The financial manager and investment guru

Now being retired, Peter Lynch has earned a reputation as one of the most successful financial managers in the history of the time when he led the fund "Fidelity Magellan" in the period from 1977 to 1990. During these 13 years, until his retirement in 1990., The fund has held the top ranking among the lines of mutual funds. $ 10,000 investment in the "Fidelity Magellan fund" in 1977. to 1990. would have grown to $ 288,000. During this period, Lynch has reached an average annual return of 29%.

When Lynch took management "Fidelity Magellan fund" in 1977., The fund had in managing assets worth $ 20 million. By 1990. when he decided to retire, the cost rose to $ 14 billion. During the 13 years that Lynch managed the fund, "Fidelity Magellan fund" has not been able to beat only twice Index "S & P 500." No financial manager in history has ever managed such a large fund has done so successfully and for so long. What is striking is the fact that Lynch was able to maintain such a high rate of return even after the assets of the fund razdulis.

Although it is very difficult to imitate the style of management of investment portfolio Lynch, he insists that small investors can explore market-based instruments better than most professionals. This is because individual investors are often better positioned to identify attractive investment sooner. In addition, they are always free in his actions. On the contrary, many Wall Street professionals with limited committees, guardians and supervisors.

Here are some investment principles of Peter Lynch:

Buy what you know
A key principle of Lynch is that you can identify trading opportunities, concentrating on what you already know. Lynch has always invested in the shares of those industries that he understood, even if it worked in the business sector or industry, forecasts that have been faded. One such example was his investment in Chrysler in 1980th years. Chrysler then has been on the verge of bankruptcy, but after review of test samples of its new minivan, Chrysler Lynch made one of the best assets of the Fund. Chrysler has increased in price more than tripled over the next few years.

Acquire a good opportunity
Lynch has always hunted for profit opportunities than average. Although he loved undervalued stocks like Chrysler, it has also invested in the promising growth stocks, such as "Hanes Co". Shares "Hanes Co" have grown six-fold over time when the "Fidelity Magellan fund" to keep them.

Yield, price, and a good business model
Lynch, in general, considered the three qualities of good company: profitability, price and a good business model.

Key points that Lynch advises to check:
1. If you are impressed by a certain product or service, make sure that this was an adequate percentage of the total sales of the company and made a significant contribution to profits.
2. Give preference to companies with strong positions in the cash.
3. Give preference to companies with a good ratio of price to income, which is currently lower than projected.
4. Avoid companies with high debt to assets.
5. Avoid slow-growing and cyclical stocks.

Do not keep cash
You should always stay fully invested, otherwise you may miss the market rises. Ignore the market ups and downs. Your profits and losses do not depend on the economy as a whole. Buy whenever you hit an attractive idea to the relevant history.

Know when to sell
Sell your shares when the company's long-term growth rates are beginning to slow.

Sell shares of fast-growing companies, which seems to be no room for further expansion or the expansion only leads to poor sales and disappointing profit growth.

Forex Magazine
based on streetauthority.com