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Peter Lynch a renowned figure in the world of Finance shares his insights on the stock market and the importance of understanding Market volatility with a wealth of experience Lynch offers valuable advice to investors of all ages it's an incredible rate of illiteracy in in our public these people have had no experience learning about the stock market it's a tragic you can purchase a stock do certain things you will do better you're not ready to do those things you should keep your money in the bank are you concerned about the volatility in the financial markets today do you think something needs to be done I I love volatility I think I remember when uh 1972 the market went down dramatically and Taco Bell went from 14 to 1 did no debt they never had a restaurant close I started buying at seven but I kept onto it it went to one it was the largest position in Magellan in 1978 when it was bought out by forty two dollars by Pepsi Cola I think it would have gone to 400 if they'd buy it out I think volatility is terrific I think it is very I think these calls are very important I don't think the market going up 80 points one day and down 80 the next is a good thing for the public I think that's not a very good thing but I think all these callers and all these other things to keep the volatility down each day is important but the Market's going to go up and down human nature hasn't changed a lot of 25 000 years and Osama bin will come out of left field and uh Mark will go down or Mark will go out volatility will occur and Margarets will continue to have these ups and downs I think that's a great opportunity if people can understand what they own if they don't understand what they own like an old Mutual funds right here on mutual funds they own and keep adding to it basic corporate profits have grown about eighty percent a year historically so corporate profits double about every nine years the stock market ought to double about every nine years so I think the next Market's about 3 800 today 3700 I'm pretty convinced the next 3 800 points will be up it won't be down the next 500 points the next 600 points I don't know which way they go so the market ought to double in the next eight or nine years they're ought to double again in the 89 years after that because profits will go up eight percent a year and and stocks will fall that's all there is to it but Peter Lynch discusses the issue of illiteracy in Public Finance emphasizing the importance of Education about the stock market he expresses his love for Market volatility and believes that it presents opportunities for investors however he also highlights the need for Market regulations to prevent excessive volatility for the Public's benefit Lynch mentions that corporate profits historically grow at around eight percent a year leading to stock market doubling every nine years and he expects this trend to continue in the future 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 markets had 50 declines of 10 or more so 50 declines in 93 years but once every two years the market Falls 10 we call that a correction that means that's a euphemism for losing a lot of money rapidly so 50 defines in 93 years about once every two years the market Falls 10 of those 50 declines 15 have been 25 or more that's known as a bear 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 markets can go down something 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 6-22 is exceptional so you take advantage of these they're going to happen no one knows when they're going to happen people tell you about it after the fact that they predicted it but they predicted it 53 times so you can take advantage of the volatility Market if you understand what you're on stock market I think of it more people study chess this would be not a good game to study for Starbucks in chess an outstanding player will be a good player 1 000 times Iran so everything's in front of you all the moves are known it's all technique in poker or in Bridge there's a lot of uncertainties there's a lot of things you don't know you can play a hand exactly right and lose you say but I played it right if I do it again overnight over a month I'll do that's the start my summary is much closer to Poker than it is to uh any other game and uh I think that's what's the important thing to know this is important whether you're investing for a four-year-old a 14 year old or a 74 year old you have to say what am I going to do when the market goes up these iPad audiences like this larger audiences and I'll say how many people in the room are short-term investors I've never had anybody ever raise their hand I mean everybody in the world is a long-term investor until the market goes down you know but but seriously I think it's very important that people understand when they own a bond fund that bonds can go up and down bonds are just about as well as stocks if they own a 30-year bond fund that you can lose 25 30 your money very fast even though they're government bonds people have to understand this Peter Lynch emphasizes the inevitability of market downturns and advises investors to study history he compares the stock market to Poker highlighting its uncertainties Lynch stresses the need for a plan to handle Market volatility and cautions about risks and bond funds it's an incredible rate of illiteracy in our public and all they ever hear about is what happened today that Bristol Meyers going up two or three dollars what happened to Dow Jones they don't get to learn anything about America and people at some point in their career are presented their near retirement they're given 4500 000 because it's an early retirement they have no experience they don't know what a bond is they don't know what stocks are they have to make a decision in 30 or 60 days when they have a big tax consequence these people have had no experience learning about the stock market it's a tragic so I think anything we can do to educate the public if you can convince people if they understand the volatile stock market I'm not saying anybody should buy a stock I'm just saying if you buy if you purchase a stock you ought to do certain things purchase the stock do certain things you will do better you're not ready to do those things you should keep your money in the bank keep your money in a money market some people aren't willing to do the homework they don't have the stomach for it they should stay out they're not doing betting any good by taking half their life savings and putting the stock market they've been lucky enough to save fifty thousand sixty thousand dollars to send their kids to college and one's going to start a year they're going to take all that money and put it on Equity mutual fund with a one-year Horizon that's doing no one good so I think the more whether it's a banks that explain it the Brokers that explain it if they understand them they'll do better with it so I would say if you want to buy a small growth fund they want to buy a balance fund that's hard bonds or card stocks if you put so much money in more and every year you'll be very pleased in 10 20 30 years in a world where financial literacy is lacking Lynch emphasizes the need for education and informed decision making and investing whether you're a seasoned investor or just starting out his wisdom reminds us that embracing Market fluctuations can lead to long-term success in the ever-changing world of stocks
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