Know what you Own, and Why you Own it.

October 29, 2020

Peter Lynch. an American investor, mutual fund manager, and philanthropist. 

For 13 years as a manager of a large fund, the Magellan Fund at Fidelity , from 1977 to 1990, he averaged 29.2% per year 

Is that good or good? 

He said  "Know what you own and know why you own it”. 

Ask yourself, do I really understand what you get into? 

If you have invested before, did you really know what you bought? 

What we’re going on in the company you invested in?  

"Know what you own and know why you own it”. 

What does that mean? 

Look at the fundamentals in the market where your potential investment operates,  look at the fundamentals of the sector, in the industry and the company itself.  

Note down the fundamentals and the information you have, because it will help you understand how you make better decisions, and thus  increase your performance.

Also write down why you entered.  

And be very aware if your reason is based on emotions. That is the first sign you shouldn’t get in. Especially if it is FOMO.  

How much debt does the company have? 

What is their return on investments? 

How is the company performing on key indicators compared to other companies in the same industry? 

"know what you own and know why you own it”. 

If the price goes down, it doesn’t really matter because you know you own a great company 

Our strategy is buying on the downtrend, to get a discount on the company. We wait for the price to come down to the level we want it to go down to. 

And that is likely to happen, even with the biggest companies, because it can be the short-term perception of the market 

As companies go down, what do you think most people do? 

The general public gets in at the worst time, and out at the best time to buy. 

Many people have the default reaction to sell when things go down.

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