#1
Industry Knowledge
"If you work in an industry, you have an edge in that industry."
Your professional expertise in an industry gives you an informational edge that no Wall Street analyst can replicate.
Read Full Analysis →
Peter Lynch⭕ Circle of Competence
Peter Lynch's Circle of Competence 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...
4 principles·Circle of Competence
4 Key Circle of Competence Principles
#2
Company Research
"Never invest in any idea you can't illustrate with a crayon."
Stick to businesses simple enough that anyone could understand how they make money.
Read Full Analysis →#3
Two-Minute Drill
"If you can't explain why you own a stock in two minutes or less, you shouldn't own it."
If you cannot articulate your investment thesis quickly and clearly, you are gambling, not investing.
Read Full Analysis →#4
Invest in What You Know
"Invest in what you know."
Your personal knowledge and daily observations give you a real edge over professional fund managers.
Read Full Analysis →Frequently Asked Questions
What are Peter Lynch's key circle of competence principles?
Peter Lynch has 4 key principles on circle of competence. The most important one is "Industry Knowledge" — If you work in an industry, you have an edge in that industry.
How does Peter Lynch apply circle of competence in practice?
Peter Lynch applies circle of competence through several key principles including "Industry Knowledge" and "Company Research". These principles guide practical investment decisions and have been tested across decades of market cycles.
What makes Peter Lynch's approach to circle of competence unique?
Peter Lynch's approach to circle of competence is distinguished by a focus on long-term thinking and fundamental analysis. With 4 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.
