Peter Lynch ran the Fidelity Magellan Fund for more 20 years, during which time Magellan was
the number one ranked general equity fund in America. His books One Up on Wall Street and
Beating the Street are filled with his accumulated wisdom and in Beating the Street he gives a
fairly detailed account of how he did his analysis.
The first thing that will strike new investors as strange is that Lynch’s methods are actually so
simple that mostly an amateur could use them entirely unchanged and with the same results.
Lynch does not use any gimmicky computer programs, either to pick stocks or optimize the
portfolio for volatility. Each and every company invested in by Magellan was considered on its
own individual merits, and the managers of Magellan generally did their very best to completely
avoid investing in anything that consensus opinion from the average Wall Street analyst declared
was a good thing.
Lynch sums up his points in Beating the Street with a number of humorous “Peter’s Principles”,
which appear here. Do take the time to read Beating the Street in its entirety though, as he makes
a number of very interesting points throughout.
