Invest with Guts

"The key to making money in stocks is not to get scared out of them. This point

cannot be overemphasized. Every year finds a spate of books on how to pick

stocks or find the winning mutual fund. But all this good information is useless

without the willpower. In dieting and in stocks, it is the gut and not the head

that determines the results." -- Peter Lynch, Beating the Street

 

I shared the quote with Tim during our Sunday afternoon walk. He and six friends

bought and sold stocks in a simulator. So far, most were in the red and some got

burned badly and vowed never to touch stocks again. Tim was still in and seemed

interested in the idea of a dividend income stream. It was good that he was paying

attention.

 

Lynch's idea should not be interpreted as encouraging investing on "gut feelings."

 

[7grizzly]

回複 '暖冬cool夏' 的評論 : Thank you, 暖冬, for reading and your thought-provoking comments.

You are sharp in spotting the difference between 'gut' and 'guts.' One is about
intuition and the other about resolution.

This paragraph is from the introduction of the book. Lynch is making an apt and
important analogy with dieting. It's the big picture stuff and not about fear
and greed, yet.

I think the author is saying making money out of the stock market requires
persistence. Lessons and progress can only come with time and time away from the
market does not help one learn the art. The dieting-kind of courage is needed in
investing.

[暖冬cool夏]

Sorry, I think I misunderstood a little bit. The word gut may be different from guts in its plural form. He means more of our instinct.

[暖冬cool夏]

Lynch's idea should not be interpreted as encouraging investing on "gut feelings."
+1, 100% agree. I am surprised that Lynch concludes that "it is the gut and not the head that determines the results." It reminds me a Chinese saying "撐死膽大的, 餓死膽小的". It may be true in certain circumstances, but overall it is too risky.
Wallen Buffett has a famous quote that "two super-contagious diseases, fear and greed, will forever occur in the investment community", which could result in unpredictable market aberrations. We will never know when the market bottoms out, or where the ceiling is.
Good for Tim that at a young age he starts to simulate the market! He will learn all the way along. Good luck!