📖Peter Lynch

Stalwarts

🌿 Intermediate★★★★★

Stalwarts are your portfolio insurance — they protect you in downturns and deliver steady 10-12% annual returns.

💬

Stalwarts are large companies that grow faster than slow growers but aren't going to double overnight.

— *One Up On Wall Street*，1989

🏠 Everyday Analogy

Like a time-honored restaurant in your neighborhood, it runs a stable business and earns more money each year. While it won’t make you rich overnight, it reliably provides steady income rain or shine—becoming even more precious during economic downturns.

📖 Core Interpretation

Large companies with annual growth rates of 10-12%, such as Coca-Cola and Procter & Gamble, provide protection during economic downturns.
💎 Key Insight：Companies like Coca-Cola and Procter & Gamble grow at 10-12% and rarely collapse. Lynch uses stalwarts as portfolio anchors during uncertain markets. The key is buying them at reasonable prices and knowing when to rotate out. You typically make 30-50% on a stalwart over two years, then move on to the next one. Never overpay for safety.

AI Deep Analysis

Get personalized insights and practical guidance through AI conversation

❓ Why It Matters

Providing moderate growth and downside protection serves as the ballast of the investment portfolio.

🎯 How to Practice

Focus on whether the price-to-earnings ratio is reasonable, and consider selling after holding for 2-4 years to achieve a 30-50% return.

🎙️ Master's Voice

There are six types of stocks: slow growers, stalwarts, fast growers, cyclicals, turnarounds, and asset plays.
Lynch categorized every stock by type. Each category required different analysis, expectations, and holding periods.

⚔️ Practical Guide

✅ Decision Checklist

  • What type of stock is this?
  • Am I applying the right framework?
  • Are my expectations appropriate?

📋 Action Steps

  1. Categorize each investment
  2. Apply category-specific analysis
  3. Set appropriate expectations

🚨 Warning Signs

  • No clear categorization
  • Wrong expectations
  • One-size-fits-all approach

⚠️ Common Pitfalls

✕Do not buy at excessively high prices.
✕Growth may decelerate as scale expands.

📚 Case Studies

1
Coca-Cola Global Expansion (1986)
Coca-Cola accelerated international growth and improved marketing efficiency, driving steady earnings gains and dividend increases.
✨ Outcome：Long-term holders saw substantial capital appreciation as the stock compounded steadily through the late 1980s and 1990s.
2
Bristol-Myers Drug Pipeline (1985)
Bristol-Myers benefited from a strong lineup of established drugs and new therapies, supporting reliable earnings and dividend growth.
✨ Outcome：Investors who held the stalwart enjoyed stable returns and lower volatility versus the broader market over many years.

See how masters handle real scenarios?

30 real investment dilemmas answered by legendary investors

Explore Scenarios →