How to Pick Stocks Like Peter Lynch
Peter Lynch took the helm of the Fidelity Magellan fund in 1977--and turned a $20 million portfolio into one of the biggest mutual funds in existence--averaging a whopping 13.4 percent per year. Here I will offer tips on how you can enjoy some of the same results using his methods.
Other People Are Reading
Instructions
-
-
1
Understand Peter Lynch's philosophy. He strongly espoused investing only in things you understand; do your homework on your picks and then hold them for the long term.
-
2
Use your common sense when you begin looking for stocks. Focus on stocks of companies that deal in your profession or area of expertise. Also consider buying the stocks of companies that make products you use or other very popular products.
-
-
3
Follow up any potential picks you make with solid research. There are many sources you can use, such as Bloomberg, Morningstar or Standard and Poor's, that can provide you with a wealth of information on most publicly traded companies.
-
4
Look for percentage of sales of a product for a company you are investigating because of a product they offer. Check the company's PEG ratio; a ratio of 2 or more means that strong growth has already been built into the price. Companies with strong cash positions and ratios of debt to equity that are below average may post strong returns.
-
5
Be prepared to hold your stocks for the long term. This means when the market goes up and also when it tanks. Don't let emotions get in the way of your long-term goals. Peter Lynch never believed in trying to time the market.
-
1
