What Can Investors Learn From Peter Lynch?

Should you trust your gut?

The other day I talked about Peter Lynch, the longtime manager of Fidelity’s Magellan Fund. Under Lynch’s management, Magellan was the top performer among its peers.

In his book One Up on Wall Street, Lynch wrote:

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

This is a key point. When it comes to investments, it’s easy to generate narratives—that is, to tell stories. That’s because there are so many variables that can impact any given investment in the future. Depending on one’s viewpoint, it’s easy to put more weight on some factors rather than others. This is only natural and to be expected. It’s only with the benefit of hindsight, in fact, that anyone knows which factors ended up being the ones that mattered most. For that reason, I think Lynch makes a good point here.