Peter Lynch: Invest Over The Long-Term Like A ‘Dumb Mule’

Johnny HopkinsPeter LynchLeave a Comment

In his book Learn to Earn, Peter Lynch recommends investing over the long term like a ‘dumb mule’ to achieve maximum results. Here’s an excerpt from the book:

Twenty years or longer is the right time frame. That’s long enough for stocks to rebound from the nastiest corrections on record, and it’s long enough for the profits to pile up. Eleven percent a year in total return is what stocks have produced in the past. Nobody can predict the future, but after twenty years at 11 percent, an investment of $10,000 is magically transformed into $80,623.

To get that 11 percent, you have to pledge your loyalty to stocks for better or for worse—this is a marriage we’re talking about, a marriage between your money and your investments. You can be a genius at analyzing which companies to buy, but unless you have the patience and the courage to hold on to the shares, you’re an odds-on favorite to become a mediocre investor. It’s not, always brainpower that separates good investors from bad; often, it’s discipline.

Stick with your stocks no matter what, ignore all the “smart advice” that tells you to do otherwise, and “act like a dumb mule.” That was the advice given fifty years ago by a former stockbroker, Fred Schwed, in his classic book Where Are the Customers’ Yachts? and it still applies today.

People are always looking around for the secret formula for winning on Wall Street, when all along, it’s staring them in the face: Buy shares in solid companies with earning power and don’t let go of them without a good reason. The stock price going down is not a good reason.

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