Peter Lynch's Secret To SUCCESS

peter

lynch

is here he is a legendary investor he is a best-selling author he is a philanthropist for 13 years he ran the magellan fidelity fund with average annual returns of almost 30 from 1977 to 1990 he grew from $18 million in assets to $14 billion In assets he retired at the age of 46. Since then he dedicated his time and resources to giving away a large part of his personal fortune. I'm glad to have you back at this table. Welcome, thank you. I've been warning you. You know, we had this wonderful interview and I said that from time to time I would say that what happened to Peter Lynch is one of those things, uh, because and whatever happened to Peter Lynch, right is my question, okay, people said they will start their own fund.

He will make a hedge fund I told him no, I don't know enough about abuse. He wants to do everything himself. He does not need great faithfulness. You know, a small transmission has an overdrive. That's all. Yes, so you can. It's not some kind of running a fund, you know, my lovely wife Carol and my three kids. I want to do other things, so now I've worked part-time with younger analysts, so it was because my father died at 46. So that was the reason. 46 or six, it's possible he got sick when he was 43 he died at 46 like maybe maybe he was going to live to be 146 but I said I love the job I love the company but I worked every Saturday for 11 years I just want to spend more time with my wife and your family and you're constantly on the road because you believed in what you had being there, in fact, you would take her with you and your family with you because you know, looking to understand the right company, yeah, and and, so what do you have?

I've learned since then, I mean, do you look back and say, oh, I stopped too early, I stopped too late, it's lucky, it was a perfect time, an absolutely perfect time to be able to watch my three children grow up and now they're all married and spending time my grandchildren you know it's fabulous tell me about your passions well I think my wife and I carolyn her father was a high school principal her principal she grew up in rural delaware i went to public schools and we have the best university and colleges in the world no one would doubt it, but since year 12 we are not that attractive, no, and someone born today in America is less likely to graduate from high school than their parents, that is notable, that it's not true in Europe and it falls behind in math, science and engineering scores and also 25 years ago if you dropped out of school you could work on a lathe, work on a press, work on a tool injection bowling machine, There are many jobs where you don't even have to speak English, today is an exam.

Equipment assembly teams There are low-level jobs in fast food restaurants and hospitals, but if you want to get a decent job that is challenging and fun, you have to use a computer to get people to speak in English. All these manuals are included, they are not in Creole. They are not in Portuguese they are not all in Spanish they are in English so today being a deserter is a tragedy and it should not be happening and once you lose one step, you lose the second step and the third step and the fourth step for that and the Literacy is an amazing correlation.

I think of the two million people in prison as if 85 percent were illiterate. It's not your fault. This is what happens to me, the people you and so many people I know, some deceased, some in their youth, some, but. We are all passionate about education, passionate, we all have resources, we all have a voice, why are we fixing this right? I think the biggest problem is recognizing the problem in the first place. I don't think this problem was clear 10 or 20 years ago, I mean, I think when I think. when the second world war started our army was smaller than that of the netherlands, i mean, we didn't realize how bad hitler was, how terrible the nazi party was, we have to admit it, i think we are in the phase now that we say there are 45 million children in public school probably half of them two thirds to get a decent education, the rest again not so good education which is huge, it's terrible, it's not only a problem, it's a tragedy, so I think recognizing the problem and people like you are leaders in that of just getting It's been said that this is not acceptable, this is bad for everyone, that's the first part that's starting to happen, although now they're happening several things to improve it.

I think that's very positive, but are you convinced that we have the will to do whatever it takes? Well, I think if more people recognize the problem then they will say we can do something about it, then things will happen. I think we are between phases one and two. Examples like teaching for the United States. There are many. Examples such as national mentoring are programs that are beginning to make a difference, you can really see that they make a difference and people recognize that it really works and people want to invest like in the stock market, they want to invest in the good performance of the company , no the company is doing badly so if they say it's a waste why should I invest it?

We have some district schools, so the public schools are now the best in the state versus some of the suburban schools, so these things work, they really work, but not all the results of all the charter schools are good, some of you really hope they are exactly right, but some of the first ones were not well planned, not well resolved, but the ones now, plus some district schools, we are not just talking about public schools, this is a program called red of achievements carried out by a testing program. Now, 300,000 students have it today. This should spread throughout the country.

Something Carolyn did all the research on my wife. Yes, is cool. They basically do quick tests on the child four times a year instead of saying this at the end. the student is left behind or the grading pen says the reason johnny is not doing well he can't add a quarter minus five ace or susie doesn't understand adverbs, help the teacher four times a year figure out how to help We find the student at the end of the year and then another teacher leaves the next year. There are things like that that are happening right now and that helps the teacher a lot and we are just beginning to understand how to use technology.

You've known this for a long time. It was there and we didn't know how to use it properly and they would never come out. The Khan Academy is a great example and then there is the importance of the principle. Yeah, that's something we really focused on because my wife, you know, is tall. school principal imagine the principal spends a lot of time in the boiler or on the leaky roof, these are not academics and it is such an incredible job that there are no colleagues to talk to, I mean who else do you talk to? It is hard, lonely and difficult work. job, so we're working on starting a leadership academy at Boston College to work with principals and aspiring principals to help them get the best methods, the best tools, they're the key person in America, the high school principal and then the second most important teacher. they are the leaders when it comes to CEOs of companies, the jack welchs of the lehigh cokers world, that's a principle, that's what they have to do, take a tangent for a second jack welch, leah leaker, what is What they have?

He would do a self-analysis of companies and look for things that he could identify with and he knew that they had the potential to grow and that they had a culture to grow and that they had a plan to grow. What do great managers do well? There are two guys: Fred Smith, who came up with an idea called Federal Express, at which point he had to develop it and that's really complicated. Sometimes people can just do the idea. He did all the parts at that time. Lee Iacocca had turned around and caused problems for Chrysler. and even more so, challenging a giant company like general electric to improve something good and that's very difficult, so all these people were basically solving problems and they had to manage people and one of the things that surprised people is that they don't understand The definition of management is to do things through others, it is much easier to do something yourself, you have something else, do it a lot of people, obviously, you are managing people and sometimes you have to encourage them, sometimes you have to push them a little more, but you have to understand what they want you have to work with them you have to explain yourself you have to set goals and you have to be a leader yourself and you have to put a lot of effort into it and you have to do, say, make mistakes and it's really amazing difference between being persistent and being stubborn and I think great leaders say this is persistence as good as the best assistance of stubbornness is great, that's terrible, but great managers listen, yes they absolutely do, category that I have come to know and I believe that listening is an essential quality principle and sometimes managers are so high up that the people around them do not give them ideas that you just relax filtering that they do not have the opportunity to listen and the better manager will make sure they do. here, yes, and the best thing, they go alone to their own investigation, regardless of the people around them, yes, now you are still back with you, you are still with the fun, I mean you, who are the administrator of the fun, you run the fun she runs the foundation you run the fun well I manage the money but she does she finds all the great ideas oh no she really is so the division of labor is you make the money and she makes it give away that's right, she actually she found teaching for america wendy kopp was like 21 when she found two national mentoring associations for america city a year early, I mean, she's the one who's finding out that we get a lot of proposals, she narrows down what does with visits to other people's sites.

I attend some. Of these meetings I mean we have board meetings, but basically I'm on the investment committee. Do you miss something? Do you miss the light you had or do you just say I have a part? I'm making investments. for something that means a lot to me and I know where the fruits of my labor are going, they are going to improve education and other projects that I believe in, well, how good I am, I am actually managing money for our foundation. and for us, so I'm actually doing the family fun and the foundation fun, but all I have to say is that my wife is my only boss.

Yes, when she was wearing Magellan, one in 100 Americans was at the bottom. Yes, these are people who make five thousand dollars. and ten thousand dollars was a big deal too, so when the market fell you felt really bad, I mean it's really the pressure on you when it comes to average people's money, yeah that's overwhelming and you're kind enough to say good things about Magellan, but it was 13 years, 10 times, it decreased more than 10 percent, you know, yeah, but your point was that you were confident enough to say that you know when it's decreasing, know when to give up and when not to. give up most of the time, right? saying that when the brand went down I always went down, so yeah, sure, but you wouldn't be scared because you would invest in a company, that's right, I would just say that if the company is good, it's good, I mean basically hiring Johnson Johnson was 40. years ago their profits were higher well in the world of investments in finance and they do it is for a macroeconomic study that you never believed and that I always do.

I was at the bottom and I was lucky and had a lot of money. I own an American engine in hospitality and United Ends, right, everyone and I said who is your best competitor. and they said the fifth biker oh, I remember this, yes, it was me. She had it before sunset. If someone ever says something good about a competitor you know it's true, they always write the comments down, yeah if I get them to say what they're worried someone is doing. maybe it's better than me, they have better form, we can't match them, yeah, so basically I visited them, got a big position with John, it was a big

success

, how long did you stay there?

I think seven or eight. years really yeah, big big hit, how do you know when to get it right in the baseball analogy? And I know you're a baseball fan and you want to get in this first second third inning, not when they're drawing the lineup, yeah and at Walmart. you could have bought Walmart wait wait wait you don't want to do it when they are forming the lineup you want to get to the second third and at least you won't have seen them at bat they have it right, they got the formula right and now there is Toys R Us in 20 stores on their way to 500 or Home Depot in 40 stores on the way to 4000.

What you get from Walmart 10 years after they went public and then went up 50 times is already ten timesmarket is reasonably priced for what is happening right now. To tell yourself, five years from now, 10 years from now, corporate profits will have grown about seven or eight percent a year, which means they will double, including dividends, but every 10 years it could double every year. 20 and eight times every 40. I think that's the kind of numbers that you're interested in, which has been a ten-year bond, today it's well above two percent, so I think the stock market is the best place to be for the next 10, 20, 30 years, the next two years, no, I've never known what the next two years will bring about what you want to achieve in the next year of your life.

Well, I really like working with my wife and still finding more vacation time. Yes, what do you do on vacation? Well we would like to see something new this year we went to Turkey and it was fascinating but not just oh yes, extraordinary oh it's amazing it's one of the great cities in the world from time to time, then we went to Santorini at the end. They were fantastic trips by boat and two of our daughters and their husbands, one was a great trip, so I would like to see it. Yes, I have been to Russia.

I have never been to St. Petersburg. You know, you have to go. I've been I've been to Israel I loved it I would love to go to Jordan I mean, there's a place I'd like to go. It's not that great. I mean, there are so many places you haven't seen. I mean. What do you think about how many places I haven't seen? Maybe I will have this year. I go to North Dakota, so I've been to all 50 states. Yes, I went to do research to go to Fargo. I actually went to mine it and the pieces I actually looked at fracking, so I'm, you're looking at fracking to see if it works, this process really works, it really works, it's going to change America's energy future, it's remarkable. one of the great advances, my goodness, imagine producing all this gas and gas at two dollars in mcf where people in Europe pay 10 times that price.

How did you decide it worked well? I really got a good look at this process first. You talked to someone as wild as you know, you usually drill four wells, you're lucky you hit one out of every four, right? These are a plus or b plus pots, you never hit a and f, yeah, so the question is what. cost, can you do it? and he owns the land, so he knows it and the costs continue to go down. They are doing it faster. less sand. less water. They're just doing a better job. Are they environmental threats?

Well, you know, as you know, they're usually at about 11,000 feet, the water table is about 2,000 feet, so if you make a mistake, come down, it doesn't exactly work, so they can make mistakes, it's great to see you, okay. , it's a pleasure. I always enjoy watching Peter Lynch