Back in February, we shared a video featuring Peter Lynch in 1982 and Philip Carret in 1995 (thanks to Youtube and WSW). Below is another gem of a video we've been waiting to share until market fear and uncertainty resurfaced. The 1990 video is also from Wall Street Week with the late Louis Rukeyser. In our view, the 11 minute clip is worth revisiting often to glean and reinforce significant insights on how and why to pick companies (stocks).
The video features Peter Lynch at age 46 and the late Sir John Templeton at age 78. A few nuggets of wisdom:
- Peter Lynch: there is a direct relationship between earnings and share price; know what you own (don't buy thin air); be patient - most money is usually made in third, fourth, or fifth year. "Almost everybody has the brain power to make money in the stock market. The question is, if you have the stomach and are willing to do a little bit of work."
- Sir John Templeton: average holding period of five years - be patient; "very rarely is any share valued for it's true price, it's true value. In a single year's time, they go 50% too high, 50% too low...."
- This is priceless: "The main thing that people need to learn is that selecting assets is totally different from almost every other activity. If you go to ten doctors and they tell you the same medicine, that's the thing to take. If you go to ten engineers to build a bridge, they tell you the same thing, that's the thing. If you go to ten investment advisers and they pick the same asset, you better stay away from it!"
Despite ongoing worries and approximately flat market performance during the first decade of this century, we suspect these investment legends would relay similar counsel today. There are always opportunities, particularly for those willing to remain patient and, as Mr. Lynch notes, committed to at least a modicum of ongoing research.
© 2010 Jeffrey Walkenhorst
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