Collection: Peter Lynch - #24 'Don't Treat Stocks Like Your Grandchildren'



[Transcript]

PETER LYNCH 00:00

The most thing is you can’t get too attached to a stock. You must understand there’s a company behind it. You can’t treat this like your grandchildren.


You have to deal with the stock and say, “I understand the company.” If it deteriorates, if the fundamentals slip, you have to say goodbye to it. One rule you want to remember is a stock does not know you own it. (Laughter) This is a breakthrough.


So don't get – you know, you have to understand it and say, they’re doing well and as long as they keep doing well, my best stocks have been my fifth, sixth, seventh year I own,not my fifth, sixth, seventh day. You have to understand that and stay with it.


And then I’ll switch through to my long shots. Avoid long shots, I bought about 30 long shots in my life. I’ve never broken even on one.


The one that are really bad I would call “whisper stocks.” If Arthur Levitt is here, he’d appreciate these stories. These are the times that somebody calls you up and says, “Hi, Peter. How’s Carolyn? How are the kids? I’d like to talk to you about international blivit. [Imitating]


And they keep whispering all these things. What are you talking about? I don’t understand. And these are – Now either they’re so surrounded by people that are going to run out and buy this stock because it’s so exciting, or they think the SEC is listening in.


They’ll get a shorter term – they’ll get six months in the camp rather than two years in the camp. But whisper stocks don’t work.


(Source: https://www.c-span.org/video/?60722-1/us-economic-investments)

 

[YAPSS Takeaway]

First you MUST understand the company you own.

If the company keep doing well, hold it.

If the company deteriorates or fundamental slip, sell it.