Here are several investing maxims that every investor should memorize and insight repeatably to pick winning stocks, according to Peter Lynch:
- A good company usually increases its dividend every year.
- You can lose money in a very short time; it takes a long time to make money.
- The stock market really is not a gamble; as long as you pick good companies that you think will do well and not because of the stock’s price.
- You can make a lot of money in the stock market; but then again, you can lose a lot of money.
- You have to research the company before you put your money into it.
- When you invest in the stock market, you should always diversify.
- You should invest in several stocks becasue for every five you pick, one will do very great, one will be very bad, and three will be okay.
- You should never fall in love with a stock…you should always have an open mind.
- You shouldn’t just pick a stock: you should do your homework.
- Buying stocks of utility companies is good because it gives you higher dividends, but you will make more money in growth stocks.
- Just because a stocks goes down doesn’t mean it can’t go lower.
- Over the long term, it is better to buy stocks in small companies.
- You should not buy a stock because it is cheap, but because you know a lot about it.
Look for shares that offer “growth at a reasonable price” which helps you to avoid two common investment mistakes:
- Either paying too much for fast-growing companies;
- Or buying seemingly cheap firms without realizing that they have stopped growing.
https://youtu.be/hKdtS_0vQ48
References:
- https://www.safalniveshak.com/value-investing-course-peter-lynch-way
- https://sites.google.com/site/changechina2050/investment/learn/peter-lynch-s-investment-rules
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