You should not have a stock if you cannot explain it to a 11 -year -old child in two minutes

The famous investor Peter Lynch Once emphasized the importance of understanding the work behind the shares before investing in it, also questioning the effectiveness of economic prediction.

What happened: Lynch, who was recognized in his successful work in Fidelity Investments, revealed his investment visions during 1997 letter.

He stressed the importance of understanding the business behind the arrow, and advised, “If you cannot explain an 11 -year -old child in two minutes or less, and why do you own the shares, you should not own it. Understanding the work behind the stocks is the most important principle of investment in the stock market. This is the reason that Pavite is investing only in what he understands and what is deviated in his district.

This philosophy is in line with Warren BuffettThe investment strategy, which calls for investment in the areas of personal experience.

Lynch rejected the concept of economic prediction, as he defined himself as an investor “from bottom to top” that focuses on individual stocks by analyzing the company and the comprehensive industry.

Also read: Guru Peter Lynch: “Often the great investments are the investments in which everyone thinks you are crazy.”

He also stressed the importance of patience in investment, which indicates that large returns can be achieved even after a decade of the general time for the first year. quote Wal Mart For example, emphasizing that investment is the marathon race, not the enemy.

“After a decade of Walmart when the audience was in 1970, he had only 15 % penetration in the United States, and therefore, one can assume that they have a lot of runway in the forefront to expand all over the country, but success was not guaranteed, so some investors may have already accused the bus.”

Why do it matterLynch principles provide a valuable road map for both novice investors and investors. Its focus is on business understanding, focusing on individual stocks, and patience with successful investor strategies such as Buffett.

Seeing it is a reminder to investors that successful investment depends on taking informed decisions and playing the long game.

Read after that

Peter Lynch Tip: “You do not need a lot in your life, you only need a few good stocks in your life.”