Peter Lynch: The Secret to “Buying the Dip"
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- เผยแพร่เมื่อ 20 ก.ย. 2024
- Anyone that has been following this channel knows I am a huge fan of Peter Lynch. Lynch rose to prominence running the legendary Fidelity Magellan Fund and writing books such as “One Up on Wall Street,” one of my top 5 favorite investment books. Over his 13-year career at Fidelity, the fund averaged a nearly 30% annual compounded return. Meaning $1,000 invested in his fund turned into $30,287 in little more than a decade. With a track record like that, it is clear that if you want to learn more about investing, you should learn from Peter Lynch. These impressive results are the reason I frequently incorporate lessons I have learned from studying Peter Lynch both in my personal investing and in my job as an Investment Analyst at a large investment fund based in New York City. In this video, we are going to watch one of my favorite clips of Lynch where he talks about how one of his best investments came as a result of “buying the dip” as opposed to panic selling. After the clip, we are going to break down this strategy and talk about how I applied the strategy to find an investment that made me over 3x my investment over the past 2 and a half years. The ultimate goal is for you to apply these investing lessons in your own portfolio. But first, make sure to like this video and subscribe to the channel if you aren't already because it is my goal to help make you a better investor by studying the world's greatest investors. Without further ado, let's dive in!
Let's take a second to break down the situation Peter Lynch faced when he invested in Kaiser industries because once we do, it will help you understand why Lynch was able to have the courage to buy the dip in the company’s stock price instead of panic selling when the stock fell in value. For background, Kaiser industries was a conglomerate. Put simply, it was a large company that owned many smaller companies. Kaiser industries owned companies such as Kaiser Aluminum, Kaiser Steel, and Kaiser Cement. Lynch was able to identify this company as undervalued and an attractive investment. He bought a large amount of stock at $14 a share. However, after the purchase the stock price continued to fall pretty substantially, all the way to $3 a share. Why did Peter Lynch not panic sell like most investors did at the time? It is because he truly understood what the company did and continued to believe the underlying fundamentals of the business remained strong, despite what happened with the stock price. This is why he continued to buy more and more shares as the price fell. Once the company hit its low of $3 a share, the company was so undervalued that the management of the company was forced to dissolve the conglomerate and distribute the businesses that it owned to the people that owned the shares. Shareholders received cash from the sales shares in the affiliated companies. For every 100 shares of Kaiser Industries, a stockholder got 25 shares of Kaiser Aluminum, 13 shares of Kaiser Steel and 7 shares of Kaiser Cement. Once this happened, the value of the company increased dramatically, making this investment once of Lynch’s most successful investments of all time.
Here are the main takeaways for investors: 1) truly understand the company behind the stock you own. If you view stocks as companies with underlying business fundamentals as opposed to just pieces of paper that float around in price, you will be more comfortable with price fluctuations. That leads me to the second main takeaway: if the underlying fundamentals of the business remain unchanged but the stock price is declining, that could be a sign of a great buying opportunity either to start a new position in a stock or add to your holdings in that stock.
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Subscribing because of the “Time to Lynch” counter
Glad you enjoyed it 😂
Same..
2nd
The secret is; Always keep in mind that you are buying a business, and a business doesn't change in 3 months or a year, no matter what the price of the stock does.
Exactly! If investors remember this they would be a lot better off
look at the NVIDIA STOCK :)
Look at the Wirecard stock 😇
@@silber7010 looks like sinking ship to me
Nokia, Kodak and many more
Buying a stock is easy, but buying the right stock without a time-tested strategy is incredibly hard. Hence what are the best stocks to buy now or put on a watchlist? I’ve been trying to grow my portfolio of $560K for sometime now, my major challenge is not knowing the best entry and exit strategie;s ... I would greatly appreciate any suggestions.
Investing without proper guidance can lead to mistakes and losses. I've learned this from my own experience.If you're new to investing or don't have much time, it's best to get advice from an expert.
A lot of folks downplay the role of advlsors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for licensed advisors and came across someone of utmost qualifications. She's helped grow my reserve notwithstanding inflation, from $275k to $850k.
How can one find a verifiable financial planner? I would not mind looking up the professional that helped you. I will be retiring in two years and I might need some management on my much larger portfolio. Don't want to take any chances.
Svetlana Sarkisian Chowdhury is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
Thank you for this tip. it was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her résumé.
Peter Lynch is the best combination of investor and investment teacher. That specific lecture is the best breakdown of fundamental stock market investing ever.
Yes I would completely agree!
Yeah..seems like the kind of guy you could have a laugh and a beer with
I wish Peter Lynch would have been a guest lecturer at my college
Yeah me too! That would have been awesome
‘I bought the dip but the dip kept on dipping” Will Rogers
Haha we all have been in that situation before including even Peter Lynch
Yup... I've bought a dip that kept on dipping but if it's a good company and you have conviction in it you can continue your averaging down. It could take a long time but look at Amazon as 1 example. You could have bought at $90 in 1999... you'd think oh that's awesome that's pretty cheap Amazon is $3600 now... but in 2001 it went down to $7 a share. If you had conviction you could have been buying Amazon at amazing prices more people got scared and sold instead.
Lol
😂😂
I totally agree it is a good time to capitalize on the market for long-term gains, but it wouldn't hurt to know means of actualizing short term profit, been reading off investors pulling off millions of dollars in gains presently, and I'd love to be a part of this
@Celestial Being How can one find a verifiable portfolio handler? I would not mind looking up the professional that has helped you. I will be retiring in 5 years and I might need some management on my much larger portfolio. Don't want to take any chances.
Peter Lynch is my favorite trader of all time! Such a regular guy with a completely no nonsense approach to the stock market!
Yeah! He seems like the kind of guy that would be a fun of fun to sit down with and talk about stocks
@@InvestorCenter I’m from Boston just like Lynch. He reminds me of so many Bostonians I know, I’d love to buy him a beer and talk stocks!
@@christophermartin972 I’m from the Midwest but Boston is one of my favorite cities! If I ever get a chance to interview Peter Lynch, I will make sure to invite you haha
Peter Lynch is NOT a trader. He is an investor. HUGE difference.
@@christopherstewart9874 I meant Traitor oops my bad
There is so much to learn from Peter Lynch as a Man and as Investor. He is my idol.
Definitely! Peter Lynch is the man
Not only is Peter Lynch the GOAT- he is a practical and down-to-earth man. I grew up in the same small town where he lived and was at Sunday mass often.
"understanding the company" is not enough to accurately predict the performance. You have to understand the market for its goods/services. Will customers continue to want to buy them? And you also have to understand what competition he company will face. Will the company be able to compete? And what kind of regulatory or political risks? These things are very hard to predict -- close to impossible. That's why diversification is important.
great comment
Being successful don't happen by magic, success depend on the action or step you take to achieve it,show me a man who doesn't have investment and l'l tell you how soon he’ll go broke, investment is like building a safe heaven for the future .with the right choice of investment that has at least 1% minimum risk, and with the guidance of an expert, profit and interest should be 90% guarantee.
Most people remain poor only because friends and relatives discouraged and advised them against investing and trading Bitcoin while the wise ones kept investing and growing higher financially.
I've come to realise that there's no secured job in NY, you get employed today and get sacked the next month.
@@ginadaniels9499 This was exactly the point l was trying to make with my friend, there's no good paying jobs, that was why l rushed into crypto and Bitcoin trading and I see crypto as a safe heaven
That's 100% true because the jobs I saw was just less than $1000 weekly which is very bad for a parent with 3 kids
That was why I got involved in Forex/crypto since 2020, now I can pay my bills without depending on any good pay job
His comment about it is hard to go out of business if you have no debt is important also when buying a falling stock. Little or no debt gives some security that it will not go to zero. Your example of Apple is good from the operational stand point and it is also flush with cash they can handle any debt they have. Their high profit margins mean they are continuously adding to that cash as well making it well supported fundamentally. Thanks for the video.
Thanks for watching! And yeah, I love investing in companies with large amounts of cash on the balance sheet. Google and Berkshire Hathaway are another two example
Peter Lynch is simply one of the best investors of all time.Great video 👍
Yes he is! Thank you for watching
I love how he explain everything with the same seriousnes, but the audience takes it as humor.
Thanks for adding some context to his comments. Very helpful to us new investors
Glad you found it helpful. Thank you for watching!
Imagine having Peter Lynch as your grandfather...the talks would be amazing.
Peter Lynch is a greaet fucking teacher and speaker. Very energetic, knowledgeable and humorous!
Peter is a great guy to learn from
Yes he is. Peter Lynch is definitely one of my personal favorites!
I live in Boston, Peter lynch is a legend here……Even Warren Buffett invited him to visit Omaha ….
That is what I have heard!
Sometimes I wish I was started investing back in 2018 cause so many of my fav companies got hit hard during the correction then but oh well just gotta keep on pushing
Don’t worry man! There definitely will be more corrections and buying opportunities in the future. The most important thing is to make sure you take advantage of those corrections and buy stocks!
bro I feel the same way, but at least we are now ready for new opportunities. There'll always be sector rotations into different industries, these give chances to make money
@@InvestorCenter time in the market > timing the market
Now is not a bad time to buy I suppose
I think Buffett said Lynch is the best teacher of investment
It's always the same same clips 😭 I wish we could hear more of him especially these times
Yeah I agree. He’s not doing public appearances anymore, unfortunately. That’s why I tried to add some context around his comments to make them even more relevant to today. Hope it was useful!
@@InvestorCenter always appreciated, much love
@@jacklan4103 you couldn't have said it any better!
"Walk around the block" sounds like a good solution to most of the problems in life.
What are the best things to consider in order?
P.E.?
Amount of debt?
Debt to equity?
Probability of going bankrupt?
You do a good job helping people👍...Be a part of Encouraging Life Success Day...October 3rd, Encouraging Life Success Day is a day where we all wear green, which represents GOING for our goals and dreams while encouraging others to GO after their goals and dreams as well. October 3rd, Encouraging Life Success Day, wear GREEN 😊
"Capitalism is about profiting from unfair deals and prospering through misery-producing financial scams. So, become independent as soon as possible - free yourself from people who abuse you (often on a daily basis and without you realizing it). Good people work hard to be fair and honest." - Alemvik
Great video thanks for the upload. Remember why you bought and if the underlying story hasn't changed don't panic if the share price drops.
A very important lesson for all investors
This was SO VERY HELPFUL. Thank you for making this. The lessons here are PROFOUND in their SIMPLICITY 🙂
Popular opinion holds that one should buy blue chip corporations, irregardless of fundamentals. My advice: Don't buy them as they are usually; over analyzed, over sold and over bought. Instead buy low capitalization companies, why? Because analysts - believe it or not - aren't actually paid for good advice, but rather how much business they can attract to their firms (investment banks primarily). This inherent bias toward solely favoring new IPO's, new bond issues or large corporations - irregardless of the true value of the things -, creates huge price discrepancies between their intrinsic value and their actual value (although intrinsic value is next to impossible to calculate). And thus you find that the system is broken inherently and that furthermore you can exploit this via buying small capitalization stocks, not least because they are more scalable relative to larger firms.
I did that with HMNY. I thought to myself, HMNY was down 99% from ATH, what could I lose? It has to come back up, right? Well my $2000 was pretty much gone because it went down another 99%.
Great content, Thanks for sharing 🙌🏻
Love from India 🇮🇳❤️
He is one of the most sensible investor.
AMC is still the play. Shorts haven’t covered. Do your dd if you want in on this play. Just saying
they say you cant beat the market, this dude did it
Peter is my mentor
I think a lot of investors aren't considering the dismantled value of a company, the value of the assets that the company holds after debt. Sears is another example, of little net worth. Exxon on the other hand is a company that has a lot of assets, as well as a political necessity for back door communication. It's why I would never buy Tesla, the value of Tesla when disassembled wouldn't even cover 1% of its stock share price.
Yes exactly! The “sum of the parts” valuation that you are referring to is a great way to see the value of a company
Can you explain “fundamentals” like what to look for?
Thanks for the interesting content! 😍 I wanted to ask something unrelated: 🤔 I found these words 😅. (behave today finger ski upon boy assault summer exhaust beauty stereo over). I don't know what they are. What should I do with them? 🤷♀️
Apple depends on TSMC which depends strongly on geopolitics. It might have been a good buy pre-2020, but currently it's maintaining it's value mostly thanks to hype similarly to Tesla stock.
Keep it simple! Invest with Dollar cost averaging in a Total Market Index Fund with Vanguard or Fidelity
So simple yet so many people don't follow this advice. I personably have a 50/50 split of Index funds and individual stocks as I like a little higher risk.
Recently bought some recommended stocks and now they are just penny stocks. There seems to be more negative portfolios in the last 3rd half of 2023 with markets tumbling, soaring inflation, and banks going out of business. My concern is how can the rapid interest-rate hike be of favor to a value investor, or is it better avoiding stocks for a while?
Just ''buy the dip'' man. In the long term it will payoff. High interest rates usually mean lower stock prices, however investors should be cautious of the bull run, its best you connect with a well-qualified adviser to meet your growth goals and avoid blunder.
Thanks for sharing.
Amazon is currently down 50% from its peak. Is AMZN a good buy today???
Loved hearing about your Apple investment. Thanks for sharing
Any companies right now that are experiencing pullbacks but aren't in debt and have a bright future??
I have bought a few a couple of months ago
Whenever I see a price plummet on a company that looks like it's sound, it always makes me think something is going on that I don't know about. Somebody knows better than me.
Buying the dip doesn't always work, it just keeps dropping, even if you avg down, I will soon try buying second dip.
When you use SIP, wouldn't it automatically buy more at dips.
Let's just say you buy a company at $10. Then a year later the price goes to $40. So $10 is your price avg! Ok now in another year the company price drops down to $20. In this situation would you buy the dip. Or would you do nothing because the price is still above your price avg of $10?
Depends on the value!
Bro how can I buy shares on a company a believe
Imagine having Lynch, Munger and Buffet on the same interview
That would literally be my dream haha
@@InvestorCenter there is a video where Buffet speak about meeting Lynch, and if my memory doesn't fail me it might some Charlie Rose video of Lynch speaking about Buffet calling him
Yes! I have seen the clip of Lynch talking about Buffett calling him. Lynch says Buffett called him and asked for the quote “selling your winners while holding on to your losing stocks is like water your weeds and cutting the flowers”. Buffett when on the use that quote in his annual letter
@@InvestorCenter beautifully said!
Nice latter half of the video👍
Thank you! I appreciate the comment
amazing : thank you
Thanks so much dude
Glad you enjoyed it!
You can make 30%+ short term trading and longer term investing.
BUT longer term is much easier and less stressful.
I would like to buy the Dip AAPL. $110?
Nice
I am new to investing I have 100k to invest in stocks and etfs index funds itc I know I will be succesfull in future as I am focused on long term investment what advice would you give me before I will start investing ?
Watch all of my videos to learn about investing. Start out investing in S&P 500 index funds. That’s what I would do!
VTI or VOO are both fine
What are your 5 favorite investment books that you mentioned in the video?
1. One up on Wall Street
2. The Warren Buffett way
3. The essays of Warren Buffett
4. Margin of safety
5. The intelligent investor
Another good book is “Investing the Bernie Madoff Way”
I bought PINS today based on this.
You at least have to subscribe to this channel because of that!
This is why, i love watching a video on TH-cam from Jeff Bezos.... the video is called, "Jeff Bezos says Amazon stock is not the company" starting from 1:20
it's always about what's going on inside the company!
By this logic, you cant buy any stocks anymore because everything is overvalue't. You cant invest like Buffet or Lynch in 2021.
That's the result of inflated assets. But someday the bubble will pop. Put something into compamies you are going to invest heavily in when the market crashes and when it crashes go all in
Get your checkbooks ready everyone
applying this to ROKU as I type
Smart!
And Kizer Sowzay.. lets not forget them
Let’s go brandon 🍦🍦🍦
Awesome
I like it. It learned a lot
2min hits different after bag holding clov for 6 months
You own clov?
@@InvestorCenter lol yeah, way back from December. I've seen it go from 15 to 6 upto 28 back to 12.. and still holding haha. These videos help keep my sanity
How did you work out that 1K for ten years at 30% compounded would equally 30K? My math says 13K.
10% will double your money in 7 years. 15% will double your money in 5 years (approximate). 30%/yr would take about 2.5 years to double.
Dollar cost average?
Investor centre is same in the wolf of wall street
I was about to apple at $100 a share until Carl Icahn sold his entire stake in the company.
The lesson to this story, I still don't really know.
Icahn somehow get these always super early. Same with oxy. He got in super cheap, made probably 2-3 time his money and is out now. Now Buffett went in haha
@@Lenny1337i icahn doubled his money. made 200 mil
I wonder if he thinks the Hedge Funds short term algo trading has changed anything?
Wow, this is actually a good video! And only 50k views. That sums up TH-cam!
Thanks for the kind words, Dale!
Great Video
Thank you!
But for everyone that you got right how many did you get wrong
I spent everything i could during the dip of 2020. It was not enough, and i ran out of funds
Can you elaborate on " it was not enough" ?
@@nidalalghad4959 I could only put 7k in my roth: the stocks i bought returned good profits
People always look back and wish they bought the dip.. Look at baba stock now bois.
GOAT. 🐐🐐🐐
Nobody owns Kaiser Sose
Was Peter Lynch born with gray hair?
I saw a B&W photo of him when he was 33 (and took over his fund) he had dark hair but had streaks of white coming through.
Its the only photo I have seen without him having majestic white hair.
Maybe fund management is a stressful job. Bill Ackman is the same.
Peter, Jack Bogle, Warren all on same page same rule, buy and hold for long long , well very long
How much did you earn with that move?
cut the first 1 minute
Me too
I HAVE INCURRED SO MUCH LOSSES TRADING ON MY OWN...I TRADE WELL ON DEMO BUT I THINK THE REAL MARKET IS MANIPULATED... CAN ANYONE HELP ME OUT OR AT LEAST TELL ME WHAT I'M DOING WRONG ?
Trading with an expert is the best strategy for newbies and busy investors who have little or no time to monitor trade
I will advice you should
stop trading on your own if you keep losing and start trading with Mrs Laura Morgan trading services
Wow I'm just shock you mentioned and recommended Expert Mrs Laura I thought I'm the only trading with her
I lost £1200 carelessly trading on a
platform then I was referred to Mrs Laura Morgan she recovered the loss and made an extra profit of £4600
You don't need to be shock because I'm also a huge beneficiary of expert Mrs
Laura
Buy the chips, not the dips.
#HEPION
Just buy Berkshire and you'll become a partial owner of Apple Inc. ... ;-)
Peter Lunch
😎😎
Houston Natural Resources Corporation (OTCMKTS:HNRC) stock has been soaring over the past few sessions and reached a new multi-month high. The HNRC stock has been seeing heavy buying interest as Short Stock Scanners Indicate Substantial Short Exists and short covering is underway! The company currently has earnings per share to the tune of $0.27, energy stocks trade at a PE of 17.8. At this ratio, HNRC would be $4.80 per share.
The stock has gained a whopping 147% this week from Friday’s July 22, 2022 close. Moreover, the stock closed above the 200-Day moving average.
Nine minutes of fluff when all you had to say is “do fundamental analysis” 😂
I do not know Anything about stock Market, but I think Apple is gone by the low quality of their products, not more secure and the "Status" of having IPhone Will diminuish. Status of what? To be dumb? In Brasil iPhone is the price of a bike. Macbook pro a jetsky, used car, a bike. And to have the pleasure to listen from them " your Perfect Macbook pro is vintage. Buy another. Good bye. " or buy Gold instead. In 3,2,1 a disposable computer. Only 100 bucks for an intire year.
radheshyam
Tesla🙌
Ticker CMKI
I’ve been buying lots of Walmart. I just don’t get how Walmart share is only 140. There’s no way that Walmart doesn’t hit $300 in the future. Home Depot’s is at 310 / target is 220+. Even McDonald’s is $200+ a share
I feel the same way with ebay - way cheaper than it should be.
Walmart may go up in future but your logic is flawed mate.
.
Share price is dependent upon no. of shares issued. Two equivalent companies with same revenue and profits, say A & B, can have different share prices if There are 1000 shares of A in market but 1000000 shares of B in market.
You need to look at PE ratio and growth also. WMT PE is 34 and HD is 24. Simple math makes HD cheaper right now.