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Peter Lynch’s Advice On Long Term Investing: The Best Gains Come In “Year 3 or 4”

Peter Lynch’s Advice On Long Term Investing: The Best Gains Come In “Year 3 or 4”

Some investors have made life-changing amounts of money in the stock market. Unfortunately, these investors are in the minority. Research shows that the vast majority of individual investors barely break-even in the long-term, after including the impact of inflation on returns. Similar research has also shined some light on why this is the case. As it turns out, investors struggle not because they don’t pick the right stocks, but because they don’t wait long enough. To put it another way,…

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How To Start Investing: 5 Simple Steps

How To Start Investing: 5 Simple Steps

Over the past 10 years, I’ve learned a lot about the stock market and what it takes to start investing and successfully and build wealth. Most new investors trip up because they make some simple mistakes, which are quite easy to avoid if you know what to look for in the first place. However, if you don’t know what to look for, these mistakes could become costly learning experiences. With that in mind, here are my five simple steps to…

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Dividend Stocks And Excess Returns

Dividend Stocks And Excess Returns

Some investors wrongly believe that being a dividend orientated investor means there’s reduced potential for capital growth.  But that is not the case. According to a study published by the Brandes Institute between June 1981 and 2015, high dividend-paying stocks delivered higher total returns than lower dividend-paying stocks partly due to the dividend return, and partly due to price growth.  The study looked at the five-year annualised rolling average returns of the largest 50% of stocks by market capitalisation during the period….

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Cash Is Boring, But It’s An Essential Tool For Investors

Cash Is Boring, But It’s An Essential Tool For Investors

Cash is dull. Having money sitting in your account doing nothing can be boring to watch, especially when compared to equities. In the current interest rate environment, cash returns are also lacking. But boring can be useful. Cash might not provide investors with high returns, but it does offer optionality, and you can’t put a price on that. The benefits of cash in a portfolio The coronavirus pandemic of 2020 has been one of the best case studies of why…

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Peter Lynch: Why It’s Important To Do Your Own Research

Peter Lynch: Why It’s Important To Do Your Own Research

Here’s an excerpt from an article I recently stumbled across written by Peter Lynch in 1993. In it, he talks about the importance of doing your own research and not relying on the opinions of others to make your investment decisions. I’ve edited the text below for clarity and conciseness: “The fact that the professionals now dominate the markets, which so often leads people to conclude that the amateur has no chance, has actually improved the amateur’s chance…What holds them…

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Why Warren Buffett Reads Annual Reports

Why Warren Buffett Reads Annual Reports

Most investors never review company annual reports. It’s easy to understand why. Full of facts, figures and detailed accounting notes, these reports are hard going. They’re not exactly bedtime reading. However, annual reports often contain valuable information for investors. As such, they shouldn’t be overlooked, no matter how dry the material is. So, what’s the best way to read these reports? Is there anything we should be on the lookout for that might provide insight into a company’s financial position…

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Warren Buffett: How Phil Fisher’s Scuttlebutt Method Should Be Used

Warren Buffett: How Phil Fisher’s Scuttlebutt Method Should Be Used

In 1960, Warren Buffett read a book that changed his investment mentality forever. The book was called “Common Stocks and Uncommon Profits,” and it was written by Phil Fisher in 1958. In the book, Fisher described what he called the scuttlebutt method for finding investments. This method was the process of discovering as much about a company and its products as possible. To do this, Fisher recommended interviewing competitors as well as listening to rumours on the business “grapevine.” He…

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The Best Method To Overcome Uncertainty It To Embrace It

The Best Method To Overcome Uncertainty It To Embrace It

Investors currently have to grapple with one of the most uncertain investing environments in recent history.  There are so many things going on right now it’s challenging to figure out which is the most pressing, especially from an investment perspective. The coronavirus is a global health emergency, and it has caused untold economic pain around the world.  Brexit is also on the agenda once again. It’s looking increasingly likely that the UK and EU will fail to reach an agreement…

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Mohnish Pabrai: Avoid Stocks You Don’t Understand

Mohnish Pabrai: Avoid Stocks You Don’t Understand

The highly successful growth investor Peter Lynch once advised investors to “buy what you know.” Another way to interpret this is to buy what you understand. Lynch isn’t the only successful investor that has recommend the principle of sticking to companies you understand. Warren Buffett, Charlie Munger, Seth Klarman and Mohnish Pabrai have all stated that this one of the essential principles in the world of finance. Warren Buffett calls his sphere of understanding his circle of competence. He will…

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Lessons from Wall Street’s Four Great Bottoms

Lessons from Wall Street’s Four Great Bottoms

Professor Russell Napier spends most of his time studying financial markets. Author of The Solid Ground investment report for institutional investors and co-founder of the investment research portal ERIC, Russell has been writing global macro strategy for institutional investors since 1995. He’s also a student of financial mistakes. He set up the not-for-profit Library of Mistakes in 2014, a library dedicated to avoiding mistakes. The professor set the Libary up with the simple goal of educating the financial world about…

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