Peter Lynch Lyrics: Lynch on Warren Buffett

The following notes was taken from a forum posting. If not mistaken the original writings were posted at Wallstraits.com

Lynch Lyrics
Lynch on Buffett

"The market ought to be irrelevant...and if you don't believe me, believe Warren Buffett. 'As far as I'm concerned,' Buffett has written, 'the stock market doesn't exist. It is there only as a reference to see if anybody is offering to do anything foolish.'"

"Buffett has turned his Berkshire Hathaway into an extraordinarily profitable enterprise. In the early 1960s it cost $7 to buy a share in his great company, and that same share is worth $4,900 today. A $2,000 investment in Berkshire Hathaway back then has resulted in a 700-bagger that's worth $1.4 million today. That makes Buffett a wonderful investor. What makes him the greatest investor of all time is that during a certain period when he thought stocks were grossly overpriced, he sold everything and returned all the money to his partners at a sizable profit to them. The voluntary returning of money that others would gladly pay you to continue to manage is, in my experience, unique in the history of finance."

"I'd love to be able to predict markets and anticipate recessions, but since that's impossible, I'm as satisfied to search out profitable companies as Buffett is. Just for the sake of argument, let's say you could predict the next economic boom with absolute certainty, and you wanted to profit from your foresight by picking a few high-flying stocks. You still have to pick the right stocks, just the same as if you had no foresight."

"If you knew there was going to be a Florida real estate boom and you picked Radice out of a hat, you would have lost 95% of your investment. If you knew there was a computer boom and you picked Fortune Systems without doing any homework, you'd have seen it fall from $22 in 1983 to $1 in 1984. If you knew the early 80s was bullish for airlines, what good would it have done if you'd invested in People Express (which went bankrupt) or Pan Am (which declined from $9 in 1983 to $4 in 1984 thanks to inept management)? Let's say you knew steel was making a comeback, and so you took a list of steel stocks, taped it to a dart board, and threw a dart at LTV. LTV declined from $26.5 to $1 between 1981 and 1986, roughly the period in which Nucor, a company in the same industry, rose from $10 to $50. So, you want to worry about something... worry about picking the right stocks and the market will take care of itself."

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