Peter Lynch: “Every day, I think the market is gonna go up.”
“In a stock, all you can lose is 100% — and I've done that,” said Lynch. “But your great mistakes are selling a good company [too soon] and then it doubles, triples, [or] quadruples.”
On June 28, 2002, legendary investor Peter Lynch appeared as the featured guest on Louis Rukeyser’s Wall Street to discuss money, markets, and mindset.
This was a deeply troubled time for investors. A deflating technology bubble had recently ravaged portfolios across America. Then, a cascade of corporate governance scandals shredded what remained of investor confidence. And, to top it all off, the post-9/11 specter of terrorism and war hung over everything.
Into this climate of fear stepped Lynch — calm, plain-spoken, and clear-eyed.
This is something that Warren Buffett had always understood. Moments of panic are precisely when a steady voice matters most. Not to cheerlead, but to offer perspective.
Here, Lynch does just that. Enjoy!
Peter Lynch is an authentic Hall of Fame investor. Under his management from May 1977 to May 1990, the Fidelity Magellan fund was the best-performing mutual fund in the world. Since then, he has stayed active as a writer, teacher, and philanthropist — while also serving as vice chairman of Fidelity Management & Research.
Louis Rukeyser: Many viewers want to know whether this market is totally different? Whether your old view that people should find, buy, and hold good stocks is no longer applicable? What do you think?
Peter Lynch: I think the same rules applied fifty years ago, applied five years ago, and [will] apply twenty years from now. First of all, you have to know what you own — whether it’s a fund or a stock — and you have to have a reason for it. You ought to be able to explain to an 11-year-old in two minutes or less why you own it. And “This sucker is going up!” is not a good reason. I’ve tried that one and it doesn’t work.
Speak to the question of trust. Marty [Zweig] just expressed considerable concern about it. I did at the opening. What do you think it’s going to take to repair it?
Time. This is really terrible, this week, what you mentioned about WorldCom and [Arthur] Andersen. These are real problems, but you just have to have faith. We’ve had this before. I think it’s going to take time to heal. This is very serious.
What do you think the antidote is to make sure we get rid of these abuses?
I think people will be punished for it. I think there will be surveillance and boards of directors are going to be more careful. What’s happened after we’ve had an incredible economic boom — a lot of easy money around — people push the envelope. It’s sad. You can’t legislate integrity.