As a first-year caddie at Brae Burn Country Club, Peter Lynch made $2 per round…
Lynch was only 11 years old. And yet, men four times his age turned to him for golf tips.
He’d help the golfers with their putts. He’d tell them the right club to use to clear the water. And he’d make sure they thought about everything from pin placements to wind speed.
Even at a young age, Lynch knew what he was talking about. And the men listened.
It didn’t take long for Lynch to become a go-to expert on Brae Burn’s course…
By the time he got to high school, golfers would seek him out. They’d want him to carry their bags. And he’d make $10 for doing that through two rounds each day.
As Lynch recalled to Sports Illustrated in 2000…
My friends who had newspaper routes couldn’t make that in a week.
Lynch was inducted into the Caddie Hall of Fame last November. The Western Golf Association honored him at a black-tie affair in Chicago.
But as an investor, you likely recognize his name from what he did off the course…
You see, Brae Burn is in a well-to-do Boston suburb.
Lynch helped many lawyers, doctors, and businessmen with their golf games. And during their rounds, the men would often talk about their latest stock picks.
The course-side banter intrigued Lynch. So he started charting stocks himself.
Lynch earned the Francis Ouimet Caddie Scholarship. That gave him $300 per year toward the $1,000 tuition at nearby Boston College. He paid the rest with his caddie money.
In 1965, Lynch joined investment giant Fidelity. And the rest is history…
He managed Fidelity’s Magellan Fund from 1977 to 1990. During that time, the fund grew from about $18 million in assets to $14 billion. It averaged a 29.2% return in that span.
In other words, Lynch went from caddying to managing the world’s best-performing fund.
His life story is one of success. He thrived because of common sense and a keen eye for opportunity. And he also followed a basic mantra during his decades in the business…
Invest in what you know.
This idea has guided countless investors. It has helped them navigate the complex world of stocks. And I’ve always used it when people ask me how to begin investing.
The core of Lynch’s philosophy is straightforward…
Put your money to work in companies, products, or ideas you understand and use yourself.
If you notice a new product or service is gaining popularity in your area, investigate it. That product or service might be worth investing in.
Lynch believed everyday observations could lead to rewarding investments. And importantly, he would try to find them before they caught the eye of Wall Street pros.
Lynch wrote One Up on Wall Street in 1989. It’s the first book I ever read about investing. And over the years, I’ve taken Lynch’s advice to heart. You can, too…
Start in your pantry.
I bet you’ll find dozens of products from publicly traded companies on your own shelf. These companies won’t always be worth buying. But that’s why you dig deeper.
The Power Gauge can help you along this path, too…
In fact, it recently turned “bullish” on the Consumer Staples Select Sector SPDR Fund (XLP). We use this exchange-traded fund (“ETF”) to track the consumer-staples sector in the Power Gauge.
Meanwhile, XLP has recently been strong relative to the S&P 500 Index for the first time since January 2023.
But right now, only seven stocks in the ETF earn a “bullish” or “very bullish” rating. And that’s out of 36 rated stocks.
So, now might be the time to take a look around your pantry… and put Lynch’s philosophy in action.
Just remember to check the Power Gauge before you put money to work.
Good investing,
Pete Carmasino
P.S. I recently joined Chaikin Analytics founder Marc Chaikin for a special on-camera presentation…
In it, Marc shared his latest prediction about another wave of market volatility. And I helped him break down the exact strategy to use to take advantage of what we see coming.
