Peter Lynch, the greatest mutual fund manager of all time, has a great quote in the introduction to the millennium edition of his classic One Up on Wall Street. In it, he writes one of the greatest, simple-to-understand justifications for following the fundamentals of a company:
"The basic story remains simple and never-ending. Stocks aren't lottery tickets. There's a company attached to every share. Companies do better or they do worse. If a company does worse than before, its stock will fall. If a company does better, its stock will rise. If you own good companies that continue to increase their earnings, you'll do well. Corporate profits are up fifty-five-fold since World War II, and the stock market is up sixtyfold. Four wars, nine recessions, eight presidents, and one impeachment didn't change that."
Amen. It can't get any clearer than that.
what a great article….so many first time investors dont read nearly enough information and view points before jumping in…
Thanks for righting this.
I am starting at level zro as far as knowledge about investing goes. I have been doing alot of reading from the articules that you write. Your writing and explanations are simple to follow, thank you,
tammy