Quotes from Peter Lynch

I'm always on the lookout for great companies in lousy industries. A great industry that's growing fast, such as computers or medical technology, attracts too much attention and too many competitors.

If you're considering a stock on the strength of some specific product that a company makes, the first thing to find out is: What effect will the success of the product have on the company's bottom line?

Once I've established the size of the company relative to others in a particular industry, next I place it into one of six general categories: slow growers, stalwarts, fast growers, cyclicals, asset plays, and turnarounds.

Actually Wall Street thinks just as the Greeks did. The early Greeks used to sit around for days and debate how many teeth a horse has. They thought they could figure it out by just sitting there, instead of checking the horse. A lot of investors sit around and debate whether a stock is going up, as if the financial muse will give them the answer, instead of checking the company.

installed central air conditioning, bought big refrigerator/

A successful stockpicker has the same relationship with a drop in the market as a Minnesotan has with freezing weather. You know it's coming, and you're ready to ride it out, and when your favorite stocks go down with the rest, you jump at the chance to buy more.

and magazines and listen to the same economists.

It's best to divide your money among three or four types of stock funds (growth, value, emerging growth, etc.) so you'll always have some money invested in the most profitable sector of the market.

This is a crucial safeguard of our capitalist system, because if shareholders could be sued whenever a company made a mistake, people like you and me would be afraid to buy shares and become investors.

Never invest in any company before you've done the homework on the company's earnings prospects, financial condition, competitive position, plans for expansion, and so forth.

This is a crucial safeguard of our capitalist system, because if shareholders could be sued whenever a company made a mistake, people like you and me would be afraid to buy shares and become investors. Why would we want to run the risk of being held responsible for another big oil spill, or a rat hair in a hamburger, or the endless variety of mishaps that occur in business every day? Without limited liability, nobody would want to buy a single share of stock.

When we say this, we're assuming you are a long-term investor who is determined to stick with stocks no matter what.

In general, if you polled all the doctors, I'd bet only a small percentage would turn out to be invested in medical stocks, and more would be invested in oil; and if you polled the shoe-store owners, more would be invested in aerospace than in shoes, while the aerospace engineers are more likely to dabble in shoe stocks. Why it is that stock certificates, like grasses, are always greener in somebody else's pasture I'm not sure.

This taught me not only that it's difficult to predict markets, but also that small investors tend to be pessimistic and optimistic at precisely the wrong times, so it's self-defeating to try to invest in good markets and get out of bad ones.

By putting your stocks into categories you'll have a better idea of what to expect from them.

Consider the size of a company if you expect it to profit from a specific product.

If you can't figure out what category your stocks are in, then ask your broker. If a broker recommended the stocks in the first place, then you definitely ought to ask, because how else are you to know what you're looking for? Are you looking for slow growth, fast growth, recession protection, a turnaround, a cyclical bounce, or assets?

the stock market demands conviction as surely as it victimizes the unconvinced.

That's not to say there's no such thing as an overvalued market, but there's no point worrying about it.

As far back as 1602, Dutch people were buying shares in the United Dutch East India Company. This was the world's first popular stock, sold on the world's first popular stock exchange, which operated from a bridge over the Amstel River in Amsterdam. Crowds of eager investors gathered there, trying to get the attention of a stockbroker, and when their pushing and shoving got out of hand, police were called in to restore the peace.

A person who owns property and has a stake in the enterprise is likely to work harder and feel happier and do a better job than a person who doesn't.

Corporate profits are up fifty-five-fold since World War II, and the stock market is up sixtyfold. Four wars, nine recessions, eight presidents, and one impeachment didn't change that.

The lesson here is: don't spend a lot of time poring over the past performance charts. That's not to say you shouldn't pick a fund with a good long-term record. But it's better to stick with a steady and consistent performer than to move in and out of funds, trying to catch the waves. Another major issue is what happens to a

My advice for the next decade: Keep on the lookout for tomorrow's big baggers. You're likely to find one.