Peter Lynch, former Fidelity Investments vice chairman, identified a key investor mistake 30 years ago that remains relevant: the real enemy is not a market downturn, but missing opportunities due to fear of one. He argued that investors often lose money waiting for a correction.
- The core issue is a psychological misconception where fear of decline causes investors to stay out of the market, thereby missing potential gains.
- Lynch advised that instead of trying to predict market movements, investors should focus on their personal risk tolerance.
- He suggested asking a critical question: "If my portfolio falls 10% or 20%, what will I do? Can I withstand it?" If the answer is no, then reducing one's position is the prudent action.
As early as 30 years ago, Peter Lynch, vice chairman of Fidelity Investments, pointed out a common psychological misconception in the investment market: "Most people lose money while waiting for a correction."
In a 1997 interview, he pointed out that the real enemy of ordinary investors is not the market downturn itself, but the missed opportunities to make money due to fear of a market downturn. Lynch believed that as ordinary investors, what they should do is not predict the market, but ask themselves: If my position drops by 10% or 20%, what will I do? Can I withstand it? If not, then you should immediately reduce your position.
Peter Lynch's investment advice from 30 years ago is still relevant today.
