YouSaid · the spoken record

Peter Lynch

lines on the record: 67
first: 2024-09-08
most recent: 2024-09-08
sittings or episodes: 1
sources: podcast

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“Look into a specific business and just find out if their products are flying off the shelf. Are they so busy that they now have to establish a backlog in order to meet customer demand? Or maybe the business is forced to increase its capacity by expanding its manufacturing? These are all honest signals that a business is improving rather than just looking at the stock price. And these are really the signals that you want to be focusing on when thinking about new investments rather than pontificating on what AI stocks are going to see the largest increase in a stock price. Peter had some other classic stories about the macro environment and how confusing it could be. For instance, he mentioned that the Cuban missile crisis was the closest that the world ever got towards nuclear war. Peter was scared for his family, himself, and his country. And yet on the same day as the crisis, the stock market fell a mere three percent, a number that is a lot lower than you'd expect. Given the real possibility of a nuclear event. Then he notes that 71 months later, President”
2024-09-08 · We Study Billionaires · TIP658: Peter Lynch’s Guide to Investing in Your Expertise w/ Kyle Grieve · IDENTIFIED FROM THE TRANSCRIPT
“In chatting with a dentist about plaque than Peter about stocks, that would probably be a really good sign that the market was about to turn up. People love to talk, and a lot of that is just that talk. So how do we separate the noise from the facts we need in order to make better decisions? Lynch says that logic really goes a long way to helping identify the illogic of Wall Street. Here he says Wall Street thinks just as the Greeks did. The early Greeks used to sit around for days and debate how many teeth a horse had. They thought they could figure it out just by sitting there instead of just going and checking the horse. A lot of investors sit around and debate whether a stock is going up as if the financial news will give them the answer instead of just checking the company. Now to me this just screams that you should be checking the fundamentals of the business regularly much more often than you should be checking the stock price. Instead of water cooler talk where people are talking about which industry is going to be the next hot sector to rotate into,”
2024-09-08 · We Study Billionaires · TIP658: Peter Lynch’s Guide to Investing in Your Expertise w/ Kyle Grieve · IDENTIFIED FROM THE TRANSCRIPT
“Make money in stocks, or else I wouldn't have made any money. I've sat right there at my quotron through some of the most terrible drops, and I couldn't have figured them out beforehand if my life depended on it. So what about the connections between the market and the general economy? Economic booms and busts and interest rates. To this, Lynch would say there is definitely a correlation between something like interest rates and the stock market. The problem is that nobody can predict what interest rates will be in the future. So any potential information that you get from attempting to predict that is going to be as useful as flipping a coin. Lynch points out that there are 60,000 economists in the US and that they could only forecast recessions and interest rates twice in a row. They'd all be millionaires. But they aren't. And that should tell you something. Now, instead of market timing, Pierre observed what people were talking about at dinner parties. He mentioned that when 10 people were more interested.”
2024-09-08 · We Study Billionaires · TIP658: Peter Lynch’s Guide to Investing in Your Expertise w/ Kyle Grieve · IDENTIFIED FROM THE TRANSCRIPT
“To invest in good markets and exit bad ones. In a study called Mind the Gap, they basically had a 10-year sample size that ended it in 2023. And what they show was that fund investors earned a 6.3% per year dollar weighted return over 10 years ended December 31st, 2023, while their fund holdings earned about 7.3%. Now this was because they mistimed buys and sells and they decreased their time in the market. Now whether you own index funds or individual stocks, you're better off having your cash invested rather than trying to buy in at a future price that you hope will be cheaper than it is currently. Now doing this sounds good in practice, but as these 10 year studies show, it just doesn't work in reality because you just have an inability to time them properly and your emotions do things that make you do silly things at the wrong times. But Lynn shares some really good news about our inability to time the markets. You don't have to be able to predict the stock market.”
2024-09-08 · We Study Billionaires · TIP658: Peter Lynch’s Guide to Investing in Your Expertise w/ Kyle Grieve · IDENTIFIED FROM THE TRANSCRIPT
“Principles that have been around now for over a century. When I speak with other investors, I often find myself in awe of the number of mature businesses that they have in their portfolios. Even when they seem to be telling me that they're in growth mode. As we'll go over more later, slow growers or stalwarts are businesses that probably have the same chance of underperforming in the market as they do overperforming it. So if you aim to make outsized returns, you are kind of misaligned if you own too many of these businesses. Now let's get back to one of the primary mistakes investors try to clone from the smart money, which is trying to time the market. Timing the market has existed since the inception of the market and will continue until the stock market ends. Speculation is simply a part of human nature. To fight the folly of market timing, there are a few things that you must first understand. Lynch made the excellent point that investors tend to be pessimistic and optimistic at precisely the wrong times. And because of this, it's simply pointless to attempt”
2024-09-08 · We Study Billionaires · TIP658: Peter Lynch’s Guide to Investing in Your Expertise w/ Kyle Grieve · IDENTIFIED FROM THE TRANSCRIPT
“So here's seven of them one, trying to beat the index every single quarter. Two, trying to time the market. Three, buying businesses with momentum. Four, going short. Five, using leverage. Six, pigeonholing yourself into exclusively buying into high market cap businesses. And seven, buying overly complicated financial derivatives. Now, this is why one of my guardrails is to never watch financial news. I know I'll probably generate some type of bias if I do. And to combat this, I just simply don't take part by not watching it. And this isn't just a saying I literally never watch it. I couldn't even tell you which channel it was on if you asked me. Now investing is a game where you're better off learning timeless principles from investors with worthy track records and putting those principles into action. If you observe Wall Street long enough, you'll realize very few follow the most common and valuable investment.”
2024-09-08 · We Study Billionaires · TIP658: Peter Lynch’s Guide to Investing in Your Expertise w/ Kyle Grieve · IDENTIFIED FROM THE TRANSCRIPT
“Lose when you're wrong. He is directly talking about frequency and magnitude here. If you had one big winner, it can really just carry your investing for almost an entire lifetime. But by the same token, if you put all your money into a stock that goes to zero, you have decimated your ability to make money into the future. So make sure that you are taking very good care of your winners and avoid making mistakes that can really sabotage your entire portfolio. Now, what is one way to blow up your entire portfolio? using leverage. Don't bother, the risk is just too high. One of Lynch's legendary quotes is dumb money is only dumb when it listens to the smart money. I love this quote for just so many reasons as I've gained more experience in investing. It makes just more and more sense. One of the biggest investment problems is the lemming-like behavior of retail investors who just go out and copy hedge funds. Now, there are actions that hedge funds make that I personally think are pretty pointless and don't bother costing.”
2024-09-08 · We Study Billionaires · TIP658: Peter Lynch’s Guide to Investing in Your Expertise w/ Kyle Grieve · IDENTIFIED FROM THE TRANSCRIPT
“But paying an infinite price will often end in misery. Now, let's be honest about investing. There are zero investors who make a profit on every single investment that they make. For every winner a good investor has, they have a dud that moves nowhere, or loses money. But the fascinating part about investing is that even though you won't be right 100% of the time, you can still be wildly successful. Peter mentions that he's observed that you only really need six out of ten winners in a portfolio to produce satisfactory returns. Now there are very few jobs in this world where you can be unsuccessful 40% of the time and still be considered competent, but investing is one of them. Now the key here is to think of two profound words, which are frequency and magnitude. You'll have a frequency of how often you're right or wrong. But the frequency isn't actually what matters most. It's the magnitude of what you make when you win and what you lose when you lose that matters the most. George Soros said it's not whether you're right or wrong, but how much you make when you're right and how much you”
2024-09-08 · We Study Billionaires · TIP658: Peter Lynch’s Guide to Investing in Your Expertise w/ Kyle Grieve · IDENTIFIED FROM THE TRANSCRIPT
“EDS deserved an even higher evaluation of 1,000 times earnings. Now, the interesting thing about EDS is that the business EDS continued flourishing. Lynch writes, in the years that followed, EDS the company performed very well. The earnings and sales grew dramatically and everything it did was a whopping success. EDS the stock was another story. In the following years, the price”
2024-09-08 · We Study Billionaires · TIP658: Peter Lynch’s Guide to Investing in Your Expertise w/ Kyle Grieve · IDENTIFIED FROM THE TRANSCRIPT
“In that case, they may have simply taken a pass and avoided the 90% trip on the way down. Now there's a mental model that I've been thinking about a lot lately that I've coined as covert cyclicality. It just means that we fail to see the embedded cyclicality of a business and make mistakes because of it. Did investors really expect Zoom to continue growing revenue at 156% per year for multiple years into the future? It's just not a sustainable growth rate. But if you use that growth rate, perhaps you could have actually justified paying those nosebleed valuations for the business. Another great example Lynch goes over is that of electronic data systems. This is a hot stock in the late 1960s. But when Peter saw a broker port on the business, his jaw dropped. It had a PE of 500. This meant it would take five centuries to make back your investment if EDS earnings remained constant. The even crazier part about this was that the analyst writing about it suggested that the PE was actually cheap and that”
2024-09-08 · We Study Billionaires · TIP658: Peter Lynch’s Guide to Investing in Your Expertise w/ Kyle Grieve · IDENTIFIED FROM THE TRANSCRIPT
“Is the latter. Since it's all time high, it has been at a 90% drawdown. The market appraises business at a 1600 times EV to EBIT multiple. That's right, 1600 times. Today, it's 15. Now this is a good seg into some cautionary advice for investing that Peter Lynch writes about. While you can like a product and even have intimate knowledge of a product, this isn't really enough information just to own the stock. Lynch cautions to never invest in a business until you do your own homework on things like company earnings. financial health, positioning versus competitors, plans for growth, management, and so forth. Returning to the Zoom example, many investors had used Zoom pretty extensively during the pandemic and probably had a great experience using the product. However, as Lynch said, that is insufficient information to buy the sock. A quick analysis of Zoom may have identified competitors such as Google Meets, Microsoft Teams, or WebEx and failed to see the competitive advantage that Zoom had versus these tech giants.”
2024-09-08 · We Study Billionaires · TIP658: Peter Lynch’s Guide to Investing in Your Expertise w/ Kyle Grieve · IDENTIFIED FROM THE TRANSCRIPT
“Whether on Wall Street or your next door neighbor, invest in businesses whose products they barely understand. And then they wonder why they lose so much money in investments. This is one of the hard parts of investing. The interplay between fundamentals, price appreciation, momentum, and appraisal. For instance, you can have a business where the fundamentals can increase, price can skyrocket, generating even more momentum, but often the appraisal of the business becomes just too euphoric. Look at Zoom video. Revenue and operating income were exploding between 2020 and 2022. Revenue Kegger during this time was $156%, and operating income compounded annual growth rate at this time was a ridiculous $812%. So the fundamentals were increasing, and so was the stock price. But how well did investors understand the business? Were they buying it because they had insights into Zoom's competitive advantage? Or were they buying it because the stock price was going up?”
2024-09-08 · We Study Billionaires · TIP658: Peter Lynch’s Guide to Investing in Your Expertise w/ Kyle Grieve · IDENTIFIED FROM THE TRANSCRIPT
“Hedge funds who have access to billion dollar information such as satellite imagery of retail parking lots. The thought process here is that they can track foot traffic of their stores to get additional insights into a business that the general public just can't access. Now, while this is an interesting analytical tool, I can think of a pretty easy caveat. What about retailers inside of a mall? How does this analysis help you determine where they are going? Analysts in New York isn't going to understand how busy a store inside of a mall is going to be on the West Coast. And even if they could determine that, there are other barriers for larger investors that don't exist for retail investors, which we'll cover a little bit more later in this episode. Lynch takes further aim at Wall Street, saying that there is an unwritten rule on Wall Street. If you don't understand it, then put your life savings into it. Shun the enterprises around the corner, which can at least be observed, and seek out the one that manufactures an incomprehensible product. His point is that too many investors”
2024-09-08 · We Study Billionaires · TIP658: Peter Lynch’s Guide to Investing in Your Expertise w/ Kyle Grieve · IDENTIFIED FROM THE TRANSCRIPT
“Thematic sections, which I'll share with you today. The first section I want to discuss is the essence of the book, which is the importance of simplicity. Investing is not a game where being trendy and ahead of the curve is required in order to succeed. Peter Lynch points out that many great investors, including himself, are technophobes just like Warren Buffett. His advice is to buy what you know and understand. If you don't know or understand it, just don't buy it. You'll note that many of the examples he gives are very simple businesses. He talks about businesses like Dunkin' Donuts and Chrysler as businesses that he thinks that he can understand. When it comes to the internet back in the 90s, he admitted he didn't bother playing in that game because without any expert help from his wife or kids, he couldn't even find the web. Now this point about buying what you understand really is the essence of the book. I've shared this benefit before about being able to buy things that you really understand and I've gotten some pushback from other people who say that everyday investors just can't compete with billion dollar heads.”
2024-09-08 · We Study Billionaires · TIP658: Peter Lynch’s Guide to Investing in Your Expertise w/ Kyle Grieve · IDENTIFIED FROM THE TRANSCRIPT
“Welcome to the Investors Podcast. I'm your host, Kyle Greave, and today we'll be discussing One Up on Wall Street. One of the most practical books on investing ever written. There are only a few investing books that I recommend to people who want to learn about investing. And one up on Wall Street is always in my top five. Why is that? It's practical. It gives plenty of detailed examples and the information comes from a top-notch source, Peter Lynch, who has one of the most enviable track records in investing history. It's entertaining. Peter Lynch makes a traditionally dry subject like investing and adds his own humor and personality to make the book highly readable, funny, and relatable. Lastly, the advice is based on just sound and timeless investing principles. Even though the book was first published in 1989, it's still just as relevant today in 2024 as it was then. Now, even though the book is less than 300 pages, it's jam-packed with different investing information. So I've separated it into multiple things.”
2024-09-08 · We Study Billionaires · TIP658: Peter Lynch’s Guide to Investing in Your Expertise w/ Kyle Grieve · IDENTIFIED FROM THE TRANSCRIPT
“While Wall Street doesn't widely use this method, it was incredibly successful for Peter Lynch. Today, we'll cover topics like the importance of simplicity and understanding for investment success, why you can succeed in investing while being wrong often, cloning characteristics too many investors follow that should probably be avoided to improve investing success, the significant difference in analyzing large and small businesses, how to treat stock tips with caution to avoid risky investments, why separating your investments into subtypes can be a helpful investing tool, and a whole lot more. So if you're an investor looking to generate new ideas thoughtfully and intelligently, you won't want to miss this show. Now, let's get right into this week's episode.”
2024-09-08 · We Study Billionaires · TIP658: Peter Lynch’s Guide to Investing in Your Expertise w/ Kyle Grieve · IDENTIFIED FROM THE TRANSCRIPT
“Peter Lynch is among the most successful investors of all time, generating a whopping 29% compounded annual return over 13 years vastly outperforming the S&P 500 by a wide margin during that time spent. His book, Went Up on Wall Street, explains some of the most significant concepts that helped him reach such lofty success levels. The most powerful concept in the book was for retail investors. His insistence on using what you already know to help you generate stock ideas that Wall Street doesn't widely hold. He outlines numerous places to look to help you find ideas that you will already understand well. This flies in the face of much of the typical Wall Street dogma, which is buying whatever is hot, popular, and hard to understand. Peter Lynch was a master of turning over more rocks than other analysts and other fund managers, which was a significant reason for his success. His investing strategy required many tracking positions where he would buy all sorts of businesses in a particular industry, and then he'd increase his bets on the companies that he thought had competitive advantages over competitors.”
2024-09-08 · We Study Billionaires · TIP658: Peter Lynch’s Guide to Investing in Your Expertise w/ Kyle Grieve · IDENTIFIED FROM THE TRANSCRIPT