Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Sig who wrote (66601)	9/22/1998 8:52:00 AM
From: Mohan Marette	Read Replies (1) \| Respond to of 176387

'You don't learn a lot form...talk shows,you get shaken out'-Peter Lynch. Sig: Excerpts of an article from MSFT Investor. =================================== "What I'm saying is, you don't learn a lot from listening to talk shows," Lynch says. "You get shaken out." -- Peter Lynch, Fidelity Investments Peter Lynch on playing this volatile market. The man who guided Fidelity Magellan to the top isn't among the naysayers spooked by the Street's downturn. If you know your stocks, he says, stand by them. By Timothy Middleton ..... This kind of thinking has Peter Lynch fairly apoplectic. "Economists have predicted 26 of the last nine recessions," he fumes -- recessions being the events that take down corporate profits, and thus stock prices, which follow earnings like a mule behind a carrot. "We've had nine recessions since World War II, and despite that, corporate profits have gone up 64-fold, and the stock market's gone up 60-fold." Everybody has been spooked by recent events from Wall Street to Red Square. Fidelity Investments is not the least of them. To reassure nervous investors in its mainly equity portfolios, the nation's largest fund complex has released a new advertising campaign featuring Lynch, whose prowess at the helm of Magellan Fund until 1990 is largely responsible for Fidelity's growth. At the same time, Lynch is consenting to press interviews, which he rarely does, in order to reinforce the ad theme, which is that the key to success at investing is to ignore current events and stick with a well-thought-out plan for your whole life. He notes that as recently as 1990 the world was also in turmoil, with U.S. real estate in shambles, banks failing, a recession biting hard and troops on the edge of war in the Persian Gulf. "It was the ugliest time of my career," says Lynch, 54. A drumbeat of negative headlines drove many small investors out of stocks -- just before, in 1991, the stock market surged 30.5%. "What I'm saying is, you don't learn a lot from listening to talk shows," Lynch says. "You get shaken out." Know thy assets Lynch's idea for an unshakable investment foundation is this: Know your assets. "You have to take responsibility for your investments -- this isn't something you can delegate," he says. He insists you've got to understand how the different asset classes make money for you before you can begin to invest intelligently in them. Having made his literal fortune in domestic equities, he naturally favors them. "This century, the place to be is in stocks," he notes. "I happen to think it will be the place to be the next 20 years, and the next 40 years. And there's a reason for it. "You have to take responsibility for your investments -- this isn't something you can delegate," -- Lynch "Corporate profits have grown about 9% a year compounded since World War II despite all these recessions," he notes. "At 9% a year, money doubles every eight, quadruples every 16, goes up eight-fold every 24 or 25 years. That means -- guess what? -- the stock market has gone up about eight-fold every 25 years." By the same token, there have been times -- including some lengthy periods -- when alternative investments have done better than stocks. When the market sank 21.5% in October 1987, intermediate-term government bonds spurted 3.0%. And appearances to the contrary notwithstanding, international equities have not languished in Wall Street's shadow since the great bull market began in 1982. ....... But Lynch has been one of the most successful mutual-fund managers ever, and his reminder that stocks go up as well as down is reassuring. Stock prices are entirely random over short periods, but over longer ones they trend up, and they do so in a circular, cyclical fashion, with tomorrow's fashion darlings always plucked from among today's wallflowers. So buy wallflowers, Lynch says, but don't throw away that bouquet you've already got in your hand. investor.msn.com