You may not have heard of him, but way back in the ’80s there was this silver-haired investing genius named Peter Lynch.
He used to run something called the Fidelity Magellan Fund. That’s this giant mutual fund that turned something like $20 million into—get this—a whopping $14 billion in about 13 years. You read it right: from millions to billions.
But how did he do it? Sure, he looked at the numbers and sat through a lot of company presentations. But he did something different, too. And something all the other fund managers of his day were missing out on: he had a real, common-sense way of making his picks. It’s all right here in what he said:
“If you stay half-alert, you can pick the spectacular performers right from your place of business or out of the neighborhood shopping mall, and long before Wall Street discovers them."
Learn to invest by using what you know
So can you really become a bit of a Peter Lynch? Say you’re a fashionista,a great chef, or are really knowledgeable about cars. You already have what you need to get started.
The Lynch approach is based on one idea: Start with what you know. You may know more than Wall Street does about businesses you see day in and day out. Or industries you might happen to work in. Or industries you might happen to be passionate about.
You’re more likely to come out ahead if you know the ins and outs about the business before they start affecting the financials. That’s one of the secrets to investing, and why WeSeed can help.
Here’s what you need to know
- Good businesses are everywhere: Know it or not, the next Starbucks could be happening all around you. You just have to look. They may be at the shopping mall or on your street corner. You may work there. You may crave the product (iPod, anyone?).
- You have power: Like you’ve never had before, because of the Internet. You can learn more about a business faster than ever before.
- It doesn’t stop with “gee, I love the coffee”: you still must learn about the business—Lynch was adamant about that. What makes it tick, what makes it prosper, what will make it “have legs” in the marketplace. You gotta know your stuff.
Now, Let’s Do It!
- Stop, look, and listen. The good businesses are there — learn to keep your eyes and ears open to find them.
- Tune into all resources. Not just the financial media and Internet, but anybody you know — or who you haven’t met before — with insight. Ask lots of questions.
- Find the “aha” company, then follow the story. Become an expert. When something like Starbucks tickles your investing taste buds, don’t stop there. Find out what makes it tick. Visit again and again. See if it’s always busy. See what others have to say about it. Dig up the numbers. Pretty soon, you’ll be One Up on Wall Street — the title of Lynch’s 1989 bestseller, which is still relevant today.
Jennifer Openshaw, author of " The Millionaire Zone," is co-founder and president of WeSeed.com, whose mission is to help everyday people use what they know and love to learn about stocks, make smarter money decisions and ultimately take control of their financial destinies. You can reach her at jopenshaw@weseed.com.
The views expressed here are those of the author and do not necessarily reflect the positions of LendingTree, LLC.
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