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Stocks 506: Great Investors: Peter Lynch

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1.
Peter Lynch believed investors should invest for the short term so that they do not lose money.
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False. He believed in long-term investing and ignoring short-term movements in the market.
2.
What was Peter Lynch's favorite investment metric?
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P/E ratio. Although he valued several, P/E ratio was his favorite.
3.
What sorts of companies did Peter Lynch favor?
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Those in industries he understood. Lynch invested in those in industries he understood. Lynch firmly believes that you should invest only in what you know. He shunned industries he didn't understand, even if they presented great value or great possibilities. Notice this echoes Warren Buffett's "circle of competence" idea.
4.
Companies whose sales and profits rise and fall in a regular fashion are called _______.
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Cyclicals. The cyclicals tend to be predictable.
5.
Peter Lynch's investment style is best described as what?
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Opportunistic. Lynch took ideas from many different investment philosophies. He went wherever he thought the best opportunities were.