Forum Archive Index - June 2001

["Dick O'Connor" <callme_nz@hotmail.com>]

Peter, Important subject, good article.

One of the things that surprised me was that in an interview with that good 
US investment writer John Train, Peter Lynch said at one time that of all 
the stock he buys (when he was running the Fidelity Magellan Fund), three 
months later he was happy with less than a quarter of them. This was an 
extraordinary thing to say for a man who was expert at his job, who worked 
very long hours, had Fidelity experts to help him if he needed them, was 
welcomed by companies everywhere, and was scrupulous about searching out 
best buys. William O'Neil, who went on to found Investors Business Daily, 
also went to rare lengths to research what caused shares to rise and then 
went through lengthy screening processes before buying. They are still 
saying on the paper's web site that about half of share selections turn out 
to be unsuccessful.

Other quite famous investors have said much the same thing and have talked 
about the need to quickly get rid of losers. I think we have to acknowledge 
that if that's what real experts at investing say, we have to accept the 
fact that we are going to make mistakes too. Experience teaches all of us 
sooner or later that we have to teach ourselves to be good sellers without 
any of the psychological hang-ups. Cutting losses and preserving capital is 
a major part of investment success.....and your article deals with a most 
important point.
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