Peter Lynch Investment Checklist
Lynch Investment Checklist. Beyond a common trait of all exceptional people a ridiculous work ethic, At a Financial Conference in 2005, Peter Lynch shared how to invest via a checklist for investors to use:
- Know what you own. Lynch was very specific to the fact that you should invest in areas you know. Very similar to the circle of competence Buffett & Munger preach. This was the classic Peter Lynch saying.
- Don’t attempt to predict the economy and interest rates. I’ve seen way too many people sell because of debt ceilings or wars or because they believe the economy will do only to be wrong.
- You have plenty of time to identify and recognize exceptional companies. Exceptional companies provide exceptional returns and there’s a number of opportunities to get them at good prices
- Avoid long shots. If the odds are long stay away. Don’t require a lot of things to change.
- Good management is very important – buy good businesses. While good management is important, good businesses are as well.
- Be flexible and humble, and learn from mistakes. The moment you think you’re too smart you’ll find out why you aren’t. Be adaptive and learn from your mistakes
- Before you make a purchase, you should be able to explain why you’re buying. If you can’t explain why you’re buying something in plain english to someone very simply then why are you buying it?
- There’s always something to worry about. There is always something in this world to worry about. There’s debt ceilings, debt crises, Greece, China slowing down, this, that… I’m sure you can find more and will find more. Invest for the long term not for fear of this next quarter or short term factors.