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Investing Lessons from Peter Lynch

The Financial markets provides various financial instruments which could be leveraged by the Firms and investors to raise the capital at a much lower cost. Given the dynamic nature of the markets, it is upon the investors to understand the market dynamics, get right set of tools for analyzing the behavior of the securities at various scenarios and make a wiser investment decision. As a beginner, the art of selecting a viable investment could be overwhelming. However, treading on the path charted out by the well-known investors could help the beginners in mitigating the substantial risks and maximize the probability of gaining sustainable returns from the various investment avenues. We are here to present some of investing strategies adopted by Peter Lynch, who is widely known for reaping gains through his investment principles.

As a fund manager at Fidelity investments, Peter Lynch helmed the legendary Magellan Fund which was known for its stellar performance of achieving an average of 29% of annual return. Under the reign of Peter Lynch, Magellan Fund turned out to be one of the best performing mutual funds. Apart from Magellan fund, Peter Lynch was able to identify few other stocks which earned significant profits. Let’s have a look at the key investment tenets proposed by Peter Lynch.

Principle 1: Look beyond the visible

“During the gold rush, most would-be miners lost money, but the people who sold them picks, shovels, tents, and blue-jeans made a nice profit. Today, you can look for non-internet companies that indirectly benefit from internet traffic or you can invest in manufacturers of switches and related gizmos that keep the traffic moving.”

- Peter Lynch

This principle emphasizes that an anecdotal evidence and clear-cut observations must supplement the investment analysis but shouldn’t be the sole basis upon which the investment decisions are made. A well-known example which stands as a proof to this tenet is the Dotcom bubble. During 1990s, the internet and technology industry witnessed a boom as a result of which the technology stocks were growing multifold and investors dismissed the idea of losing all the value in a shorter span of time. But in the early 2000s, several dot-com and Telecom stocks have lost almost 95% of their investment value and the value deterioration is mainly driven by the speculation of the investors who had pumped the capital in several internet-based startups based on the speculation that stocks of these companies would be feasible without a sound rationale.

You can see the Upcoming IPO List of 2021 & can apply Peter Lynch Lessons while selecting the IPO to apply.

Investors must look beyond the obvious indicators like price while considering various investment options. Since market works on the assumption that Market discounts everything, the investor must have a good eye for detail in terms of identifying key growth drivers, industry analysis, underlying opportunities and threats, macroeconomic fundamentals which can potentially influence the performance of stocks.

Principle 2: Invest in what you know

Never invest in any idea you can’t illustrate with a crayon.”

Peter Lynch.

As a strong proponent of value investing, Peter Lynch relied on a simple investment principle of investing in the financial instruments which he is aware of. Having a sound expertise of how an investment works laid a strong foundation to his investment decisions. He leveraged the concept of Local Knowledge to identify the undervalued stocks which has the potential of making big bucks. In addition to this, he emphasized that the investor must understand the existing trends, Key players in the industry, the firm’s operating model, its corporate governance framework and its dividend payout structure in order to make right investment decisions.

Principle 3: Investing for Long term

“Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in the corrections themselves.”

- Peter Lynch

Peter Lynch emphasizes on the concept of Long-term investing. The markets are dynamic in nature. When new announcement and surprises are available, the market undergoes correction the moment it processes newly available the information. In general, the investors are subjugated by the market corrections and resort to panic selling with a view to avoid losses. But the ultimate result turns out to be contrary to their assumption and they incur significant losses by adopting to sell their stocks. Peter Lynch stood against the concept of market timing.

He conducted a study to explain the relevance of market timing with respect to investment made on same period on two different days. The conclusion are as follows

Period

Investment amount

Day of which the investment is made

Return (Compounded)

1965 – 95

$1000

Absolute high day for 30 years

10.6%

1965 – 95

$1000

Absolute low day for 30 years

11.7%

He strongly believed that volatility in the short run has nothing to do with the value an investment generates. In addition, he didn’t expend his energy in trying to forecast the direction in which the overall economy was heading. He propounded that as long as the Firm’s financials are strong, the investment will create a value in long terms for the investors.

Peter Lynch coined a term known as TenBagger which had its origin from the Baseball game to measure the success rate of the runner’s hit. Ten bagger indicates the stock whose market price can reach up to 10 times its intrinsic value. The underlying rule to identify a ten bagger is to hold on to the investment even if it reaps gains above 100%.

Principle 4: Do your research

The investor must pro-actively examine the financials of the company, various risks involved and choose the strategy to offset the risks associated with the financial instrument.

The investors must research and take calculated risks of investing in the relevant financial instrument according to their level of risk tolerance. A risk-averse investor could opt for investing in fixed income instruments like Bonds and Debentures. When an investor is inclined to take risks, then he could look for the investments with higher returns since the risk and returns are directly related. The investors must incorporate framework to sense the risks associated with various investment avenues. For example, fixed income securities like Deposits and Bonds, are subjected to inflation risks which significantly reduces the purchasing power. Bond market is subjected to liquidity risk where the buyers and sellers are not readily available. This limitation can even lead to lower prices than anticipated. Default risks indicates the company’s inability to meet their debt obligations. Apart from this, the investments are also subjected to systematic risks and unsystematic risks. As far as unsystematic risks are concerned, they could be mitigated by Diversifying the portfolio. But the systematic risks are inevitable. Thus, various risks need to be taken into account while making the investment decision.

Conclusion

Peter Lynch familiarized the strategy known as GARP (Growth at Reasonable Price) which aimed at identifying undervalued stocks with higher growth potential. He also contributed to the field of investment research by authoring three books on investing. As per Peter Lynch, a sound investment decision should be aimed for long term, supplemented by effective research and should be free from emotions in order to earn significant returns.

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Signs And Symptoms Of Low Testosterone And Natural Supplements

There are a lot of men all over the world who suffer from the problem of low testosterone levels in their body. While at first the problem doesn’t seem too obvious and apparent, there are some signs of low testosterone in the body that one can’t miss. For example, you may not have been feeling the desire to have sex in a long time, or may not have been able to perform well in all of your recent sexual encounters. There are also those men who suffer from weak erections or are unable to endure for a long time during lovemaking. All these factors indicate symptoms of low testosterone; it basically means that your sexual health is not at its best and you should look into it before problems get worse.

A lot of what men go through these days can be blamed on their lifestyle. Modern day lifestyle is such that people follow erratic routines with no fixed hours of sleep, no definite time for rest, and lack of nutritious food and exercising. On top of that, almost everyone seems to think that the best way to get rid of their stress and gain instant relaxation is through smoking and drinking. Unfortunately, all of these things are very unhealthy for the body; these habits make a person weak and hollow from the inside, and one loses out on natural strength and stamina completely.

There are, of course, ways to cure the problem. There are natural supplements to increase testosterone in the body, and unlike chemical-based medicines, these natural pills are absolutely safe to consume. If you have been suffering from the problem of low testosterone in your body for quite some time now then you can try Musli Kaunch Shakti capsules. Made from carefully selected and mixed natural ingredients, these capsules enter the bloodstream and strengthen one’s sexual health in a safe and reliable manner. Your reproductive organs become stronger, muscles become more active, libido experiences a boost and your overall vitality and youthfulness sees a rise. In other words, it starts to reignite the passion for lovemaking in you by reducing stress and anxiety levels in the body.

The dosage is quite simple; you need to take to 2 capsules of Musli Kaunch Shakti, twice everyday with a lot of water, preferably after meals. Take the capsules regularly and you will start to see results within just 3 months. In some severe cases, one can extend the period of consumption to 6 months as well.

It is important for a person to identify the signs of low testosterone in the body soon enough, so that the problem does not become worse. Natural supplements to increase testosterone rectify the damage to quite a great extent, but one must remember to eat healthy and exercise well in order to see the best results. It is only when you start taking care of your body and overall health that you will see a boost in your sexual health. So if you have noticed the symptoms of low testosterone take action now and prevent the situation from getting worse.

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Probiotics and Breastfeeding

Once upon a time, breast milk was considered the best food for babies. Until now, many people still believe in this. However, even the most perfect food in nature can be contaminated by the earth’s ecology destroyed by humans. The pollution and destruction of the ecological environment and the lifestyles of modern society have caused many women to reduce their milk production, while the quality of milk is also declining. This situation is particularly evident in large cities and heavily polluted areas.

There is evidence that the quality of breast milk has declined worldwide. Obviously, it is mainly due to the presence of human pollutants in the air, water and food chain. The quality of breast milk directly affects the composition of the baby’s intestinal flora. The intestinal flora of babies today is very different from those of babies half a century ago. Although Bifidobacterium infantis is the preferred colonizing bacteria, more recent studies have shown that other species of bifidobacteria, such as Bifidobacterium bifidum and Bifidobacterium longum, are now the dominant bacteria in the intestines of breastfed babies.

Dr. Rasic pointed out that Bifidobacterium infantis is not as “strong” as other Bifidobacteria, which means that it is rarely found in the food chain, air and water. Even so, Bifidobacterium infantis can resist invading harmful microorganisms in the intestine, including E. coli, Klebsiella and even Salmonella.

In a 1988 research paper “The presence of Bifidobacterium infantis and Bifidobacterium bifidum in the intestines of infants and adults”, Dr. J.L. Rasic reported the changes in the composition of the intestinal flora of German infants in the past 30 years. This study showed a decrease in the number of bifidobacteria and a decline in strains in breastfed babies. The decline in beneficial bacteria is accompanied by an increase in the number of unwanted pathogenic microorganisms. From 1974 to 1977, the last few years of the study, it was found that more than 10% of babies had no Bifidobacterium detected in their feces.

The same trend was also found in premature babies. Although the number of bifidobacteria in premature babies is less than that of full-pregnant babies, there are also a small amount of bifidobacteria in these fragile new lives.

Dr. Rasic discovered that two types of dangerous bacteria-Klebsiella and coliform bacteria can grow steadily in some babies of the same age. These kinds of pathogenic bacteria are now generally found to be resistant to antibiotics. Dr. Rasic also noticed that the average pH of the baby’s gastrointestinal tract gradually increased, indicating a decrease in acidity in the large intestine. Obviously this will promote the overgrowth of bad bacteria and fungi.

Researchers in the UK, Germany and France have confirmed Dr. Rasic’s findings. Using computer models, a group of scientists predicted that babies’ intestinal tracts are inevitably facing the constant loss of beneficial bacteria along with an increase in dangerous pathogenic bacteria. This replacement of the flora will have serious consequences.

Dr. A. Schecter and T. Gasiewicz outlined this problem in their 1987 book (Solving the Problem of Hazardous Waste). They proved that toxic chemicals such as polychlorinated diphenylfurans have increased in human milk in different regions (the United States, Canada and Vietnam). Breastfeeding infants are the front line of receiving these toxic substances. It is understandable that the content of toxic substances in human milk in Vietnam is much higher than that in the United States and Canada. This is due to the extensive use of herbicides during the Vietnam War. However, potentially carcinogenic chemicals have also been found in the breast milk of North American women.

In 1980, the American Journal of Clinical Nutrition published a paper “The Effect of Breastfeeding on Intestinal Bifidobacterium in Newborns” by three doctors H. Beerens, C. Romond, and C. Neut. Three pointed out that feeding babies with different combinations of bifidobacteria, the number of bifidobacteria may be similar, but the types are different. These differences can have a great impact on health. The study also showed that the main difference between cow’s milk and breast-fed babies is that cow-fed babies have high levels of dangerous bacteria of the Bacteroides, Clostridium and E. coli. Such a high content will not decrease as the child grows up.

After examining various food sources that can enhance the colonization of beneficial bacteria in the baby’s gastrointestinal tract, the doctor concluded that human milk is still the best. They wrote: No other mammal’s milk can promote the growth of bifidobacteria.

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