Peter Lynch managed money for a very short term, but did such a great job that he became very famous. He is also a very good writer – which means he has books which have sold more than a million copies. Awesome indeed.

Some of the things that he said are really worth remembering, but people should please REMEMBER the following:

When Peter Lynch or Warren Buffet say something it is NOT easy to understand: ‘Buy a business if you like the product’…he talks about a lingerie company which was a multi bagger in his portfolio.

So if you traveled by Jet Airways and liked the service you would have bought Jet Airways, right?

or even worse, Kingfisher?

When PL or WB say buy a company that you know or business that you understand, please understand they mean: “THIS IS THE STARTING POINT FOR DOING RESEARCH ABOUT A COMPANY”.

They do not buy a Coke, Pepsi, or Wriggley just because they use a product that they like. THEY LOVE THE FINANCIALS AND THE PRICE TOO.

If you like Lux, Gillette, Nestle, Colgate toothpaste, Sunfeast biscuit….you know which companies to buy. However if you like Cadbury silk, Hyundai cars, Samsonite bags, Samsung phone, …..dear dear me what will you do? Please?

When Warren Buffet says ‘Indexing is good’ he means it is good for you BECAUSE YOU do not have his wherewithal or diligence to do research. Not easy to beat the market, but WB does not do indexing.

 

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  1. Lynch himself clearly says not to do this. In the same book he explains Bildner’s sandwiches, a product he loved but was a bad investment. This message is obvious if one reads the whole book

  2. Subra I think the key point to understand is Lynch and Buffet lived during times when bargains were available in the market where for example value investing concepts would have worked. In today’s world of double digit PEs, such bargains are non existent

  3. I have been investing in stocks like RIL, BHEL, ONGC for the last 5 yrs and while no analyst says they are bad and don’t accumulate, market thinks otherwise.

    I think best to stick to Nifty ETF

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