Dividend Growth Investor: 25 Golden Rules for Investing by Peter Lynch

One of the top investors of all time, Peter Lynch ran Fidelity Investment’s Magellan Fund for 13 years. He turned $20 million in assets into over $14 billion, for an average annual return over 29 percent. That’s a far cry better than other well-known investors such as Warren Buffett.

Over the years, Lynch has espoused a number of ideas about how to invest, which have been simplified into a series of rules.

One of the key rules is to start by investing in products and services that you understand. That can allow you to outperform experts, who often have to be experts in nearly all market sectors and stocks.

Another key rule is that professional investors act as a crowd. The big money that they manage tends to act like a stampeding herd. Investors can find overlooked parts of the market, such as small caps, or by getting in or out ahead of the herd.

Over time, a company’s operational performance will drive its returns. But in the short-term, there’s often no correlation between how a company is performing and how its stock will return. That suggests that investors should be patient.

And, it’s good to remember that long shot ideas will often miss the mark. That moves from investing to speculating, which can provide good returns, but often won’t.

To read the full list of 25 golden rules from Peter Lynch, click here.