What Was Peter Lynch's Advice for Individual Investors?

Why the "why" of an investment is so important

Peter Lynch was the manager of the Fidelity Magellan Fund from 1977 to 1990. His track record over the course of his tenure made Magellan the most successful fund in the industry. This is what Lynch had to say about investing:

“I am amazed at how many people own stocks, they would not be able to tell you why they own it. They couldn’t say in a minute or less why they own it. Actually, if you really press them, they’d say, ‘The reason I own this is the sucker is going up.’ And that’s the only reason. That’s the only reason they own it.”

Lynch was referring here specifically to stocks, but the message applies to any investment. Among the reasons I think this is good advice: The better you understand what you own, the easier it will be to stick with it through the inevitable ups and downs.

You can find Lynch’s entire talk on YouTube.