Collection: Peter Lynch - #63 | 2 Investing Tips for Beginners In Stock Market



[Transcript]

PETER LYNCH

Be flexible. People have all these biases, all these prejudices, they want to buy high-growth industries, they won't buy financial companies, they won't buy savings and loans, they won't buy companies that start with the letter R... I mean, you know, there's all these rules. They all hurt you.


There are great stocks everywhere. There are stocks that are near bankruptcy stocks, in bankruptcies, stocks about to go on bankruptcy, there are companies on the new high list – they're attracted – this company on new low list... They're all over the place, they're in growth industries, non growth industries... Don't cut yourself off to one segment. People have way too many prejudices, too many biases.


Another thing about it is math and the kind of math for you need to do this.


I don't use a computer, I don't have a computer. I really was doing great math. I remember 7 x 7 was 41 and 9 x 9 is 81, and you know, 12 x 12, I think is 144, it's some big numbers. I got that one down cold. I said, this is great, I love this stuff. And the barge left St Louis going at 8 miles an hour and the train left Pittsburgh and... Ha! This stuff is easy.


I remember one day I think was ninth grade, it was a grim day, somebody introduced cosine. That day... I mean remember cosine? I mean does anybody use cosine the last couple years? Let's have a show of hands, how many of you have use cosine for the last 6 months? But I remember tangent and cotangent. Why would you want to know about tangent? And remember the area under the curve? Remember that crazy calculus area under the curve? I mean what the hell would you want to measure area under curve for?


You know, the – That is such garbage, you know, you don't need this for the stock market. If you can measure – if you can add 8 and 8, and get fairly close to 16, that's all you need. You know you say, 400 million in debt, no equity, no cash, losing money, forget it, you know. They got 300 million in cash, no debt, 200 million in net worth, they're losing 10 million a quarter but they'll be around. That's all you need.


You have to get – that's all you need. That is not that hard. If you made through 5th grade math, you can handle this stuff.


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

 

[YAPSS Takeaway]

  • Be flexible, invest as long as you see opportunities with minimal risks.

  • You only need simple math to do well in investing.