The Peter Lynch "Rules" That People Misunderstand

"Peter Lynch is a legendary value investor with the track record to show for it. Indeed, if you're a young, beginning investor, you're probably unaware of the man's incredibly hot run his fund enjoyed through the late-1970s and the entirety of the 1980s. Through the baker's dozen years as manager of Fidelity's Magellan fund, he landed a nearly 30% annualized return. That's not just impressive - it's one of the greatest long-term fund performances in history."

"Though various hedge fund managers may top markets in any given two, four, or even five-year timespan, it's very difficult to score market-beating returns for more than a decade. What's more, Lynch not only topped the market over the lengthy timespan, but he also managed a return that's nearly three times the market's long-term average (the S&P 500 can be expected to average 9%, maybe 10% returns in any given year)."

Peter Lynch achieved nearly 30% annualized returns over thirteen years managing Fidelity's Magellan fund. Sustained, market-beating returns for over a decade are rare, and Lynch's results equaled roughly three times the S&P 500's long-term average of about 9–10% per year. Plenty of reading material exists, including One Up on Wall Street, which is recommended for new DIY investors. Two specific pieces of Lynch's advice are frequently misinterpreted by novice investors. Such advice is easy to understand but difficult to apply when navigating turbulent markets, macro headwinds, and emotional reactions to declines like an 8% Nasdaq drop.

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