Peter Lynch: Why Predicting the Market Is a Waste of Time

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there are reasons for stocks that go up

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uh CocaCola this is very magic it's a

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very magic number easy to remember

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cocacola is earning 30 times per share

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what they did 32 years ago the stock has

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gone up

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30fold bethlehem Steel is earning less

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than they did 30 years ago the stock is

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half its price of 30 years ago stocks

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are not lottery tickets there's a

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company behind every stock if a company

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does well the stock does well it's not

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that

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complicated people get too carried away

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and first of all they try and predict

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the stock market that is a total waste

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of time no one can predict the stock

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market they try to predict interest

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rates i mean this is a if anybody

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predict interest rates right three times

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in a row they'd be a billionaire

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considering there's not that many

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billionaires on the planet it's very you

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know I took I had logic so I had a

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syllogism in uh studied these when I was

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in Boston College there can't be that

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many people who can predict interest

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rates because there'd be lots of

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billionaires and no one can predict the

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economy right a lot of people in this

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room were around in 1981 and 82 when we

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had a 20% prime rate with double digit

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inflation double digit digit

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unemployment i don't remember anybody

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telling me in 1981 about it i didn't

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read I study all this stuff i don't

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remember anybody telling we're going to

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have the worst recession since the

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depression so what I'm trying to tell

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you it'd be very useful to know what the

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stock market is going to do be terrific

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to know that the Dow Jones average a

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year from now would be X that we're

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going to have a full-scale recession or

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interest rates going to be 12% that's

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useful stuff you never know it

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though you just don't get to learn it so

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I've always said if you spend 14 minutes

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a year on economics you've wasted 12

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minutes and I I I really believe

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that now I have to be I have to be fair

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i'm talking about economics in the broad

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scale predicting the downturn for next

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year or the upturn or M1 and M23B and

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all these all these M's