원문 보기
First of all, they try and predict the stock market. That is a total waste of time. No one can predict the stock market. They try to predict the interest rates and no one can predict the economy. If you look at the market today, you will see that it is currently trading near all-time high levels despite the massive economic uncertainties related to the alarmingly high debt figures, geopolitical tensions, and still ongoing wars.
So many investors are currently left wondering should they invest now or wait instead either for lower stock prices or more economic stability. Thankfully the legendary investor who was managing the famous Mellan fund Peter Lynch got us covered because in this video we will explore his timeless advice on investing during turbulent times of uncertainty.
During his time at Mellan he achieved an average return of 29.2% 2% which is more than twice what the S&P 500 earned during that time. But most impressively, he managed to achieve that result in an extremely turbulent period for the US and world economy caused by a very high inflation, oil crisis, the cold war, and even the stock market crash of 1987 where the Dow Jones crashed more than 22% in a single day known as Black Monday.
Right. A lot of people in this room were around in 1981 and '82 when we had a 20% prime rate with double digit inflation, double digit digit unemployment. I don't remember anybody telling me in 1981 about it. I didn't read. I studied all this stuff. I don't remember anybody telling we're going to have the worst recession since the depression.
So what I'm trying to tell you, it'd be very useful to know what the stock market is going to do. It'd be terrific to know that the Dow Jones average a year from now would be X. That we're going to have a full-scale recession where interest rates going to be 12%. That's useful stuff. You never know it though.
So I can confidently say that he's probably the most capable investor when it comes to withstanding turbulent times and making the crucial decision of choosing the best time to invest. So let's now hear what is Peter's opinion on if you should invest now or wait instead. Another key element is that you have plenty of time.
People are in unbelievable rush to buy a stock. I'll give you an example of a well-known company. Walmart went public in October of 1970. 1970 went public already had a great record. It had 15 years performance, great balance sheet. You could have waited 10 years saying you're a very conservative investor.
You're not sure this Walmart can make it. You want to check you're you see them operate in small towns. You're afraid they can only make it in seven or eight states. You want to wait till they go to more states. You keep waiting. You could have bought Walmart 10 years after they went public and made 35 times your money.
In this interview, what Peter Lynch talks about is something known as the fear of missing out where people usually tend to make irrational decisions and invest their money fast so they don't miss out on something regardless of how uncertain they are or how risky the investment is. So he makes the point that even if you wait some time for when you have a more clear image of the market or a specific company, you can still make an amazing return without taking the risk caused by uncertainty.
Funnily enough, he makes the case that if you have waited 10 years after Walmart went public and then you invested, you would make 35 times your initial investment. However, that clip was recorded in 1994. So, if you hold that position until today, you could have made 3,300 times your initial investment.
Meaning that if you had invested $1,000 in 1980, you will now have over $3.3 million from that investment alone. And let's say that even if you invested in Walmart in the year 1997, 27 years after its IPO, you would still have earned 24 times your initial investment. And let's say that even if you invested in 2016, less than 10 years ago, which is 46 years after the company went public, you will still about quadruple your money, making around four times what you have invested initially.
Where I am going with all of this is that you can still make a lot of money even if you decide to wait instead of dump your money into something risky that you do not fully understand. So Peter Lynch makes the claim that those great businesses can turn out to be terrible investments if they're purchased at the wrong time.
So let's hear the example that he gives is a lot of times people buy on the basis the stock has gone down this much how you know how much further it can go down. I remember when Polaroid went from 130 to 100, people said, "Here's this great company, great record." If it ever gets below 100, you know, just buy every share, you know, and it did get below 100.
A lot of people bought on that basis saying, "Look, it's gone from 135 to 100. It's now 95. What a buy." Within a year, it was 18. And this is a company with no debt. I mean, this is a company, it was just so overpriced, it went down. What Peter Lynch is saying in this clip is that just because a great company is falling in price does not mean it's a good time to buy it.
Something very similar might be happening in the AI space now where a lot of analysts are estimating that we might be in a similar situation to the dotcom bubble in 2001 where a perfect example of this is the company Microsoft where it had an extremely high valuation in the year 2001 and after the bubble popped the stock dipped so much that it took it 15 years to recover.
meaning that if you invested then you would need to wait until 2016 to get your initial investment back. But regardless of that, the company still recorded higher and higher earning figures each and every year during that period. So then what should you do if maybe now is not a great time to buy stocks?
When should you buy then? Well, Peter Lynch is going to explain just that in this clip. But you should study history. And history is the important thing you learn from. What you learn from history is the market goes down. It goes down a lot. The math is simple. There's been 93 years a century. This is easy to do.
The market's had 50 declines of 10% or more. So 50 declines in 93 years. But once every two years, the market falls 10%. Of those 50 declines, 15 have been 25% or more. That's known as a bare market. We've had 15 declines in 93 years. So, every six years, the market's going to have a 25% decline. That's all you need to know.
You need to know the market's going to go down sometime. If you're not ready for that, you shouldn't own stocks. And it's good when it happens. If you like a stock at 14, it goes to six. That's great. You understand the company, you look at the balance sheet, and they're doing fine. You're hoping to get to 22 with it.
14 to 22 is terrific. 6 to 22 is exceptional. So you take advantage of these declines. They're going to happen. No one knows when they're going to happen. So you heard it. According to Peter Lynch, history in the stock market always repeats itself. So the most important thing as a value investor is to be prepared and be patient.
Stock market value investing is a long-term game where there is no place for irrational decisions. Being patient always pays off. So instead of worrying if you're missing out investing in the market now, it is more important to learn how to find quality businesses that are within your circle of competence, possess great competitive advantages, have low debt figures, and finally identify a price at which you would be comfortable to invest your money in with a big enough margin of safety.
So waiting for when the price of any of these companies falls below intrinsic value and then investing heavily is what made Peter Lynch one of the best performing investors to ever live. So if you want to learn the investment strategies and philosophies of Peter Lynch and other value investors such as Warren Buffett, Charlie Mer, Ray Dalio and many more.
Watch these videos where I explored their strategies on how they managed to outperform the market consistently.
Comments 0