#1
Know What You Own
"Know what you own, and know why you own it. If you can't explain it to a ten-year-old in two minutes or less, you shouldn't own it."
Understanding your investments is the best risk management.
Read Full Analysis →
Peter Lynch🛡 Risk Management
Peter Lynch's Risk Management 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...
3 principles·Risk Management
3 Key Risk Management Principles
#2
Diworsification
"Diworsification—when a company diversifies into unrelated areas—is a bad sign."
A company that diversifies into unrelated businesses is usually destroying value and signaling management hubris.
Read Full Analysis →#3
Diversification
"Own as many stocks as there are situations in which you have an edge."
The right number of stocks to own depends on how many genuine informational edges you actually have.
Read Full Analysis →Frequently Asked Questions
What are Peter Lynch's key risk management principles?
Peter Lynch has 3 key principles on risk management. The most important one is "Know What You Own" — Know what you own, and know why you own it.
How does Peter Lynch apply risk management in practice?
Peter Lynch applies risk management through several key principles including "Know What You Own" and "Diworsification". These principles guide practical investment decisions and have been tested across decades of market cycles.
What makes Peter Lynch's approach to risk management unique?
Peter Lynch's approach to risk management is distinguished by a focus on long-term thinking and fundamental analysis. With 3 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.
