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Collection: Peter Lynch - #25 'There's Always Something To Worry About If You Own Stocks'


Video Link: https://youtu.be/BlISW8wm5UQ


In this episode, Peter Lynch talks about why there's always something to worry about if you own stocks and what should you do about it?


In this episode, you’ll learn:

  • Events that people worry about in the past which might affect the stock market.

  • Why stomach is more important than brain in the stock market?

To check out all Collection: Peter Lynch <click here>

 

[Transcript]

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

PETER LYNCH 00:00

And then I want to conclude with, there’s always something to worry about. If you own stocks there's always something to worry about, you can't get away from it.


What happened in the 1950s, people were worried about. The only reason we got out of the Depression was World War II. We got another recession in the early 1950s. We said we’re going to go right back into a depression. People were worried about a depression in the 1950s, and they were worried about nuclear war.


Back then, the little warheads they had then, they couldn’t blow up a McLean in West Virginia, or a McLean in Virginia or Charleston. Now, all of these countries that end in -stan – there’s nine of these “-stan” countries that came out of Russia. They all have enough warheads to blow the world up and no one worries about it.


When I was a kid, people built fallout shelters. We used to have civil defense drills. Remember this one in high school? You get under your desk. I never thought, even then, that was a particularly good thing to do. (Laughter) They’d blow a whistle, somebody would put on a hat, and we would all get under our desks.


But in the 1950s, people wouldn’t buy stocks. Except for the 1980s, the 1950s was the best decade this century of the stock market. People wouldn’t buy stocks in the 1950s because they were worried about nuclear war and they were worried about a possible depression.


Then people – Remember when oil went from $4 to $40 and was headed for $100 and we were going to have a depression? Remember that one? Well about three years later, the same experts – now higher paid – oil is now at $10, and they said it was going down to $4 and we’re going to have a depression.


And then the Japanese – Remember how the Japanese were going to own the world, remember that one? And then we were going to have a depression. And then about two years later, we were all worried about Japan collapsing.


This is the most absurd thing I’ve ever heard. This is a country with a 20% savings rate, incredible work force, incredible productivity, and people were saying we’re going to have a depression because Japan is going to collapse. In their prayer list, they’ve lowered Mother Teresa and crippled children and they’re praying for Japan at night. (Laughter) You know, it’s unbelievable.


I mean it – the LDC Debt, remember the LDC Debt? Remember that one? All these countries – Chase had lent their net worth to Brazil, Chile, Peru and those other countries, they were not going to pay it back and we were going to have a depression. It always ends in we’re going to have a depression, or we’ll have the Great Depression. [Inaudible]


But all these countries – Now, I understand what these are called – then, they were called “less developed” countries. Now, we used to call them “underdeveloped” countries. Those are all wrong terms. Those are not politically correct. You must call these “emerging” countries. You can't use less developed or underdeveloped in a sense.


In fact, the other day I heard the politically correct term for somebody that’s overweight: laterally challenged. (Laughter) So there is always something to worry about.


And the key organ in your body in the stock market is your stomach. It’s not the brain. If you can add 8 and 8 and get reasonably close to 16, that’s the only level of math you need to know. You don’t need to know the area under the curve. Remember that quadratic equation and integral calculus and the area under the curve?


I mean whoever cared what was under the damn curve? (Laughter) But you had to study this. You don’t need this in the stock market. So all you have to know is that it’ll always be scary, there will always be something to worry about.


You just have to forget all about it. Cut it all out and own good companies or own turnarounds. Study them and you’ll do well. And that's all the risks and I'm ready for questions.

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