How to Invest in What You Know
Peter Lynch is one of the most successful mutual fund managers of all time. Lynch ran Fidelity's Magellan Fund between 1977 and 1990, averaging a 29% annual return and regularly outperforming the S&P 500. You'd think he had a crystal ball hiding in his desk drawer, but his approach is anchored in a surprisingly simple concept: Invest in what you know.
Investing in what you know means choosing companies with products and business models you understand. That doesn't require you to have an MBA, though. Look to Ronald Read for proof of that. Read was a janitor with no formal financial education. When he died, he was worth millions, and it was because he'd been investing for decades in blue-chip companies whose names he recognized.
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Source Fool.com
