Things, of course, are a lot different today. Getting
one-on-one interview time with the ubiquitous former fund manager is next to
impossible--he's too busy combining his roles as a pitchman for Fidelity, an elder
statesman for the mutual fund industry, and an investment advisor for numerous non-profit
organizations.
All those roles involve public speaking. Unfortunately for the
plug-averse, Lynch frequently peppers his speeches with references to the firm that still
signs his paychecks. And repetition creeps in if you've heard him more than once.
(Example: when someone asks him his opinion of Internet stocks, a likely response from the
Net-wary Lynch is "Yahoo--that's a chocolate drink, isn’t it?" )
And never mind those silly ads where the gray-topped investment
oracle plays straight man to Lily Tomlin and Don Rickles. Somehow, when it comes to Lynch,
common sense wisdom works better than contrived comedy.
Still, when the most familiar face in the mutual fund industry
speaks, it's worth a listen. Speaking before 2,000 of his industry cohorts last week at
the Investment Company Institute's recent annual gathering in Washington, D.C. , Lynch
spoke about "the most dangerous things people say about stock prices."
Here are some of them, along with Lynch's responses:
"It's gone down his much already, it can't go much lower."
"That's what they said about Digital when it went from $198 a
share to $100a share. Eventually, it landed up at $31."
"If it's gone this high already, how can it possibly go
higher?"
"A lot of people sold Microsoft and Home Depot years ago with
that thought in mind."
"Eventually, stocks always come back."
"They said that about International Harvester and RCA, and it
hasn't happened for them yet."
"It's a $3.00 stock. How much can I lose?"
"You lose everything if it goes to zero."
"It's always darkest before dawn."
"Actually, it's always darkest before it gets pitch black.
Industry sectors can take a decade or more to turn around."
"When it rebounds to $10 a share, I'll sell."
"The stock does not know that you own it, that you're a nice
person, and that you expect it to go up. It may not."
"What, me worry? Conservative stocks don't fluctuate
much."
"You can't say that when quality banks and companies like
AT&T have dropped 50 percent."
"Look at all the money I've lost. I didn't buy it."
"I've had lots of lost opportunities from not buying a stock.
But other ones always come along."
Other Lynchisms of note:
"People overemphasize the importance of management. What's more
important is a workable concept. You should buy a company any fool can manage because
eventually, one will."
"The key organ of investing is the stomach, not the
brain."
"I'm shocked that people buy a stock, but can't explain to the
average 12-year-old exactly why they did it because they don't understand hat the company
does. I made money in names like Dunkin Donuts, Taco Bell, and Chrysler. If you know the
reasons you buy a company, you know the reasons for selling it."
"Don’t try to predict the economy, interest rates, or the
stock market. The prime rate stood at 20 percent in 1981, and unemployment was 12 percent.
I don't remember anyone telling us in 1979 that was going to happen. And the recession in
1990 was preceded by economists' predictions of a soft landing."
Fifteen years ago, as a
new writer for a personal finance magazine, I called Fidelity Magellan manager Peter
Lynch, expecting a secretary to field the call and tell me he was in a meeting. Instead
Mr. Lynch himself answered the phone. I was even more surprised when he spent over
one-half hour talking to me, without even a hint of the 'please let's get on with this'
tone of voice so common among star managers.