Legendary investor Peter Lynch built his reputation in the 1980s by overseeing the Fidelity Magellan Fund while also building his fame by winning the market on a daily basis. Decades later, he gives some advice to the next generation of investors.
The artificial intelligence boom has swept the market for the past three years, but Lynch, who averaged an annual return rate of 29.2% over the 13 years he took over Magellan until 1990, has been happy to watch on the sidelines.
“I have zero AI stocks to me,” Lynch told the podcast with investor Josh Brown, “The Compound and Friends.” “I couldn’t pronounce it literally Nvidia Until about 8 months ago. ”
Lynch, who famously claimed that one in 100 Americans once had stock in Fidelity Magellan, spoke on his podcast about his career, the lessons he learned along the way, and, yes, today’s enthusiasm for everything related to artificial intelligence. Here are five of the biggest points.
AI that stays on the seat
Since the introduction of ChatGPT in late 2022, MegaCap tech stocks have skyrocketed, with many on Wall Street wondering whether AI trading could be reminiscent of the late 1990s dot-com bubble. When asked whether investors were pursuing too much of AI trading, Lynch replied, “I don’t know.”
Lynch said he doesn’t understand technology enough to have an informed opinion on the market’s optimism about AI.
“I’m the worst engineer ever,” he said. “You can’t do anything on a computer. You just have a yellow pad.”
Lynch declined to talk about his current portfolio or stocks he currently likes, citing Fidelity regulations.
Why not “play in the market”?
For many years, Lynch has argued that investors should have a deeper understanding of the companies they invest in. This is the core philosophy of his book, One Up on Wall Street.
“I have this expression: ‘Know what you own.’ If you don’t understand what you own, you’re completely defeated,” Lynch said.
Lynch said people will spend hours looking at flights to ensure the lowest prices. But when it comes to investments, he said, “I’m going to put $10,000 on some of the outrageous stocks I heard on the bus.”
He described the term “playing in the market” as “bad” and “dangerous.” Instead, Lynch said people should buy good companies and realize what they are doing.
Lynch said that the average rate of fluctuations for a typical New York Stock Exchange securities is 100% in any year, so investors need to know what to do when a big move occurs.
Entry after the first inning
It’s common sense to buy stocks before the stock price rises, but Lynch warned not to underestimate any investment idea just because the stock price is already rising.
“In some cases, you don’t have to start in the first inning,” Lynch said.
For example, Lynch pointed out: McDonald’she was said long ago to be already experiencing rapid growth in the country. The burger chain has expanded internationally and has experienced strong growth.
“People said, ‘McDonald’s is over,'” Lynch said. “They just didn’t think about it very well.”
Benefits of investing today
Lynch said investors today have “cushions” that didn’t exist before the Great Depression and the New Deal.
Lynch cited unemployment insurance, social security benefits and the establishment of a Securities and Exchange Commission that will provide long-term support for the public. He also highlighted the active role of the Federal Reserve in recent decades.
Lynch said investors today benefit from “so many great things,” noting that there is more market and economy “buffer” than in the past.
Lynch said investors have been preparing frequently for economic collapses around the 1930s. However, market testing has not been as dwindling as ever since, even during the 2008-2009 global financial crisis.
“We had many opportunities to get ‘big opportunities’,” Lynch said. “There were probably some bad presidents, some bad parliament, some bad economists, but we managed to get through it.”
The future of work
Lynch reassured workers who were worried that AI would be taking their jobs away.
In the early 1980s, about 1 million people worked. AT&T When the entire labor force was around 100 million, it was only one person. Lynch said that despite the growing telecommunications sector, today’s major companies employ around 400,000 people.
Today, the US workforce itself is growing by more than 160 million people. Americans could possibly expect to expand some areas to offset the culmination associated with technological advancements and automation.
Lynch’s comments come from executives of the following companies: Walmart In Accenture It warns that artificial intelligence will dramatically rebuild the workforce.
“It’s a great country. We’re creative,” Lynch said. “The US will create it, China will replicate it, and Europe will legislate.”
(Look at Josh Brown’s investment outlook and where he thinks there are next opportunities on the market today.)
(Learn the best strategies for 2026 from inside the New York Stock Exchange with Josh Brown and others at CNBC PRO Live. Tickets and info here.)
