[To] Peter Lynch: The essence of the most precious growth stock investment

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Peter Lynch at the Harvard Business School New York Club 1990 annual gathering--speech at the International dinner summary of the essence of the growth unit:

The organizer of the event told me to talk about anything. I only know one thing--stocks. So I made a quick decision: I should talk about stocks. I will try to review a handful of points that are important to me and I think they play a significant role in the people who try to make money in the stock market. ”


Rule 1: Understand the stocks you hold
"The first rule is that you have to understand the stocks you hold. It sounds simple, but we know that there are few people who can do it. You should be able to explain to a 12-year-old child your reason for buying a stock within two minutes or less. If you can't do this, if the only reason you buy this stock is because you think its price will go up, then you should not buy. ”

"I can tell you a simple common stock--this type of stock most people will buy. It is a relatively ordinary company, the production of products is very simple. The product Features 1 m memory CMOS, bipolar RSC floating-point I/O interface processors, 16-bit dual-channel memory, UNIX operating systems, Whetstone-per-second floating-point silicon emitters, high bandwidth, and 15 microsecond computing power. ”


"If you hold this junk stock, you'll never make money – never." It is important to understand the stocks you hold. The business you are investing in should be simple. What gives me a good return is a simple company that I can understand, such as Dawn Donut (Dunkin ' Donuts), LaQuinta motel, etc. These are the companies that can bring good returns. ”


Rule 2: Making economic predictions useless
"Predicting the economy is totally futile and don't try to predict interest rates. Alan Greenspan is the head of the Fed. He could not predict the interest rate. He can raise interest rates or cut rates, but he can't tell you what interest rates will be in 12 months or two years. You can't predict the stock market. ”

"I would like to be able to know this information. It is helpful for me to learn this information when the recession is going to happen. This will be very good. Most of you here should remember the 1980-1982 recession, the worst recession since the Great Depression. At that time, our unemployment rate reached 15%, inflation reached 14%, and the base rate was 20%. Have any of you got a call to tell you that there's going to be a recession? Do you remember which magazine in the magazines you read frequently had successfully foreseen the situation? No one told me there would be such a miserable situation. ”

"You may not believe how much time people are wasting on predicting what will happen a year from now," he says. It's great to know in advance what happened a year later. But you never know. So don't waste it. It doesn't do any good. ”


Rule 3: Don't worry about the stock market
"You have to look for McDonald's and Wal-Mart for this type of company. Don't worry about the stock market. Look at Avon. Over the past 15 years, Avon's stock has fallen from $160 to $35. 15 years ago it was a great company. But now, all the Avon ladies are Liman. She knocks on the door, but housewives either go to work or play outside with their children. Everything they sell can be bought at supermarkets or pharmacies. Avon's profit base fell apart. This company was only great for about 20 years. ”

"The closing price of the stock market today is 2,700 points. Even if today's closing price is 9,700, Avon is still a miserable company. Shares fell $35 from $160. So despite the stock market performance over the past 15 years, your investment in Avon is dismal. ”

"It was also during this period that McDonald's performed very well. They went into overseas markets and they had breakfast and takeout, and they did a good job. In this period, their performance experienced a magical rise, profit growth to 12 times times the original, the stock price rose to the original 12 times times. If Dow Jones's closing price today is 700 points instead of 2,700, you can still get a good return on your investment in McDonald's. Its share price could be $20, not $30, but you can still get 8 or 9 times times the profit. "Focus on stocks and forget about the global (bigpicture)." ”


Rule 4: Don't be impatient. You have plenty of time.
"You have plenty of time." Don't think about it: you have to put it into practice as soon as you think of a concept. In fact, you have enough time for you to study the company thoroughly. The stocks that give me a big return are the only buys I pay attention to in the second, third, or four and five years. Losing money in the stock market can be very fast, but it is very slow to make a profit. There should be some sort of balance between making money and losing it, but not really. ”
"I want to talk to you about Wal-Mart, the company that went public in 1970. At the time they had 38 stores, a beautiful historical record and a solid balance sheet. After a spin-off--of course, Wal-Mart's stock is never a reason to spin off--it's priced at 8 cents a share after the adjustment. You might tell yourself that if I don't buy Wal-Mart's stock next month, I'll miss the best investment opportunity in my life. "5 years later, Wal-Mart has 125 stores, with profits rising to 7 times times 5 years ago. What do you think? The share price rose to 5 times times 5 years ago, to 41 cents per share. "As of December 1980, Wal-Mart had 275 stores, and profits rose again to 5 times times 5 years ago." What do you think? The share price rose to 5 times times 5 years ago and is now 1.89 USD/share. ”

"In December 1985, it had 859 stores, which did not count the Sam Club. In this 5-year period, profits rose to 6 times times the original price, which is now $15.94. So you can tell yourself, God, this stock has risen from 80 cents to $15.94. I bought it too late. It's crazy. I should not buy these bulky giant companies anymore. No, it is not too late for you to buy at this time. Because Wal-Mart's closing price today is $50. You have plenty of time to buy. ”

"In 1980, Wal-Mart has been on the market for 10 years. Its sales revenue exceeds $1 billion, the balance sheet is very good and the operating record is good. The real surprise is that investing in Wal-Mart may not make you a huge profit, but if you buy Wal-Mart in 1980, you can still make 25 times times as much as you do, and in that period, this rate of return will beat the Magellan fund. By the way, I did not hold Wal-Mart during this period. At the time, I thought its stock price was too high. ”

the work of the SAC obtained by Fidelity:
"When I applied for Fidelity, I had a total of 80 employees. Today, the total number of our employees is 7200 people. At the time, 25 of Fidelity's job seekers came from Harvard, with a total of 50 candidates vying for 3 jobs. I'm Wharton, and we used to joke that Harvard is a second-rate school, and that we're Wharton is a first-class school. Anyway, there are a lot of applicants from Harvard. But I was the only job seeker to have been a caddy for the president for 11 years, so I got one of three jobs. ”

"When I was working at Fidelity, we had a joke: the chance to work to the next Christmas was a good Christmas bonus. It was a horrible start. ”


dangerous Argument 1: share prices have fallen so much, how much can the share price fall?
"The next topic is the 10 most dangerous statements common to the stock market. Dangerous argument 1: Since the share price has fallen so much, how much can it fall? ”

"Almost as soon as I started working for Fidelity, I liked the stock of Kaiser Industries. At that time, Kaiser's share price fell from $25 to $13. That's when I used the dangerous word 1 rule. We bought one of the largest single deals in the history of U.S. securities trading. We either buy 12.5 million shares, or we buy 14.5 million shares, and the bid price is $11.125, which is $1.5 lower than the market. I said, ' What a good investment we make on this stock! It has fallen to $13. From $25 to that level, it's impossible to fall even lower. It's 11.125 dollars now. ’”

"When Kaiser's share price fell to $9, I told my mother, ' buy it now, and since the share price has fallen so much, it can't fall to the lower. Luckily, my mother didn't follow my advice because the stock price fell to $4 over the next 3 months. ”

"Kaiser has no liabilities, holds 50% of Kaiser Steel, a 40% stake in Kaiser Aluminum, Kaiser Cement, Kaiser Machinery, and 30% of the Kaiser Broadcast – a company that holds 19 subsidiaries. At that point, with shares falling to $4, $100 million could buy the whole company. ”

"In retrospect, a Boeing 747 plane was priced at $24 million. Now, I think so much money you can not even buy a Boeing 747 of a toilet, you may buy an engine. But at the time, Kaiser Industries could buy 4 Boeing 747 aircraft. The company is not in debt. I'm not worried that it will go bankrupt. But I bought it too early and we can't buy more shares because we've reached the ceiling. ”

"Eventually, 4 years later, they cleared all the positions they held, and the stock became an excellent investment. The final value per share is $35 or $40. But buying is not a good idea just because the price of a stock has fallen a lot. ”


Dangerous Argument 2: How much can the share price rise?
"Dangerous parlance 2 is the opposite of the previous one, which is like the Wal-Mart story, ' and since the stock price has risen so much, how could it have risen even higher?" ’”

"I'm a company, you might think it's not a growth company. In 1950, the Philippo Molis Company's share price was 75 cents. In 1961, 11 years later, the share price rose to $2.5--up 3 times times. You might say that this big increase has been enough for a company in a declining industry-the company's products are bad and there is no prospect. How high is it going to rise? It has risen to 2.5. So you'll probably sell it in 1961. ”
"In 1972, 11 years later, the company's share price rose to $28. It has risen 11 times times since you made 3 times times the sale in 1961. 1972 you might say to yourself, since stock prices have risen so high, how high can it be? Then you sell after a 11 times-fold rise, 3 times times up and 5 times times higher, and you miss the chance to make 7 times-fold profits. ”

"So what I'm saying is, don't get involved in the technical analysis of stock performance. Stock commentators use all these terms, adjectives, and prologue. If the price of a stock rises, they constantly add new titles. They will say that the stock price is too inflated, then too high, that it does not match the intrinsic value, or that the share price is super inflated. They have mastered all the terms that depict the price of stocks being overpriced. ”

"If you like this company, it shouldn't interfere with you." You should say to yourself, I like this stock that sells for $30. But you can never get away from the comments of stock commentators. But you have to get rid of these comments. Because you are right, you should say, ' I like this stock that sells for $30. These commentators are wrong. ”

"But when the price of this stock goes up to $50, the commentators ' words may float in your mind." You might say, ' Wait, when the stock price is $30, these people are pretty sure the price is overvalued. Now that the stock has risen to 50, they must be right. ’”

"So you really need to shield these comments from their impact. I bought it after Subaru rose to 20 times times the original. I was lucky to make 7 times times as much as I bought. I also bought shares that fell from $20 to $12. I've bought a lot of this type of stock. Now, you can't buy a box of Hersheybar chocolates for $5-they're 5 cents a piece. ”

Therefore, the stock's historical performance has nothing to do with future performance. The performance of the company is related to the future performance. ”


Dangerous argument 3: How much can I compensate? The stock price is only $3.
"The third dangerous statement is very important, and I can always hear this saying: ' The price is $3. How much can I compensate? The stock price is only $3. ’”

"Now let's do a math and get back to our basic math knowledge. If you buy two stocks, a stock price of $60, and another $6, you put $10,000 on each of these two stocks, and if they all fall to 0, you'll lose exactly the same money. This is obvious. The result is this. People just don't believe it. You'll know when you get home and you figure it out. ”

"A lot of people often say, ' Oh my God, these idiots bought a $60 stock, and I bought only $6. How good my investment is. But watch out for those who make money by shorting stocks, and they won't sell the stock when the stock reaches 60 or 70 dollars and is still on the rise. They bought 75% of the shares after their shares fell 75%. When the stock price fell from $40 to 7 cents, they were absolutely convinced the company was worthless. They will not sell the company's shares at $40. They chose to kill them in the course of falling stock prices and sell short when the shares fell to $3. So who's in the market for these people selling short shares? It's the people who say ' stock prices are only $3 and where they can fall. ' ”


dangerous Argument 4: Eventually, all that falls will bounce back.
"Take RCA company for example." It used to be a very successful business. RCA's share price rebounded back to 1929-year price for 55 years. It can be seen how high it was at the time of its exorbitant pricing. So the idea of holding a stock and thinking it will eventually bounce back to a certain price is totally unworkable. Johnsmanville Company, mobile home Company, double-breasted knitting apparel company, floppy disk company--winchester disc Drive Company, remember these companies, their share price fell after never rebound back. Don't wait for these companies ' stock prices to rebound. ”


Dangerous Argument 5: The situation is so bad that I should buy it.
"Just because the company's situation is very bleak and buy its stock." When the situation is too bad to be bad, it's time to buy (it's dangerous). In 1979, the United States had 96000 railway freight cars. As of 1981, the figure was reduced to 45000 knots. This is the trough of 17 years. You say to yourself, ' rail freight cars have fallen from 96000 knots to 45000 knots. This is the worst situation in 17 years, and how bad can it be? ' If this is the only reason you buy, then in 1982 you will find that the number of freight cars has been reduced from 45000 knots to 17000 knots, and in 1983 it was further reduced to 5700 knots. It is dangerous to invest a lot of money in this industry simply because the boom in an industry is deteriorating for the sole reason. "To give an example of oil drilling, in 1981 the United States had 4520 onshore oil rigs. In 1984 the number was reduced by half to 2200 units. At this time, many people broke into the industry. People say it's time to buy the oil-service industry because the number of wells is cut by half. Two years later, the number of wells was reduced by 70% to 686 units. Now, the number is still below 1000 units. So it's unwise to buy just because a company is in a bad condition. ”

"I've seen poor companies, and the next time you call them bad things are unbelievable, then you can describe their situation in terms of horror, disappointment, or cruelty." So the best experience I've learned from the textile industry is that Burlington Industrial is still a relatively new textile company because it was founded in 1908, and the textile industry has been around for a long time. The textile industry has experienced dismal times, and they know what it is. They have seen the age of recession. ”

"The textile Company and the clothing exhibition company are different people. The latter is a relatively optimistic group. If you ask them how the exhibition works, their answers are always good, fantastic, awesome, and everyone likes to wait for such words. They are always cheerful, much like the people of the software company. "But people in the textile industry are more calm." They have experienced recession and tough market conditions. The textile industry has a wonderful proverb: ' No pole Taibulai (itis always darkest before pitch black). ’”


Dangerous Argument 6: When the stock price bounces back to $10, I sell
When the stock price bounced back to $10, I sold it. Once you say this, the stock price will never bounce back to $10--never. ”

"How many times has this happened?" You pick a price and say, ' I don't like the stock, and when the stock goes back to $10, I sell it. ' This attitude will make you suffer. The stock price may return to $9.625, and you may not be able to wait until it returns to $10 for the rest of your life. If you don't like a company, whether you buy at the time of $40 or $4, if the success of the company is not the factor, if the fundamentals weaken, then you should forget the stock before the price movement. ”

"There is no use in hopes and prayers for stock prices to rise. I've tried this before, it's useless. Stock may not know that you are holding it. ”


dangerous Argument 7: Never sell Long I. Lighting Co.
ConEd's share price fell 80% in 18 months and then rose to 6 times times the original. Each of the three companies, Indiana Public service, Bay State, and Long I. lighting, fell 75%, and then there was a big rally. Some of Texas's good-quality banks--I say these banks ' equity ratios for assets--fell 100% from 8% to 9%--. The company is dynamic. Their development is driven by a number of forces. You must know what these forces are. ”

"One of the tragedies of life is that sometimes people inherit stocks. They inherited a stock and didn't know what the stock was, but their mother told them, ' Whatever you do, never sell the Long I. lighting Company's stock. ' I'm not talking about reading the financial pages of the newspaper. The company has a small factory called Shoreham, which has been under construction for seven or eight years, and the budget has overrun 5 billion to $7 billion, and people don't want it. ”
"However, people think that Long I. is a good growth market, Long I. Lighting the municipal company has 10 years of brilliant business records, they have a monopoly in Long I.-how can you miss such a good company?" Let me tell you something, if your mother reads the newspaper, she should be able to find out all the problems that the company has. She should sell at $28, or at $25 or $23. Or you should cut the meat at $4. She should know that this company is really a problem. ”

"Some people have inherited the shares of Eastman Kodak company. But just because their father, mother or uncle liked the company, they held it. But if their father or mother knew what was wrong with the company's growth momentum, they might sell Kodak's shares. ”

"The company will change." Wal-Mart has changed. If companies don't get better, they'll get worse. To keep growing, McDonald's has done five different things. So you should not take it for granted that holding a conservative stock will give you a good return. ”


dangerous argument 8: Because there is no money to buy
"The eighth dangerous argument is horrible: look at the amount of money I've lost because I didn't buy it." "That's been bothering me," he said. Remember: If you don't hold a certain rising stock, check your bank account quickly and you don't lose a penny. If you see the share price of the home sales network rising from $6 to $60, and you don't own the company's stock, you don't lose $300,000. You will lose money only if you hold stock and the stock price drops from $60 to $6. ”

"It's unbelievable how many people fret about nadir, and, according to my imagination, if the stock market goes up 50 points a day, someone might say, ' I just lost $28 billion. ’”

"So, remember: if you didn't buy a stock, but the stock price went up, you didn't actually lose money." In the United States, the only way to lose money is to hold a stock, and then share it down. I've been through this a lot of times. One common and basic fact is that if you invest $1000 in a stock, you'll lose at most $1000 unless you're crazy about margin trading. ”

"When I was young, I not only used the margin, I also made the house a mortgage with a housing finance loan to fry. Fortunately, it was a bull market at the time. But if you invest $1000 in the stock market, you'll lose up to $1000. That's it, I've proved it. In the fund I manage, more than 3 portfolio companies go bankrupt each year. But if you buy the right company, you can make 15,000, or 20,000, or even $70,000. In an era you just need to buy a few stocks on it. You have to get the money from the good company to make up for the losses caused by the bad companies. ”

"The money-making mechanism in the stock market is compelling, and you can make more money on stocks than you lose." But you have to hold on long enough. This will not happen within one months or a year. ”

"I missed hundreds of thousands of stocks. But you just need a few stocks to get rich. ”


Dangerous Argument 9: This is the next great company
"Dangerous saying 9 is very important. Whenever you hear ' this is the next ... ', try to break your mind and don't listen to the following words, because the words will always be exciting. The next great company has never been successful. The next toy anti-bucket city did not succeed, the next home Debao did not succeed, the next Xerox did not succeed-Xerox himself did not do very well, the next McDonald's and so on have failed. ”

"Any time you hear what's next, ignore it." ”


Dangerous argument 10: The stock price has risen, and my view must beOf
"Dangerous argument 10: Stock prices are up, so my view is definitely right, or the share price is down, and my view must be wrong." "These calls have always surprised me, and someone called, ' I recently bought a stock for $10 and now it's up to $14. You should buy this stock. "What does he mean by that?" he said. He bought $10, and now it's up to $14, why should I buy it because the stock price has risen from $10 to $14? It is clear that the fact that the stock price is rising means that they are right. ”

"It doesn't mean they can point people. It doesn't mean anything. I used to buy a stock in the pink single market, with a stock price rising from $10 to $14 and then falling to 3 cents. I'm not kidding. I also bought stocks that fell to $6 from $10, and then rose to $60. I may have sold it in 6.125 dollars. ”

"You should not worry about the stock movement. I noticed that a theme spokesperson for this event a few years ago was George W. Bush, and I thought of him and I remembered Zapata, whose share price was $32 in 1981, and it was still on the rise pretty well. The future of the company is offshore drilling. If you look at the chart of the stock, you will say that the stock will obviously reach $310. ”

"At the same time, there is another company Ethel, which produces products called tetraethyl lead, which are additives that help to extract octane from oil. The price of this stock is $2, and it doesn't look promising. ”

"Today, Ethel's share price has risen to 15 times times that time. Zapata's share price slipped by 90%. The stock price has risen and there is no relationship between the future trend of stocks. The performance of the company is related to the performance of the stock. ”


One, vision companies can not bring you return:
"Avoid vision-oriented companies (Longshots). Every time you hear someone recommending stocks to you, the stocks they recommend are so exciting that they talk to you on the phone with a soft voice. I don't know if it's because they're worried about the next-door neighbor hearing it or because they're worried about the SEC's monitoring. Maybe if you call in a soft tone, you don't have to go to jail or just half the sentence. ”

"Anyway, they whisper, ' the company I recommend to you is very good, fantastic, or it's a powerful company. ' But they missed out on something. There is a very technical term for these stocks nnte i.e. short-term non-profit (Nonear termearnings). These companies are not profitable. They have no history (that is, these companies have only one vision – the translator's note). Some of them are just a good idea. In fact, the idea might work. But it often doesn't work. ”

"Remember: If the stock goes up from $2 to $300, you can get a high return on the $8 purchase, even at $12." When others recommend this kind of vision company, you can follow up a year later, write them on paper, and put them in the drawer. Take it out a year later and take it out after three years. Examine the fundamentals of these companies after three years to make investment decisions. ”

"I have bought 25 prospective companies. I followed them for 5 years. No one company made a breakthrough, I bought 25, not a company success. ”


second, don't confuse growth and money：
"Avoid high-growth, easy-to-access industries. High-growth industries are a scary area because everyone wants to get into the industry. How many people have heard of Crowncork Seal company? It's a terrific company. They make cans and stoppers for cans and bottles. ”

"All of you here are influential people. How many boards will meet this week to decide whether to enter the canning industry? How many were there last year? What about the past 7 years? What about the past 20 years? ”

"The company's stock price has risen to 50 times times its original size. They are always in the technical lead. They are the industry leaders. They did not change the name of the company to an acronym like CROCOSCO. ”

"Can is a non-growth industry. Sham Watton's retail is also a non-growth industry. That's good--you're looking for a growing company in a non-growth industry. Because no one wants to enter the industry, but the Winchester disc drive company is different, everyone wants to enter its industry. ”

"The carpet industry in the the 1950s was surprisingly good," he asked. The fastest growing age in the computer industry is also the 1950s. At that time, the carpet industry grew faster than a computer. ”

"I don't remember very well, in the 20th century 30 and 40 's, the carpet price seemed to be 20 or 25 dollars a yard. All the rich people are covered in rugs, others are floors. ”

"Someone later invented a special production process. The price of carpets and rugs dropped to $2 per yard. Carpets are spread all over the place, airports, schools, offices, apartments, housing and so on. People first lay a layer of plywood and then put a rug on it. ”

"Now the carpet is out of date. It is better to lay the plank. People's tastes are so repeated. But in the 1950s the carpet industry experienced a magnificent growth. Unfortunately, carpet producers have grown from 4 to 195 in the late the 1950s. As a result, no company made any money. Because of the growth of the industry, they all lost money. So don't confuse growth with money. In fact, growth usually results in losses. ”

"The market's enthusiasm for bioengineering companies is amazing today. Most of these companies have 102 PhDs and 102 microscopes. People buy their stocks like crazy. And what made me make money was the Dawn Donut. I don't have to worry about Korean imports and money supply data. You don't have to worry about these things when you hold the Dawn donut. ”


three or five grade math is enough to meet your investment needs:
"Be sure to examine the balance sheet. This is very important. If you take a grade five math education, that's enough investment. I'm good, math is my strong point--until calculus comes up in math. I'm really good at math, remember this math problem, two trains from Saint Louis, the other one from Dallas, how long two trains meet. I like this kind of problem very much. ”

But all of a sudden, there were two equations and calculus in mathematics. Do you remember? The meaning of calculus is the area below the curve. Does anyone in history understand this? They keep saying that calculus is the area underneath the curve. I can never understand what the hell is going on underneath the curve. ”

"But the good thing about the stock market is that you don't have to deal with anything like that. If you have studied maths in grade five, you can do well in the stock market. The mathematics used in the stock market is very simple. ”

"You don't need to use a computer. People say the computer age has broken the stock market. I mean if the computer can figure out which stocks to buy, then all you have to do is spend some time on the Cray computer. ”


Four, spend 15 seconds on the balance sheet:
"But you have to examine the balance sheet. Almost every company I hold and make money from makes a good financial situation. It takes only 15 seconds to see how a company's finances are. You look to the left of the balance sheet, and you look to the right. The right is a mess, the left is suspicious. You don't have to spend too much time knowing that this company is not worth investing in. If you don't see any debt, you know that the company is quite satisfactory. ”

"When I first started this business, you didn't get a quarterly balance sheet. Today, you can get a balance sheet for each quarter. In the past, the company would not list the expiry time of the debt. Now they have to list the expiry time of all the debts. You can tell how much money the company owes to the bank. ”

"I reckon there should be a few bankers on the scene. The difference between 30 's money and 30-year bank loans is huge. You know what the bank is like. They're just icing on the cake, and when you're doing well, they invite you to dinner and are willing to offer you a variety of loans, but once you have a dismal performance for a few consecutive quarters, they want to take back the loan and never get it right. ”

"But you can read the balance sheet. You can look at a company to see if it has debt. Or you find that the company does have $30 million in debt, but the debt will not expire until 30 years from then. ”


study the stock you want to buy as you study the microwave oven:
"When I was lucky enough to buy Chrysler, the company had $1 billion in cash and no debt due within three years. They achieved breakeven and the cash flow was positive. So, even for cyclical companies, it is worthwhile to take a minute to examine the balance sheet. ”

"There is a phenomenon that surprises me that people compare 10 refrigerators before they finally buy a refrigerator. They will look at the different refrigerators in the consumer report. They will stroll through 15 shops. But without knowing what it was, they were so secretive about the stock market that they did not realize that they had no chance to invest $10,000 in the stock of a bioengineering company when they listened to the gossip of a taxi driver. ”

"The worst-case scenario is that stock prices rose 30% after they bought them, and they put in $20,000; Best of all, they fell 30% in the next three months." ”

"This is a surprising situation," he asked. When people invest in stocks and lose money, they complain about the programtrading, and they blame the agency: ' It's the damn institutions that make me lose money. ' If you buy a refrigerator and find a defective, you'll say, ' I'm a fool. I should have done more research, I bought the refrigerator quality unqualified. ’”

"Two days later, the same people went to Hawaii and spent 1.5 hours buying round-trip tickets to save $98. People are very careful with these things, but on the stock they are careless. ”

"Just study the stock you want to buy as you study the microwave. This investment method will give you a better return on stock market investment. ”


Six, you can only know in hindsight which stock is great:
"The great stock is always an accident. There is no doubt about it. If anyone who buys Wal-Mart knows he can make 500 times times, then I think he's an alien. You can never know who is a great company beforehand. ”

"You buy a good company and review the performance of this stock for the last 8, 10 or even 12 years, you say, ' Oh my God, look at how much money I've made. ' But you never know how much you're going to make or how much you'll lose in the future. You can only know the profit and loss afterwards. ”

"It's the same as the house. Many people bought a house in the 1960s. Caroline and I bought a house at the price of $40,000. Prices rose a lot later. When we bought it, no one told us that we would make a lot of money. Back in the 1960s, no one said: ' Buy a house, buy a home is a good investment, you will make a lot of money. You see, 15 years later, house prices have gone up a big cut. It was a complete accident. ”

"Yet over the past four or five years, people have bought a lot of real estate-their second home-and they feel they are going to make a big fortune from it. This is not a workable approach. ”

"The same is true for stocks. I bought Stop&shop, a retail company in Massachusetts. When I buy it, it has a dividend yield of 7%. The performance of the stock was mediocre, and I thought I might earn 30%. ”

"4 months later, after I did more research, I found that the company performed very well after acquiring Bradlees. At this point in time, Wal-Mart is still not Bradlees's rival. Bradlees began to enter the Wal-Mart market. But the whole northeast market is theirs. Bradlees is a discount storage store and is doing well now. They have transformed the way Stop&shop operates and launched the Super Stop&shop. They're doing very well. The share price rose to 15 times times the original in 11. ”

"It was a complete surprise to me. But the company is constantly getting better and I have been holding it. ”


Seven, the retail investors have great advantages:
"In terms of stock investment, retail investors have an incredible advantage. Some retail companies work in the chemical industry, while others are employed in the paper industry. They will be 9 months ahead of me to learn about the changes in the chemical industry's boom. They are the first to know that there is a shortage of chlorine. They can first know that the caustic is out of stock. They can be the first to know that inventory sales are complete. But they went to buy bioengineering stocks. ”

"They also know that it takes 5-6 years to build a chlorine plant. In the United States, it is difficult to get environmental approvals for a bowling alley, let alone a corrosive chlorine plant. People can get a lot of information about their industry. ”

"One of my favorite examples is smithklinebeck-man. This is a relatively small pharmaceutical company, is it invented the treatment of ulcers Tegamet medicine. Until then, there was no other way to treat ulcers except surgery. ”

"For a company like Tegamet, this medicine is very good. A bad medicine is good after you drink it, then you say thank you, and pay $4 for the diagnostic fee will be finished. But you have to keep taking Tegamet, otherwise the ulcer will recur. ”

"The company's share price rose to 15 times times the original. Before they buy the necessary utensils, they are called scrap. ”

"You don't have to buy this company while Tegamet is still doing clinical testing. You don't even have to buy it when it's just listed. However, when your relatives and friends use this medicine to find that the treatment of the ulcer is good, then you should buy it. Imagine all the doctors prescribe this medicine, and all pharmacists will know how good the investment is with this medicine. ”

"How many people here have ever gotten tips from doctors about the stock of pharmaceutical companies?" How many people get tips from doctors about oil or electronics companies?

"I got a very good tip from the vice chairman of the Holiday Inn company. About 12 or 13 years ago, he told me that there was a motel company named LaQuinta in Texas. He said, ' they beat us. Their products are very good. Their business has gone beyond San Antonio and they are doing well. ' It turned out to be a really good stock. ”

"Every few years you just need to invest in a few stocks that you have a wealth of information to get good returns. You just need to focus on one area and buy a local company that you're familiar with. ”

"There's a fireman in Wilbury, Massachusetts, and he doesn't know much about the stock market. But he has a very good theory. He found that two companies in their town were expanding their factories, so he spent $1000 a year on the shares of the two companies and spent 5 years in a row, resulting in a millionaire. ”

"He did not read the Wall Street Journal, nor did Barron, who did not cray the computer," he went on. He just saw the company growing, so it must be good to judge the company's situation. They are great local companies. ”
"Retail has some advantages, and I really want to emphasize that. Retail investors generally feel that they are amateur basketball players, but to play against the Los Angeles Lakers, so there is no hope to win. In fact, this is completely wrong. Retail investors have a number of specific advantages. ”


Eight, professional investors--an incredible contradiction:
"I know you've heard the oft-quoted paradox of ' prawn (jumboshrimp) '. I've always liked this paradox. Since I have served in the army for two years, another paradox I like is ' Military intelligence (militaryintelligence) '. ”

"But ' professional investors ' is also a contradiction in the quality of the statement." Professional investors have all those prejudices, they only buy big-cap stocks, they only buy companies with years of history, they don't look at union companies. I used to have a trade union company, and they brought me great rewards. Nor will they buy shares in the industry without growth. We get a good return in the industry. I have bought shares in a bankrupt company. I also bought a company that was going bankrupt. These investments are not pleasant. You may not believe in the prejudices of professional investors, and some people will not buy companies that start with Y and so on. ”

"In addition, professional investors have one of the most important rules. If you're a professional investor, you'll be fine if you lose money on a market-recognized blue chip, but if you lose money on other stocks, you'll get into trouble. For example, if your investment in IBM loses money, everyone will say, ' What's wrong with IBM? ' But if you lose money on the Tacobell or LaQuinta motel, they'll say, ' What's wrong with you? ' You're losing money on a company like the latter, and they're going to kick you out. But you can make unlimited losses on IBM, Minnesota mining, or Kodak. ”


Nine, there are always some things to worry about:
"The last factor to consider is that there is always something to worry about. You have to ask yourself, ' How much do I tolerate pain? ' If you're ready to enter the stock market, you have to be able to withstand the pain. There are always some serious things that are worrying. ”

"I grew up in the 20th century 40 and 50, and the stock market was not doing well in the 40. People are really afraid of another depression. The people who are relatively serious and concerned are the leaders of the country, who think that the only reason we are out of the Great Depression is the Second World War. They feel that the country is so unstable that if another Great Depression occurs, the whole society will collapse. ”

"Then there was the fear of nuclear war. The 1950s people like crazy to build the basement of anti-nuclear dust, hoarding canned food. They built thousands of dust-proof basements. ”

"In the the 1950s people were reluctant to buy stocks because they feared nuclear war and feared that the recession would recur." The 1950s was not such a glorious time, but the Dow Jones index still rose to 3 times times the original. The average stock also rose to 3 times times the original, although there were many big problems to be worried about during this period. ”

"More than 10 years ago, I distinctly remember the price of oil from $4/barrel, $5/barrel to $30/barrel. Everyone predicted that the oil would rise to $100 a barrel, so that the world would suffer a depression and the whole world would collapse. ”

"3 years later, the price of oil fell to $12/barrel. It is also said that the price of oil will fall to $2/barrel and we will suffer a depression. I am not joking, this is the same group of people said. There is concern that the fall in oil prices will lead to a massive default on oil-related loans. ”

"Then there was concern about the growth of the money supply." Do you remember? Data on the money supply are usually released in the afternoon of Thursday. We're all waiting to see the latest data. No one knows what this data means. But they say M3 growth is flat, M2 is slowing down, and so on. Everyone is worried about the growth of the money supply. ”

"But this has nothing to do with Melville, Melville's earnings continued to rise for 42 consecutive years, Hjheinz's earnings rose for 58 consecutive years, and Bristolmeyers's earnings rose continuously for 36 years without debt. Do you think these companies care about money supply? People are worrying. ”

"People are now beginning to worry about the ozone layer and warming. If this is the reason to stop you from buying a good company, then you are in trouble. In fact, if you look at Sunday's newspaper, the news is so depressed that you probably don't want to go to work in Monday. ”

"You have to listen to me--it's a great country. We've added 25 million jobs in the last 10 years, even though big companies have cut 1 million jobs. We experienced 8 recessions after the Second World War. We will have a recession in the future. In the past 70 years, the stock market has fallen by more than 10% in total 40 times. We will also experience further declines. ”

"But if you will always be worried about these things, then you should put your money in a bank or money market account. ”


10, the investment is really simple:
"So you need to find a company that you have a lot of information about and understand, and then tie it up with those companies." So that's how easy it is to invest. ”

[To] Peter Lynch: The essence of the most precious growth stock investment