#1
New Product Success
"A single successful product can turn around a company's fortunes."
A single blockbuster product can transform a struggling company into a market leader overnight.
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Peter Lynch📌 Business Judgment
Peter Lynch's Business Judgment Rules
Peter Lynch (born January 19, 1944) is an American investor, mutual fund manager, and philanthropist. He managed the Fidelity Magellan Fund from 1977 to 1990, achieving an average annual return of 29.2%, making it the best-performing mutual fund in the world during that period. Lynch is famous for his "invest in what you know" philosophy, encouraging individual investors to use...
8 principles·Business Judgment
8 Key Business Judgment Principles
#2
Free Cash Flow
"Cash flow is the lifeblood of a company."
Free cash flow reveals whether a company actually generates real money or just reports accounting profits.
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Balance Sheet
"Look for a strong balance sheet with low debt."
A clean balance sheet with low debt gives a company the resilience to survive bad times and capitalize on good ones.
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Categories Change
"Companies don't stay in one category forever."
Reclassify your stocks regularly because a fast grower today can become a slow grower tomorrow.
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Asset Plays
"An asset play is any company that's sitting on something valuable that the market has overlooked."
Hidden assets on balance sheets — real estate, patents, cash — create buying opportunities that Wall Street ignores.
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Turnarounds
"Turnarounds are companies that have been battered and depressed, and have the potential to recover."
Turnarounds can deliver explosive returns, but only if the company has enough cash to survive the recovery.
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Cyclicals
"Cyclicals are companies whose sales and profits rise and fall in regular fashion."
Timing is everything with cyclicals — buy when the business looks terrible, sell when it looks great.
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Six Categories of Stocks
"I've developed my own system for categorizing stocks into six categories."
Classify every stock into one of six categories before buying so you know what to expect from it.
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What are Peter Lynch's key business judgment principles?
Peter Lynch has 8 key principles on business judgment. The most important one is "New Product Success" — A single successful product can turn around a company's fortunes.
How does Peter Lynch apply business judgment in practice?
Peter Lynch applies business judgment through several key principles including "New Product Success" and "Free Cash Flow". These principles guide practical investment decisions and have been tested across decades of market cycles.
What makes Peter Lynch's approach to business judgment unique?
Peter Lynch's approach to business judgment is distinguished by a focus on long-term thinking and fundamental analysis. With 8 specific principles in this area, Peter Lynch provides a comprehensive framework that investors at any level can study and apply to improve their decision-making.
