At the helm of Fidelity’s Magellan Fund for 13 years, mutual fund legend Peter Lynch transformed $US18 million in assets under management to more than $US14 billion.
Now Lynch is pretty much out of the game. He chose to manage his own money for his family and philanthropic causes as opposed to launching a hedge fund or something of the like.
Lynch gave Rose his “Three C’s” of investing — complacency, concern, and capitulation.
“Being complacent is the worst one,” Lynch says. “If you’re working hard, you can avoid it.”
When considering an investment, Lynch says, you have to ask yourself if it is still early for a company or if it has years of growth ahead. Using a baseball analogy, the trick is getting into a stock in the “first, second, third inning, not when they’re drawing up the line-up.”
Make sure to get your facts straight first and don’t rush. As an example, “You could have bought Walmart 10 years after they went public,” and still done very well, Lynch notes.
On what has changed in the market, Lynch highlighted the “computer-driven” nature of today’s high-frequency trading. “I think that’s a waste of time, it’s disruptive.”
Though, he did note the wealth of information online has been a help to investors. You don’t have to wait for the mail to see Nike’s inventory anymore, he joked.
Lynch, who was not able to short stocks at Magellan, said that “being right on the long side” is better.
“When you’re short you can only make 90%, when you’re long you can make tenfold,” he said.