Peter Lynch Lyrics: Risks and Rewards in Stock Market Investing

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

Lynch Lyrics
Risks and Rewards in Stock Market Investing

"The stock market is not pure science, not like chess, where the superior position always wins. If seven out of ten of my stocks perform as expected, I'm delighted. If six out of ten of my stocks perform as expected, then I'm thankful. Six out of ten is all it takes to produce an enviable record on Wall Street."

"Over time, the risks in the stock market can be reduced by proper play just as the risks in stud poker are reduced. With improper play (buying a stock that's overpriced) even the purchase of Bristol-Myers or Heinz can result in huge losses and wasted opportunities, as I've said. It happens to people who imagine that betting with blue chips relieves them of the need to pay attention, so they lose half their money in quick fashion and may not recoup it for another eight years. In the early 1970s millions of uninformed dollars chased overpriced opportunities and soon disappeared as a result. Does that make Bristol-Myers and McDonalds risky investments? Only because of the way people invested in them."

"On the other hand, assuming you'd done the homework, putting your money on the risky and troubled General Public Utilities, the owners of the Three Mile Island nuclear problem, was far more 'conservative' than an ill-timed investment in solid old Kellogg. The big winners come from so-called high-risk categories, but the risks have more to do with the investors than with the categories. Clearly, the stock market has been a gamble worth taking-- as long as you know how to play the game."


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