Peter Lynch is considered one of the best investors in American history.
This is a two minute clip of an interview of him that was filmed in 1994 that has three key golden nuggets of wisdom that we can benefit from.
Nugget 1
Human nature (greed and fear) were causing volatility in the investment markets because of "some event out of left field" thirty years ago when this was filmed. They are doing so today, and I assure they will be doing so in another thirty years.
That's just part of the deal.
If you're saving, or even just systematically rebalancing your accounts like we do for you, that volatility actually works in your favor by allowing you to buy at those low points, which is why Lynch stated that he loved volatility and that it was a great opportunity. That's a fantastic perspective to have.
Nugget 2
Lynch stated he expected the stock market to double every 9 years, quite simply because corporate profits typically double every 9 years.
It's easy to lose sight of the fact that as an investor in stocks, you quite literally have an ownership stake in some of the best companies in the world, and you stand to benefit from their success over the long-term.
Even thirty years later, the stock market is within approximately 10% of where his projection would have left us. I find that fascinating.
Nugget 3
Lastly, even as one of the smartest guys in the room, Lynch stated that he didn't know which direction the next 20% move in the market would be. But that was okay because he was confident in which direction the next 100% move would be (and he was right).
That is a fantastic reminder to tune out the day-to-day fluctuations and noise, and to extend your perspective to years and decades.
I respect his candor and appreciate the peace of mind that his sentiment instills. I hope you do, too.
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