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The legendary investor Peter. Lynch Peter Lynch (2)

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The legendary investor Peter. Lynch Peter Lynch (2)


There are many opinions on why legendary investor Peter Lynch chose to retire at a high time. As for the real reason, he said this…

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Legendary Investor Peter Lynch (1)

Dominate Wall Street

In 1969, Lynch came to Fidelity after graduation and officially became a staff member of the company. From his initial career as a metals commodities analyst to being promoted to director of research at Fidelity a few years later, Lynch gradually had access to the forefront of the securities market. In addition to constantly visiting companies, collecting intelligence, and picking out the most promising investment targets, he also pays attention to matching his judgment results with practice, laying a good foundation for future real practice. Eight years later, Lynch was named fund manager of Fidelity’s Magellan Fund, thanks to a job well done. For Lynch, this is a promotion and a challenge. On the one hand, Lynch can finally face the market directly, but on the other hand, there are many funds under Fidelity. If you want to stand out and make some achievements, you must put in more hard work and have more ideas. .

For the sake of performance, Lynch became a workaholic, he drove to the office at 6:15 every day and came home at 7:15 at night, in addition to reading files several feet thick, he met a company for lunch every day, and listened to 200 agents a day He and his assistants also check 2,000 companies every month. He visits 40 to 50 companies every month, five to six hundred companies a year, even if it is small, he visits at least 200 companies a year, reads 700 annual reports, and even pays attention to his favorite companies when shopping with his wife and daughter. When my wife was on vacation, she came across a company related to her investment nearby, and she also went to investigate at any time. When he is not reading or visiting, he will be on the phone for hours and dozens of hours to learn about the state of the company and the latest developments in the investment field from all aspects. It can be said that in addition to talent is hard work.

At that time, Peter Lynch was not favored by Fidelity. The white-haired young man focused on selecting small and medium-sized growth stocks, which was completely different from the “Pretty 50” in the market at that time. And when Peter Lynch first took over, he decided not to accept new external investors, and the initial investment was mainly stock funds. There are many old stocks in the combined fund account that have been deeply trapped. He believes that even if these stocks rebound, they will not have excess returns, and he must not wait for the market to drive the stocks in his hands to rise. One month after taking office, he cleared all the old stocks and replaced them with companies with higher growth potential such as financial insurance, cultural media and so on.

Ten months later, the Dow is down 17.6% and the S&P is down 9.4%, while the Magellan Fund’s net worth has risen by more than 20%. In 1979, the S&P rose 18.4% while the Magellan Fund’s net worth rose by a massive 51%.

Since then, Magellan Fund has maintained a high net value growth rate for more than ten years. In 1981, the fund was reopened to external investors. In 1986, the fund scale exceeded 5 billion US dollars. In August 1987, the management scale increased to 10 billion US dollars. This year’s “Black Monday” stock market crashed, and Magellan Funds suffered heavy losses. However, under Peter Lynch’s “gold finger” trader, he accurately placed a heavy position on growth stocks after the stock market crash in 1987, and the fund’s performance was “reborn after death.” By the time Lynch retired in 1990, the size of the fund had climbed to US$14 billion, with more than 1 million holders, making it the largest stock fund in the world at that time, with an annualized return of 29% for 13 years of management.

The figure below shows the fund’s stage returns

Retirement

In 1990, the assets of the Magellan Fund reached 14 billion US dollars, and Lynch reached the peak of his career. At this time, Peter Lynch chose to retire. His autobiography states:

On May 31, 1990, with a “click”, I turned off the stock market quotation machine in front of me and walked out of the Magellan Funds office. I have worked here for 13 years and have bought over 15,000 stocks. Although I managed the Magellan Fund, which is equivalent to the gross national product of the entire country of Ecuador, I enjoyed the honor and glory, but it also cost me a personal life.

I couldn’t have the blissful time I had with my family so often, and the joy of watching my children grow up every day. The kids grow up and change so fast, every week, they have to introduce themselves to me almost every weekend, so that my dad, who is busy investing but doesn’t touch the house at all, can recognize who is who. When you start mixing Freddie Mac, Sallie Mae, Fannie Mae with the names of your children, when you can remember 2,000 stock codes but When you can’t remember the birthdays of your family’s children, chances are you’ve become a workaholic, too caught up in your work to get out of it.

By 1989, the stock market crash that happened in 1987 had long since become a thing of the past, and the stock market was moving forward steadily again. My wife and daughters Mary, Anne and Beth threw a birthday party to celebrate my 46th birthday. Halfway through the birthday party, my heart skipped a beat. It suddenly occurred to me that my father died when he was 46 years old. When you realize that you have outlived your parents, you will feel from the bottom of your heart that you are going to die just like them. You are just beginning to realize that the time you can live is very short, and the death after that will be very long.

You start to reflect on why you didn’t know how to cherish the precious time of your life before, and why you didn’t spend more time with your children to go to school sports games, go skiing, and watch football games. You will remind yourself to never be a workaholic again. Because no one at the end of the day says, “I’m so sorry I didn’t invest more time at work!”

Of course Lynch was fed up with working 80 hours a week, so, like other great investors and traders, Peter Lynch walked away with the money he earned. As a billionaire, he has also made many billionaires. After his retirement, it is difficult for the successor of the Magellan Fund to reproduce the glory of Lynch at the helm.

After Peter Lynch retired in 1990, he began to summarize his investment experience, and successively published “Peter Lynch’s Successful Investment”, “Beat Wall Street” and “Peter Lynch Teach You Money Management”, which once again caused a sensation on Wall Street. (To be continued)

(Arthur)

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