In this video Peter Lynch discusses how to invest when stock prices are at all-time highs. He gives practical pieces of advice that we can all apply to the stocks that we buy. Enjoy!
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Peter Lynch was one of the smartest investors that the world has ever seen. He got a return of 29.2% while been an investment manager of the Magellan Fund making it the best-performing mutual fund in the world. In this video I’m going to show you a clip of Peter Lynch talking about high stock market prices and what to do…
One of the first things that you’ll notice in the interview is they talked about market P/E ratio’s. Whenever the market gets to a p/e ratio above 20, you need to be on your toes. Now that’s exactly the market we’re in currently. The S & P 500 is well above that 20 mark.
That means prices are high there’s no doubt about it. So the question is how do we invest?
As Lynch talked about in the interview, buy good quality businesses that are outperforming the competition. These are the ones that are going to survive a potential crash.
Secondly, check that their balance sheets are stable and preferably have a little bit of cash on them for tough times.
3rd, you’ve got to understand the company that you own. You wouldn’t buy a local business in your town if you didn’t understand it, and it should be the same with a publicly traded company.
And lastly remember that good times only last so long. Make sure that you are prepared financially and emotionally for if a crash happens. Because if you are you can do one of the most important things when it comes to investing, and that’s buying stocks cheaply…
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DISCLAIMER: It’s important to note that I am not a financial adviser and you should do your own research when picking stocks to invest in. These are just some of my viewpoints, by no means would I recommend watching one YouTube video and then immediately buying that stock. This video was made for educational and entertainment purposes only. Consult your financial adviser.