Investor Peter Lynch: his success story
Peter Lynch is an investment guru. During his 13 years at Fidelity Magellan, from 1977 to 1990, he achieved an annual profit of 29%. When he first took ownership of the company, he had only 20 million dollars as assets, but Lynch managed to increase that amount to 14 billion dollars in 13 years.
Born January 19, 1944, Lynch graduated from Boston College in 1965. Prior to his career, Lynch was an assistant to President Magellan, along with other investment bankers at Brae Burn Country Club. As a result of his friendship with the president, he was given the opportunity to undertake an internship at Fidelity Magellan in 1966.
As an intern, he worked as an analyst in the paper, chemical and publishing industries of Fidelity. From 1967 to 1969, Peter Lynch joined the army to take part in the Vietnam War. In 1969, after returning from the war, he was hired as a full-time employee at Fidelity Magellan and took over the investment sector in textiles, mining, metals and chemicals. In 1974, Lynch was appointed Director of Research at Fidelity, and three years later, in 1977, he became Manager of the Investment Fund.
As head of Fidelity Magellan, Peter Lynch worked hard, 6-7 days a week. With the help of two assistant researchers, he was able to invest in 1400 shares simultaneously. He personally met with various brokers, company managers and analysts to get first-hand information about the financial market. His hard work and ambition paid off with the historic growth of the company’s assets and an annual profit of 29.2% over 13 years.
Lynch retired in 1990 and has been actively involved in various humanitarian activities ever since. He believes that charity is a form of investment. Lynch is currently Vice Chairman of Fidelity Management & Research Co., which is an investment advisor to Fidelity Investments.
In addition, during his retirement, Lynch has written three books on investments with John Rothschild: One Up On Wall Street, Beating the Street, and Learn to Earn. By the way, the first two books were phenomenal successes and became bestsellers.
Investor Peter Lynch strategies
Peter Lynch firmly believes that individual investors have an advantage over professionals when it comes to business. Because, unlike the latter, individual investors have more freedom to act independently and explore the market without being bound by committees, trustees and bosses.
According to Lynch, this flexibility in action gives small investors an advantage because they have better ability and potential to identify profitable investments. He encourages a bottom-up approach to identifying opportunities. Peter offers a step-by-step search for options: first, get familiar with the company’s business and then do a fundamental analysis to test growth potential and profitability.
Local knowledge is what Lynch has preached and affirmed as a key element of a successful investment. His well-known deposit principle sounds like: “Invest in what you know” is still considered one of the most important lessons for any trader.
He has adopted a historic approach to investment. Lynch believed that the more people know about the company, its business, its products and its competitors, the more likely it is to find a good story that has a good chance of coming true. In addition, he also saw small or growing companies as a good place to invest because they have higher growth prospects than mature organizations.