Peter Lynch facts for kids

Peter Lynch (born January 19, 1944) is a famous American investor, author, and generous giver to charity (a philanthropist). He is best known for managing a special type of investment called the Magellan Fund at a company called Fidelity Investments.

From 1977 to 1990, Peter Lynch helped the Magellan Fund grow a lot. It started with about $18 million and grew to over $14 billion! He made an average of 29.2% profit each year, which was more than double what the general stock market (the S&P 500) usually made. This made the Magellan Fund one of the best-performing funds in the world.

Peter Lynch believes in "value investing". This means finding companies whose stocks are worth more than their current price. He wrote popular books like One Up on Wall Street to teach people how to invest. He also came up with famous ideas like "invest in what you know" and the term "ten bagger" for a super successful investment.

Early Life and School

Peter Lynch was born on January 19, 1944, in Newton, Massachusetts. When he was seven, his father became very ill and passed away a few years later. His mother had to work to support the family.

From his early teenage years, Peter worked as a caddie (carrying golf clubs) to help his family. While he was in college at Boston College, he used his savings to buy shares in an airline company. The price of these shares went up a lot, and the money he made helped him pay for his education.

In 1965, Peter graduated from Boston College. He studied history, psychology, and philosophy. Later, in 1968, he earned a special business degree called a Master of Business Administration (MBA) from the Wharton School of the University of Pennsylvania.

His Career in Investing

Starting at Fidelity

In 1966, Peter Lynch got a job as an intern (a temporary trainee) at Fidelity Investments. He had caddied for the company's president, which helped him get his foot in the door. He first learned about the paper, chemical, and publishing industries.

After serving in the Army for two years, he returned to Fidelity in 1969 and was hired full-time. He then focused on industries like textiles, metals, and chemicals. From 1974 to 1977, he became Fidelity's director of research, leading a team that studied companies.

Leading the Magellan Fund

In 1977, Peter Lynch was chosen to lead the Magellan Fund. At that time, it was not very well known and had only $18 million in assets. By the time he stopped managing the fund in 1990, it had grown to more than $14 billion! It also held shares in over 1,000 different companies.

From 1977 to 1990, the Magellan Fund made an average of 29.2% profit each year. This amazing performance made it one of the best mutual funds ever.

When Peter took over, the Magellan Fund was small, so he had a lot of freedom to choose what stocks to buy. He looked for individual companies he thought were good investments, rather than following a strict plan. He started with large American companies and later invested in smaller and international ones.

Peter Lynch found success in many different types of companies. Some of his most profitable investments for the Magellan Fund included Fannie Mae, Ford, Philip Morris, and General Electric.

How Peter Lynch Invests

Peter Lynch has written three books about investing with his co-author John Rothchild. These books are One Up on Wall Street, Beating the Street, and Learn to Earn. The last book, Learn to Earn, was written especially for young people and new investors.

One Up on Wall Street explains his investing ideas, like how to classify different types of stocks and how to build an investment portfolio. Beating the Street shows how he used these ideas in real life, discussing many of the stocks he picked. These books are helpful for anyone who wants to learn about investing.

Peter Lynch also wrote articles for Worth magazine, where he shared more of his ideas. He is famous for some key investing rules.

His most famous rule is: "invest in what you know." This means you should look for investment ideas in things you understand from your daily life or hobbies. Peter believes that regular people can often find great investments before big Wall Street experts. This is because they see what's popular or working well in their own communities.

For example, in his book One Up, Peter explains how he invested in Dunkin' Donuts. He didn't read about it in a financial newspaper. Instead, he was impressed by their coffee as a customer and noticed their stores were always busy. After checking the company's financial health, he decided to invest. Dunkin' Donuts turned out to be one of his best investments! Peter believes that individual investors can find similar opportunities by paying attention to businesses around them.

Peter Lynch also says that his college studies in philosophy and logic were more important to his success than the math or finance he learned for his MBA. He felt that some of the theories taught in business schools didn't match what he saw happening in the real world of investing.

He also advises against trying to guess when the market will go up or down (called "market timing"). He says that people lose more money trying to predict market changes than they do from the changes themselves.

Peter Lynch helped make popular an investing style called "GARP" (Growth At A Reasonable Price). This is a mix of two ideas: finding companies that are growing fast (Growth investing) but also making sure their stock price isn't too high (Value investing). Many investment funds today use the GARP approach.

He also created the term "ten bagger" in investing. This means an investment that becomes worth ten times its original price. The term comes from baseball, where a "home run" is sometimes called a "four-bagger" because the player runs past four bases. Peter Lynch wrote that in his business, a "four-bagger" is good, but a "ten bagger" is like hitting two home runs and a double!

Personal Life

Peter Lynch married Carolyn Ann Hoff. They started the Lynch Foundation together, which supports many good causes. They had three daughters. Carolyn passed away in October 2015 at age 69 due to complications from leukemia. Peter Lynch is a devoted Catholic.

Wealth and Giving Back

In 2006, Boston Magazine listed Peter Lynch as one of the wealthiest people in Boston. He was ranked 40th with a net worth of $352 million USD.

Even though he still works part-time at Fidelity, Peter Lynch spends a lot of his time on philanthropy, which means giving money and time to help others. He sees giving to charity as a form of investment. He likes to support ideas that can grow and spread, like First Night, a New Year's Eve festival that started in Boston and is now in over 200 other cities. He also supports City Year, a community service program that began in Boston and now operates in many cities across the U.S.

The Lynch family gives money in several ways, including through the Lynch Foundation and other charitable funds. They have given $10 million to Peter Lynch's old college, Boston College. Because of their generosity, the school named its education department the Lynch School of Education and Human Development.

The Lynch Foundation is valued at $125 million. In 2013 alone, it gave away $8 million, and it has given over $80 million in grants since it started. The Foundation supports education, religious groups, cultural organizations, hospitals, and medical research. For example, in 2010, the Foundation gave $20 million to create the Lynch Leadership Academy (LLA) at Boston College. This program trains school principals. The Lynch Foundation was also one of the first big supporters of groups like Teach For America and Partners in Health.

In 1991, Peter Lynch was honored by being inducted into the Junior Achievement U.S. Business Hall of Fame. He is also a member of the Harvard Medical School Board of Fellows.

Honors

Peter Lynch received the 1992 Seton Award from the National Catholic Education Association.

See also

In Spanish: Peter Lynch para niños

• Stock selection criterion