Lynch Law

Common Sense Investing

i. Know what you own.
ii. It is futile to predict the economy, interest rates, and the stock market.
iii. You have plenty of time.
iv. The ten most dangerous things people say about stock prices:

  • If it has gone down this much already, it can’t go much lower.
  • If it has gone this high already, how can it possibly go higher?
  • Eventually, they always come back.
  • It’s $3, what can I lose?
  • It’s always darkest before the dawn.
  • When it rebounds to $10 I’ll sell.
  • What, me worry? Conservative stocks don’t fluctuate much.
  • Look at all the money I’ve lost, I didn’t buy it.
  • I missed that one. I’ll catch the next one.
  • The stock has gone up, so I must be right. The stock has gone down, so I must be wrong.

v. Other general rules

  • Avoid long shots
  • Avoid high growth, easy entry industries.
  • Look at the balance sheet.
  • Great stocks are always a surprise.
  • The individual has several advantages versus the professional investor.
  • There is always something to worry about.

Source: Lynch Law