Collection: Peter Lynch - #2 'How to Beat the Market'



[Transcript]

INTERVIEWER 00:00

So today there’s so much information everywhere information overload. Does that make it harder for active investors? The indexers say, “everyone’s got access to the same information at the same time you can’t beat the market.”


PETER LYNCH 00:13

Well, the way you beat the index is you avoid the stocks to go down, you avoid the steel companies and the oil companies and Sears and Penny and when companies deteriorate. I mean companies are dynamic. Behind every stock there is a company. These are not lottery tickets.


So, you’re trying to find the companies within the S&P 500 that are doing better, they’re going from crappy to semi crappy to good. That might take a couple years or they going to grow for a long time.


You are trying to avoid the companies that are going south. That is how you beat the market, or you find some companies outside the S&P 500 that are great companies. Carmax, that wasn’t in the S&P 500 and it went up 200-fold.


So, there are a lot of companies that enter and a lot of them have great performances before they go in.


(Source: https://video.foxbusiness.com/v/6117461044001/#sp=show-clips)

 

[YAPSS Takeaway]

1. Avoid companies that are deteriorating and invest in companies that have great performance and give them time to grow.