PETER LYNCH 00:00
It bothers me that people are very careful with their money.
The public, when they buy a refrigerator, they go to Consumer Reports. They buy a microwave oven, they do that. They ask people what’s the best radar range or what car to buy. They do research on apartments. When they go on a trip to Wyoming, they get a Mobil travel guide. When they go to Europe, they get the Michelin travel guide.
People hear a tip on a bus on some stock and they’ll put half their life savings in it before sunset, and they wonder why they lose money in the stock market. When they lose money, they blame it on the institutions and program trading. That is garbage. They didn’t do any research.
They bought a piece of junk, they didn’t look at the balance sheet, and that’s what you get for it. And that’s what we’re being driven to, and it’s self-fulfilling. The public does terrible investing, and they say they don’t have a chance. It’s because that’s the way they’re acting.
I’m trying to convince people there is a method. There are reasons for stocks to go up. Coca-Cola – this is very magic. It’s a very magic number, easy to remember.
Coca-Cola is earning 30 times per share what they did 32 years ago. The stock has gone up thirtyfold. Bethlehem Steel is earning less than they did 30 years ago. The stock is half its price of 30 years ago.
Stocks are not lottery tickets. There’s a company behind every stock. If a company does well, the stock does well. It’s not that complicated.