on investing ever written.
http://csinvestor.com/common-sense-investing-accuracy-and-peter-lynchs-10-baggers/
I’ve been an investor since before college, and I’ve been a successful investor for almost as long. I talk to other investors, I do research, and I browse the online investing communities. And through all that, I’ve noticed that there is one similarity that you can see in all successful investors: They don’t have 100% accuracy.
My accuracy is around 75% at most, but thats it; and I’m considered an All-Star in the online investing communities. That means generally, 75% of the stocks I pick do better than the S&P. It also means that 25% of them won’t be winners. But, I do my due diligence, I stick to well managed companies that have fast earnings growth, relatively high insider ownership, low P/E for the industry, good returns, and the 7 out of 10 that do beat the S&P beat it by a lot. That’s the key. When you get into investing, you have to have thick skin, you can’t cut and run when a stock goes down and you can’t get discouraged when half of your stocks aren’t beating the market. That’s just how it goes.
Remember Peter Lynch’s theory on 10 baggers:
Say you pick 5 stocks, and you’ve done all the research you can and you’re sure these are solid companies. Well some of them might go down, but even if 4 of the 5 are losers, if you hit just one 10 or 20 or 200 bagger, it makes up for the rest (a 10 bagger is a stock that increases 10 times in value). Look for 10 baggers, look for quality, and you’ll win out every time.
In case you don’t know who he is, Peter Lynch’s Fidelity Magellan fund (FMAGX) returned 29% on average, annually, during Lynch’s 13 years at the helm.
So, if you’d like to learn more about Peter Lynch’s style of investing, check out his book, One Up on Wall Street. It really is one of the best books on investing ever written.
http://csinvestor.com/common-sense-investing-accuracy-and-peter-lynchs-10-baggers/
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