Peter Lynch: how to follows his teachings
Published: 17 December 2020 by Andrew
Peter Lynch is one of those investors who knew when to cash out and go for the “good life”. Indeed, in 1990 he retired from his position as general manager of the Magellan Fund which he had taken over 13 years earlier.
The Magellano Fund was the best performing mutual fund between 1977 and 1990, with an annualized rate of return of 29.2%.
If we had invested $ 10,000 the day Peter Lynch took over the fund and sold it when he left, we would now have over $ 280,000 available.
In this guide we will not only describe the financial path of this great investor but we will also show you how to copy what great traders do, using a revolutionary tool: eToro Copy Trading.
Who is Peter Lynch?
Peter Lynch was born on January 19, 1944 in Newton, Massachusetts and in his childhood, after the death of his father, he did numerous jobs to help support the family.
In 1965 he graduated from Boston College and some financial transactions helped him to keep his studies. 3 years after graduation he obtained a Masters in Business administration.
Peter Lynch is considered one of the most successful investors of all time, a firm believer in value investing like Warren Buffett, in 1977 he became the manager of a legendary fund: the Magellan Fund.
His investment style has been described as adaptive to the prevailing economic environment, but Lynch has always stressed that you need to be able to understand what you have to generate profit.
Learn from expert traders
It would be nice to learn from more experienced traders, famous traders seem to have an edge and know the real secrets of trading, but is this really the case?
Success in financial investments is given by a number of factors: training, tenacity, character, foresight, patience, etc.
But how do you learn the techniques and strategies of the most profitable traders in the world?
eToro studied a method to make it possible, not only that, in addition to learning you can also get the same returns as the traders you are “following”. But how is it done?
We use a patented tool by eToro, Copy Trading. Let’s see what it’s about.
In practice, Copy Trading allows you to copy all the financial transactions of the best traders operating on the eToro platform (which has over 10 million subscribers).Register for free on eToro and try Copy Trading
Let’s take an example to understand how it works. For example, if the trader X who operates on eToro seems capable, he has been obtaining constant returns for a couple of years and does not risk much.
With one click you can copy his future operations automatically and for free.
Thanks to Copy Trading you will get two results:
- You can learn the strategies used by following its operation directly from your account
- You will get the same returns (in proportion to what you have invested in Trader X) of the chosen Trader
It is possible to follow up to ten successful traders with Copy Trading and we advise you to diversify, it is the best way to make stable and constant profits.
By copying several traders, when one of them makes a mistake (it happens even to the best) there will be the others to compensate for the losses.
Peter Lynch used to say that a good trader is right 6 times out of 10, nobody gets to 9 out of 10!
Below we show you some successful traders that you could copy on eToro, they are not suggestions but just examples:
Click here anchor choose which trader to copy
Peter Lynch: Books
There is another way to learn the trading strategies followed by Peter Lynch in his career: Read his books.
Let’s take a step back and examine the career that led him to write finance books.
Lynch’s interest in the stock market appears to have originated on the golf course, when at 11 he worked as a caddy and listened to the conversations of the great players.
After graduation, Peter Lynch started working at Fidelity Investments, where he had previously done internships as a student.
His career within Fidelity has been rapid and dazzling. In 1977 he was put at the helm of the Magellan Fund which at the time had assets of 18 million dollars, after 13 years with Peter Lynch at the helm, the famous Fund had exceeded 14 billion dollars!
After closing with the Magellan Fund, Lynch began writing books on investments, unaware that they would become classics.
Among the most important are: One Up on Wall Street (1989) and Beating the Street (1994).
Best Trading Course
If, in addition to Peter Lynch’s books, which certainly deserve your attention, you are looking for a real Trading Course that teaches you the rules behind financial investments, we have a suggestion for you.
ForexTB, one of the most successful brokers of recent times, has created an ebook on trading, which explains in a very effective way how to invest and how to extricate between technical analysis and fundamental analysis.
These notions are complex and the merit of the Trading Course created by ForexTB is to have made them “digestible” for anyone.
This pdf is free and in fact it is the most downloaded Basic Trading Course in the world!
If you want to become a trader and achieve success you need the basics and this course can give you for free, here is the link to download it:Download the Trading Course for free
Peter Lynch Portfolio
Many would like to know about Peter Lynch’s portfolio but in reality, not being an investor currently at the helm of a fund, we don’t know exactly what his investments are.
However, we can retrace his career to understand what were the investments that made him famous and contributed to his rise.
One of Lynch’s first successful investments was in an aviation company called Flying Tiger, which helped him pay for graduate school.
This first investment gave birth to his philosophy which has then accompanied him throughout his career. Its most famous investment principle is “Invest in what you know”, which popularizes the economic concept of “knowing what you invest in”.
The rest of the investments, including all those made as general manager of the Magellano Fund, have always been based on in-depth knowledge of the securities to be purchased.
Follow the advice of an expert
We have seen how to learn by copying the techniques of the most famous traders, how to improve our training thanks to the books of Peter Lynch and the Trading Course that we have proposed, but this is not enough.
At least at the beginning of your career as a trader, it is important to have a real guide, an expert consultant who can explain the first steps over the phone, or correct any errors you have been carrying around for some time.
Trade.com, an online broker of undoubted reliability has tried to offer this valuable advice for free, through a dedicated manager account that will be assigned to you when you sign up to the platform.
Registration on Trade.com is free, the minimum deposit required is only € 100 and in a few minutes you can get the advice of an expert and start investing small amounts, a few euros in each operation, without risking too much.Click here to sign up for free
While following the advice of the consultant assigned to you, you can download a Trading Course created by this Broker. It is an ebook that lays the foundations of technical analysis and is very useful as you take your first steps into the world of investments.
You can download the course for free from the link below:Download the free course by clicking here
Peter Lynch quotes
Peter Lynch also became famous for some of the phrases he uttered or wrote in his books, here are the 10 most representative of the great investor’s thinking:
- Investing is a fun thing
- There seems to be an unwritten rule on Wall Street: If you don’t understand it, then put your life savings into it
- Investing without research is like playing poker without looking at the cards
- It would be great if we could avoid the myth of going out at the perfect time
- In this activity, if you are good, you are right six times out of ten. It has never happened to be right nine times out of ten
- During the gold rush, most would-be miners lost their money, but the people who, more intelligently, sold them the shovels, buckets, and blue jeans they used to work, instead, made a great deal of money. nice profit
- Recessions will come and you will have stock market falls. If you don’t understand what is about to happen, then you are not ready and you will have no results
- Behind every action there is a company: find out what they are doing
- The real key to making money with stocks is to not be afraid of them
- Investing in stocks is an art, not a science and people who have been trained to strictly quantify everything have a big disadvantage
Peter Lynch Heritage
Boston Magazine once estimated Peter Lynch’s net wealth at $ 352 million but in reality, just like his current investment portfolio, this great trader’s net worth is also unknown.
But there is not only money, if as assets we also mean what Peter Lynch has left for future generations of traders, the value is priceless.
Lynch is credited with inventing the Price-to-Earnings Growth Ratio (PEG), which helps investors determine if a stock is inexpensive given its growth potential, along with other methods of valuing stocks, a great deal. appreciated by investors who look at the value.
Lynch believes that individual investors can achieve good results by investing in what they know and by knowing a company, its business model and its fundamentals.
Lynch believes in long-term investing and in choosing companies whose assets are undervalued on Wall Street. It also believes that companies with historically below average P / E ratios for their industry have the potential to perform well.
Outside of his real estate properties and a small portfolio he created for his daughter when she was four, there is very little public information about Lynch’s private investments. However, he still works with Fidelity Investments as a consultant, this notoriously family-owned company always relies on his advice.
Peter Lynch: Philanthropy
Like many other successful traders, Peter Lynch has also dedicated himself to give some of the fortune he has accumulated over the years.
Lynch is a quiet but very active philanthropist, and his efforts have mostly focused on the Lynch Foundation.
Launched in 1988, the Lynch Foundation has distributed nearly $ 130 million over the years.
Peter and Carolyn (his wife and co-founder of the Lynch Foundation) made headlines in February 1999 when they donated more than $ 10 million to Boston College, the largest single gift in the school’s history.
When asked to comment on the donation he said:
Looking back, I was damn lucky. I won the lottery. I’m just trying to give other kids the same opportunities.
Looking back over Peter Lynch’s life and professional career, one immediately sees that he is not only one of the greatest investors in the history of Wall Street but also an ethically correct man.
As we have explained in this guide, Lynch is not a speculator in the derogatory sense of the term but a true investor. A trader who supports and believes in the companies in which he invests, who evaluates the fundamentals and aims to know these companies in depth.
In our guide, in addition to explaining Peter Lynch’s philosophy, we have given you tips to learn from the most experienced traders with eToro Copy Trading, to improve your training with the ForexTB Trading Course and to follow the advice of consultants by Trade.com.
The brokers that we have proposed, allow you to access Demo accounts, ideal for practicing at zero risk, start from these, below you will find the links to register for free:
- Access the eToro Demo account for free by clicking here
- Sign up on ForexTB and log into your Demo account by clicking here
- Register on Trade.com and try the Demo account by clicking here
Peter Lynch is one of the largest investors in history. With the Magellano Fund it has achieved an average return of 29.2% / year for 13 consecutive years.
Invest in what you know. In the guide you will find the 10 most famous phrases of Peter Lynch.
According to a calculation by Boston Magazine, $ 352 million, but that’s approximate.
First you need to study, which is why the ForexTB Trading Course is an excellent starting point.