Peter Lynch Lyrics: Predicting The Market

The following notes was taken from a forum posting. If not mistaken the original writings were posted at Wallstraits.com

Lynch Lyrics
Predicting The Market

"Things inside humans make them terrible stock market timers. The unwary investor continually passes in and out of three emotional states: concern, complacency, and capitulation. He's concerned after the market has dropped or the economy has seemed to falter, which keeps him from buying good companies at bargain prices. Then after he buys at higher prices, he gets complacent because his stocks are going up. This is precisely the time he ought to be concerned enough to check the fundamentals, but he isn't. Then finally, when his stocks fall on hard times and the prices fall to below what he paid for them, he capitulates and sells in a snit."

"Some have fancied themselves 'long-term investors', but only until the next big drop (or tiny gain), at which point they quickly become short-term investors and sell out for huge losses or the occasional minuscule profit. It's easy to panic in this volatile business. Recently I read that the price of an average stock fluctuates 50% in an average year. If that's true, and apparently it's been true throughout this century, then any share currently selling for $5 is likely to hit $6 and/or fall to $4 sometime in the next 12 months. If you're the kind of buyer who can't resist getting in at $5, buying more at $6 ('See, I was right, that sucker is going up'), and then selling out in despair at $4 ('I guess I was wrong, that sucker's going down') then no shelf of how-to books is going to help you

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