원문 보기
Today we'll discuss 12 lessons from Peter Lynch, one of the greatest fund managers in history, who had a very good performance. In this video, we'll discuss several valuable lessons, and the first lesson I found very interesting is that he stated that a small investor can know more than many professionals in the financial market.
A point to highlight is that Peter Lynch had a very different profile from the typical financial market investor because in college he studied history, psychology, and political science, and his investments were also quite atypical. Meanwhile, it's a well- known fact that 60% of American fund managers don't beat the main market index, and in Brazil, this percentage is close to 80%.
This is one of the things I dislike about investing in funds because they charge high performance fees (like 2%), and many funds deliver very low returns. Peter Lynch, on the other hand, delivered an average gain of $29.2 per annum over about 20 years, a period that spanned almost 20 years, which is a return well above average and also well above the market for a long time.
He mentioned... His eclectic background played a significant role, as investing is an art, not a science. Furthermore, he held a negative view of business schools and academic economics, citing the fact that he never attended a business school focused on investment as the secret to his success. He emphasized that ordinary people know a great deal about the products they consume, the stores they visit, and the restaurants they eat at.
He even cited the example of 10 pairs of jeans from a certain brand that cost $ 0 in 1976. But if you had bought 10 shares of that company at the IPO price of $18, that investment would have turned into $600 in less than 10 years. In other words, just by investing in a brand you know (which obviously has to be promising), this investor had a very good performance.
Another point I try to discuss with others is the advantage for the consumer and the worker, because engineers see trends in real time, as do people in the financial market, those in agribusiness, and those in other sectors. In practice, that market evolves, and while this type of information can take some time for the market to become aware of it, then the result evolves, the price also evolves, and we miss out on buying at good prices.
The second lesson he mentioned is that the financial market is slow and has the wrong focus, and this also happens in Brazil. Fund managers don't like to buy unless they have analysts covering a certain stock, and they prefer to see other funds buying the stock before moving. This is what happens most often here in Brazil.
We look at some assets that have risen 30%, 50%, 100%, as was the case with Irani, and after the company's share price skyrocketed, delivering several investments, growth in results, and large payouts, only now does the market indicate buying this asset. Then who knows if the company will have all the potential to deliver a strong return as it did before being on the radar of several analysts.
Another very interesting point is that Peter Lynch knew the stocks he was a shareholder in and saw them as an owner of part of the companies, not just as part of the stock market. He mentions that the market becomes very concentrated on aspects of macroeconomics— interest rates, inflation, the Fed, etc.—while Peter Lynch wasn't so focused on that point, but rather on the companies he was a partner in.
The third lesson, on how small individual investors can handle the risk of choosing stocks, was highlighted by Peter Lynch. He pointed out that stocks, on average, are more profitable and riskier than fixed income, and he stated that the only way to mitigate risk is to know the company and its products.
That's why you should invest in what you know. I always say, if you're going to put a company in your portfolio, first go to the R&R website to understand how the company makes money, its shareholding structure, its debt, its history of results, the company's prospects, its dividend policy, and the Dri website, which contains a lot of information about a given company.
Practically all the gold is on the Dri website, and practically nobody talks about this point. Besides that, Peter Lynch also highlighted some personal qualities that a good investor should possess. He mentioned patience, and this point is crucial because things take time to happen; self-confidence; common sense; tolerance; humility (and some people lack humility); persistence (because sometimes things are going wrong and you still believe in them).
You have to persevere until the tables turn and you get a good return from that company. Be open-minded, flexible, and willing to do independent research. Admit your mistakes and ignore the general panic – this point is crucial. We have to do our own research to know if the company will be interesting or not, because this is a long journey that we will be investing in for at least 5, 10, 15, or 20 years, and we have to have this habit of choosing good companies for our portfolio.
Another point is admitting mistakes, and this point is crucial because sometimes a company has actually sunk, like Oi or Via Varejo, and the person keeps insisting, seeing that the company is practically bankrupt, and watches their money disappear. And this point of ignoring the general panic is also crucial because you will see that at some point the stock market will plummet 30% or 40%, some assets in your portfolio will fall 50% in a few days, as happened in the 2008 crisis, in 2015, in the truckers' strike in 2018, and in the pandemic.
And those who had the stomach for it and a clear strategy bought many companies at once. The price level is very good, so you have to be careful because during the pandemic, after the stock market plummeted 50%, the market was screaming that you had to close all your positions, and at the time my only concern was that I no longer had the money to buy stocks at very good prices.
Aside from that, a very interesting point I saw is that Peter Lynch highlights some categories of stocks, and one of them is the slow growth of a certain company that has a history of very low profit growth, generally in line with the overall economy. This type of company is usually more stable, more mature, operates in stable markets, and doesn't experience a large explosion of growth.
Furthermore, this type of company tends to have stability and consistent dividends, and a sector that fits this is the electricity sector; in general, it grows in line with the economy and has predictable results and consistent dividends. The second category he highlighted is medium growth, which has a history of profit growth slightly above the market average.
They may be in sectors that are not in constant growth but don't have exclusive growth potential in that company. Aside from that, the company offers a balance between growth and stability, and a sector that fits this medium growth category is... The third category Peter Lynch highlighted is about fast-growing companies.
These are often in emerging sectors or have an innovative product or service gaining a large market share. Furthermore, this type of company is for those more willing to take risks in exchange for high potential returns. A segment that fits this description is technology, which can offer rapid growth and an innovative product, but carries a very high risk.
The fourth type of company he highlighted is about turnarounds – depressed companies about to recover. This happens very frequently with companies that have experienced past problems and seen their stocks plummet; however, they are undergoing positive changes with new management, restructuring, and improvements in the fundamentals of the business.
This happened, for example, with Eternit and also with IR. Investors who focus on these assets, which may see a return to the company, are looking for profit opportunities. Regarding the company's recovery, the fifth type of company he highlighted is cyclical companies, and this is more linked to external factors.
Suzano, a world leader in oil sales, doesn't control the price of its oil, and this type of company goes through periods of high performance and periods of sharp decline in profits. Some of these companies even report losses, and investors in these companies should be aware of the fluctuations in share price and results to enter at the right time, or even exit, because that's what always happens: the commodity cycle improves, results rise, profits rise, and dividends rise as well.
Then the investor goes there and [the commodity] is at its peak, and then the product price starts to depreciate, and the company shows a drop in results. For example, we can take CSN, which has the metallurgy division and its mining company, CSN Mineração. Below, in Investor 10, there's a graph of profits versus share price, and you can see that the company went from a loss of around 1 billion in 2015 to a...
A profit of 13.6 billion in 2021, meaning that in two years the company went from the highest profit in its history to a loss, so be careful with this type of company, as things can change drastically in a short period of time. The sixth category is companies that possess something valuable that the market has n't yet perceived.
He highlighted valuable assets whose true value the market hasn't recognized, and this point can include physical assets, properties, patents, and undervalued natural resources. One point they even mention is that if Ferbasa were to extract all the value from the mine, that alone would represent 80 billion reais, while Ferbasa's stock is valued at 4 billion reais.
Obviously, the company won't extract everything in one year and it will take some time for that to happen. This point also applies to Vale, Access, and companies in this segment, and some investors seek appreciation opportunities as the market adjusts to reflect the real value of these assets. Another point that also happens is valuable assets, such as a very large plot of land belonging to the Brasília energy company.
There was also the sale of Seb Distribuidora, which at the time was valued at 1 billion reais and something, and there was a lot of competition and the sale. It was more than R$ [amount missing]. In other words, it had that hidden value of the assets of its distributor, and when the sale happened, it was for a much higher value, and the market didn't even price in that point.
Only after the sale did the company skyrocket, having a very strong result, and at the time they paid practically 100% in dividends. Here we have a list of several points that Peter Lin highlights about what would make a good company: it has to have a boring or even ridiculous name; secondly, the business has to be monotonous or even repugnant; here, the bottle caps, garbage collection, etc., could be a spin-off, as large investment firms sell shares and lower their price, and it can be depressing; funeral services, part of alcohol, part of cigarettes.
Another point: its industry is not growing, and this point people might think is negative, but there is also the positive side: nobody wants to try to compete to gain market share, and this company can consolidate itself as the giant of the sector. Another point: the company has to have a niche market and reduce competition; people need to continue buying its products, and this point is...
It's interesting that this is a perennial asset because, regardless of the crisis, this company will continue to generate revenue. Another point is that technology can reduce costs, and something I always look at is the company's movements: whether the controlling shareholder is buying or selling, whether the board of directors is buying or selling, because they have access to privileged information.
When you see the board of directors and the council buying shares month after month of a particular company, or that the company is following its recovery program and buying practically every month, this can be a good indication that this asset is cheap. Besides that, Peter Lint also highlighted some characteristics for assets, and one that I always mention is: be careful with this big gamble, and people always ask, "What's the next Vegan?
The next Magazine Luiza?" Before all this falls, be very careful. He mentions that those who seek this generally won't be so successful. Another point is too much dedication to bad assets, because he says it's better to have one good company in your portfolio than several failed companies. This point makes perfect sense.
Sometimes people show that they have five banks and five electric utilities in their portfolio, when if they had focused only on two... He said that companies with attractive prices could have yielded much higher performance than by investing in multiple companies, so be careful with excessive diversification among dubious assets.
Another point he mentioned is that companies dependent on a single client or a small number of clients can be very risky, and in fact, there are companies where 20% or 30% of their revenue comes from just one client. This needs to be reviewed in the company's management report because they disclose who their main clients are and what percentage of their revenue they represent.
So, we discussed several lessons from Peter Lynch, one of the greatest managers in the American market, who had a very high performance. Comment with questions and video suggestions, and become a member to access various educational content. I post weekly videos, there are spreadsheets, posts, a Telegram channel for members, and much more.
Besides that, if you want to switch to BTG or change advisors, there's a partner link in the video description. Take advantage of the good benefits at BTG; many people are getting the BTG Black card. So, until the next video, and best regards.
댓글 0