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Tackle Today: The Key to Making Money in Stocks

April 1, 2021

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Heed the Wisdom of Peter Lynch


I’m writing this on a day where the Russell 2000 Index dropped 4%. The bloodbath reminds me of a stellar Peter Lynch quote. He was a rock star fund manager that ran the Fidelity Magellan Fund from 1977 to 1990. Over that time, he averaged a 29.2% annual return which more than doubled that of the S&P 500. He also wrote a classic book called One Up on Wall Street.

Here’s the quote: “The real key to making money in stocks is not to get scared out of them.”

If you’re intent on owning stocks for the long run to build your wealth, you must be willing to stomach the occasional correction and even bear markets—no pain, no gain, as they say.

Here’s another stat to mull over, courtesy of Michael Batnick. “Since 1916, the Dow has made new all-time highs less than 5% of all days, but it’s up 25,568% over that time.” Said another way, 95% of the time, your account value is below its peak.

Of course, if you’re still in the accumulation phase of life, you should want a bear market. It allows you to purchase more shares at lower prices.


Chart of the Day

Expect the red dots

Annual stock returns have been positive in 31 out of 41 years since 1980. And yet, look at the red dots which market the intra-year drawdowns. If you want the gains, you must withstand the volatility.

Video of the day

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Halftime Report 12:30 PM EST

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