Value Investing

Peter Lynch

You have to say to yourself, “If I’m right, how much am I going to make? If I’m wrong, how much am I going to lose?” That’s the risk-reward ratio.

There’s no such thing as a worry-free investment. The trick is to separate the valid worries from the idle worries, and then check the worries against the facts.

Understand the nature of the companies you own and the specific reasons for holding the stock.

People who succeed in the stock market also accept periodic losses, setbacks, and unexpected occurrences.

Calamitous drops do not scare them out of the game.

The more cash that builds up in the treasury, the greater the pressure to piss it away.

This is one of the keys to successful investing: focus on the companies, not on the stocks.

Stand by your stocks as long as the fundamental story of the company hasn’t changed.

If you’re in the market, you have to know there’s going to be declines.

Buy only what you understand, believe in, and intend to stick with – even when others are chasing the next miracle.

Every time you have one of these recessions, there are always groups who say it is different this time. We won’t get out of this one.

Average investors can become experts in their own field and can pick winning stocks as effectively as Wall Street professionals by doing just a little research.

Time is on your side when you own shares of superior companies.

Job insecurity has been a problem for as long as people have depended on a paycheck.

It’s human nature to keep doing something as long as it’s pleasurable and you can succeed at it, which is why the world population continues to double every 40 years.

Stocks do well for a reason and do poorly for a reason. Make sure you know the reasons.

If you can’t find any companies that you think are attractive, put your money in the bank until you discover some.

All else being equal, invest in the company with the fewest color photographs in the annual report.

Long-term bonds can be almost as volatile as stocks. They have their own corrections.

The key to making money in stocks is not to get scared out of them.

A lot of my stocks don’t work. The beauty of the stock market is that if you are wrong, if you put $1,000 up, all you lose is $1,000. I have proven that many times.

When you sell in desperation, you always sell cheap.

The trick is not to learn to trust your gut feelings, but rather to discipline yourself to ignore them.

You remind yourself that nobody on his deathbed ever said, ‘I’d wish I’d spent more time at the office.’

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