From Golf Caddie To Billionaire - Wild Investment Strategy Of Peter Lynch

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Interested in seeing my full portfolio with explanations along with buy and sell alerts? Join our Patreon community here: In this video, I cover the story and strategy of the $29B growth investor that even Warren Buffett respects. One Up By Wall Street By Peter Lynch: Casgains's Recommended Investing/Business Books: My Second Channel: Twitter: Instagram: With just $18 million under management, he worked 80 to 90 hours per week and had frequent meetings all the time. He had no breaks, no free time, and an investment strategy that would soon shock Wall Street. This is the undercover story of the growth investor that even gained the respect of Warren Buffett. Everyone knows Warren Buffett is an investing legend who has compounded high investment returns over his lifetime. However, there is one investor that could have become even better than Buffett himself. In fact, this is what Buffett had to say about him. The investor I’m talking about is none other than Peter Lynch, an investing legend who compounded an average annual return of 29.2% per year over 13 years. While many know Peter Lynch as a successful investor and author, his simple investing tips undermine the complexity and work he put in to succeed. When compounded over his investing career, Peter returned almost five times the amount that the S&P 500 did over the same time frame. If it wasn’t for his sudden retirement at 46 years of age, Peter may have become the world’s greatest investor. This video will go in-depth on how Peter Lynch consistently generated high returns and how we can use those same principles today. Born on January 19th, 1944 in Newton, Massachusetts, Peter Lynch learned the importance of money from an early age. At the age of 11, to support his family, he worked as a caddie at a local country club. The 1950s was a great decade for the stock market, leading Lynch to be exposed to stocks at a young age. Because he caddied at a premium country club, he overheard discussions from high-profile corporate executives and financial analysts. In 1961, he attended Boston College with a triple major in history, psychology, and philosophy. While still in school, he realized that the airline cargo industry had massive potential. As a result, he purchased 100 shares of a company named Flying Tiger Airlines at $8 per share. The stock later rose to $80 as the US purchased mass amounts of planes for the Vietnam War. This was Lynch’s first exposure to a term he later coined as a ten-bagger, which is a stock that increased ten times in value. For the next couple of decades, it was his mission to discover these opportunities. After graduating from Boston College in 1965, he began studying at the University of Pennsylvania for an MBA. The following year, he became an intern at Fidelity Investments. At the age of 25, Lynch was hired full-time at Fidelity, where he was a textiles and metals analyst. From there, he quickly rose up the ranks and in 1974, he became Fidelity’s director of research. By 1977, he became the head of the Fidelity Magellan fund, where he managed $18 million in assets. His investment strategy today is known as GARP, or growth at a reasonable price. In the financial world, people often regard growth investing and value investing as two different strategies. However, Lynch took a different approach. He realized that the best strategy wasn’t buying dying companies at a great value or buying overpriced growth stocks. Instead, he looked for solid growing companies that were trading at or below fair value. Because of the way money compounds, buying a 20% grower at a PE of 20 is better than buying a 10% grower at a PE of 10. This is because 20% compounds faster than 10%, and earnings are proven to be heavily correlated with price appreciation over the long term. Peter once said that “No matter what happens to the market, the earnings will determine the results. In thirty years, Johnson & Johnson’s earnings are up seventy-fold, and the stock is up seventy-fold. Bethlehem Steel earns less today than it did thirty years ago, and guess what? The stock sells for less than it did thirty years ago.” In 1989, Lynch was crushing Wall Street, as he beat the S&P year after year. All of a sudden, one day, he received a phone call from Warren Buffett. From 1977 to 1990, Lynch’s assets under management grew from $18 million to $14 billion, which is equivalent to $29 billion today after accounting for inflation. During this time, he averaged a return of 29.2%, which was two times greater than the S&P’s annual return over the same time frame.
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