Peter Lynch ran the Magellan Fund for 13 years and achieved a 29.3% average annual return from 1977 to 1990. He is a legend in the financial world.
When investing, Lynch advises doing research and developing a story about the target stock. If through your research and analysis you can develop a good story about why the stock is a good buy, then chances are you are on the right track.
Stories and stocks? Yes, you read that correctly. That’s because stories are one of the oldest forms of communication and an excellent tool to examine our own thinking.
Whether people are eating lunch, in the line at the grocery store, or just watching the game, they are always telling stories. Stories about success and failures. Stories about the ups and downs of life. It seems only natural that someone would adapt the technique for picking stocks.
Stories and stocks? Well, why not. Hard to argue with Lynch’s track record.
PS. Lynch is also famous for saying to “Invest in what you know.” Reminds me of the phrase “Write about what you know.” There seems to be a pattern!