The Financial markets provides various financial instruments which could be leveraged by the Firms and investors to raise the capital at a much lower cost. Given the dynamic nature of the markets, it is upon the investors to understand the market dynamics, get right set of tools for analyzing the behavior of the securities at various scenarios and make a wiser investment decision. As a beginner, the art of selecting a t https://npfinancials.com.au/viable investment could be overwhelming. However, treading on the path charted out by the well-known investors could help the beginners in mitigating the substantial risks and maximize the probability of gaining sustainable returns from the various investment avenues. We are here to present some of investing strategies adopted by Peter Lynch, who is widely known for reaping gains through his investment principles.
As a fund manager at Fidelity investments, Peter Lynch helmed the legendary Magellan Fund which was known for its stellar performance of achieving an average of 29% of annual return. Under the reign of Peter Lynch, Magellan Fund turned out to be one of the best performing mutual funds. Apart from Magellan fund, Peter Lynch was able to identify few other stocks which earned significant profits. Let’s have a look at the key investment tenets proposed by Peter Lynch.
Principle 1: Look beyond the visible
“During the gold rush, most would-be miners lost money, but the people who sold them picks, shovels, tents, and blue-jeans made a nice profit. Today, you can look for non-internet companies that indirectly benefit from internet traffic or you can invest in manufacturers of switches and related gizmos that keep the traffic moving.”
– Peter Lynch
This principle emphasizes that an anecdotal evidence and clear-cut observations must supplement the investment analysis but shouldn’t be the sole basis upon which the investment decisions are made. A well-known example which stands as a proof to this tenet is the Dotcom bubble. During 1990s, the internet and technology industry witnessed a boom as a result of which the technology stocks were growing multifold and investors dismissed the idea of losing all the