📖Peter Lynch
Long-Term Thinking System
Build your investment system around earnings analysis.
If you can follow only one bit of data, follow the earnings — assuming the company in question has earnings. The direction of earnings is the single most important factor in stock prices.
🏠 Everyday Analogy
📖 Core Interpretation
In Long-Term Thinking System, Peter Lynch focuses on the gap between price and value. Returns come from paying less than what a business is worth, not from guessing short-term market moves.
💎 Key Insight：Earnings direction is the most reliable predictor of stock performance.
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❓ Why It Matters
Ignoring valuation turns even good companies into poor investments. Overpaying compresses future returns and leaves little margin when assumptions are wrong.
🎯 How to Practice
Estimate intrinsic value with conservative assumptions, set clear buy ranges, and act only when price offers a meaningful discount with acceptable downside.
⚠️ Common Pitfalls
Confusing a low price with true cheapness
Using one metric without business context
Overly optimistic assumptions that erase margin of safety
📚 Case Studies
1
Dunkin' Donuts Expansion (1986)
Observed packed stores and strong franchise growth while Wall Street ignored the stock’s potential.
✨ Outcome：Bought shares, held through expansion; investment multiplied several times as earnings and store count grew.
2
La Quinta Motor Inns Misjudged (1985)
Strong regional occupancy and steady growth, but company carried significant debt and was vulnerable to economic slowdown.
✨ Outcome：Initial gains reversed when business travel weakened; stock fell and returns were modest versus expectations.
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