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Collection: Peter Lynch - #28 'I Love Volatility'


Video Link: https://youtu.be/oQP5mVxBTlA


In this episode, Peter Lynch was asked whether he is concerned about the volatility in the financial markets? And does he think something needs to be done to reduce it?


In this episode, you’ll learn:

  • Why Peter Lynch love volatility?

  • How can you take advantage of volatility?

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

 

[Transcript]

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

MONROE KARMIN 00:00

Are you concerned about the volatility in the financial markets today? Do you think something needs to be done to reduce it?


PETER LYNCH 00:10

I love volatility.


I remember 1972 the market went from – down dramatically. And Taco Bell went from $14 to $1. They had no debt. They never had a restaurant closed. And I started buying at $7, but I kept on to it and it went to $1. It was the largest position in Magellan in 1978 it was bought out at $42 by Pepsi-Cola. I think it would have gone to $400 if didn't buy it out.


I think volatility is terrific. I think it is – I think these calls are very important. I don’t think the market going up 80 points one day and down 80 the next is a good thing for the public. I think that's not a very good thing.


But I think all these callers and all these other things to keep the volatility down each day is important, but the market is going to go up and down. Human nature hasn’t changed a lot in 25,000 years. Some event will come out of left field and the market will go down or the market will go up.


Volatility will occur, and the markets will continue to have these ups and downs. I think that's a great opportunity if people can understand what they own. If they don’t understand what they own, they can own mutual funds [Inaudible] and keep adding to it.


Over – Basic corporate profits have grown about 8% per year historically. So corporate profits double about every nine years. The stock market ought to double about every nine years.


So I think the next – The market is about 3,800 today, 3,700. I’m pretty convinced the next 3,800 points will be up. It won’t be down. The next 500 or 600 points, I don’t know which way they’ll go.


So the market ought to double in the next eight or nine years and double again in the eight or nine years after that because profits will go up 8% a year and stocks will fall. That’s all the risk to it.

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