Collection: Peter Lynch - #59 '10 Most Dangerous Things People Say About Stocks PART 6-7/10'



[Transcript]

PETER LYNCH 00:00

10 most dangerous things people say about stocks.


[#6] When it rebound to $10, I'll sell.


Somebody buys a stock at $10 and it falls to $6. They say if the gets back to $10, I'll sell. Now, I think the math, four and six, I can handle this little math. I think that's about a 66% return. You got to buy if you think it's going back to $10, you got to buy the hell out of the damn thing. But they think if it gets back to $10, I'll sell.


Now, what you ought to do is never put down a round number of these. I think the next 26 years, the stock is going between $5 and $9.25. It will never get to $10. So maybe put $9.8 or $8.75, but just saying the stock if it gets back what I paid for it.


There is a very important rule – this is one of the key rules, the stock doesn't know you own it. Remember that. You could be a miserable person, you could have, you know, never helped anybody, never done anything right, you had 67 spouses – you never done anything right. If you owned Coca-Cola last 50 years, it's gone up three hundred fold.


You'd be the greatest human in the world, help Special Olympics, help the mentally challenged, help poor people, help AIDS people... If you owned Bethlehem Steel, it's lower than it was 30 years ago, it's not your fault, don't take this personal you know.


But people treat stock sometimes like their grandchildren or a puppy, and they think the stock knows who you are. You know, it's – you know, it doesn't work that way.


[#7] I don't have to worry I own conservative stocks.


ConEd fell 80% then tripled, Public Service Indiana went down 90%, Gulf States Utilities, Long Island Lighting... This may be oxymoron.


We quality Texas banks that went to 0, we had quality New England banks that went to 0. These were companies have been around 150 years, 120 years, saying I own conservative stocks, I don't have to worry.


I've seen a lot of people, they inherit a stock from somebody, they'll say, "You know, my mother said on her deathbed, don't sell the Long Island Lighting." You know, you always wondered, you know it's like she's going to heaven or hopefully where she's going to heaven, you know, they talk about lily game or vacation or game of hearts they had or... Imagine, talking on your deathbed about Long Island Lighting, it was, you know...


But you get these stories all the time. And I think your mother would have noticed she want to sell at $29 but she would notice that this little plant that was about 6 billion over budget, no one wanted it and wasn't working and Long Island stop growing. So maybe she would turfed for $22 or got up at $18, she wouldn't let it go to $4.


So just because you inherit some stock and so-called "conservative." Like Eastman Kodak fell 75%, IBM fell 75%. Don't tell anybody you own a conservative stock. Companies are very dynamic. I don't buy that argument.


(Source: https://www.c-span.org/video/?90525-1/investing-stock-market)

 

[YAPSS Takeaway]

The stock doesn't know that you own it.