Best Stock Market Tip From Peter Lynch: Buy What You Understand

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I made money in Dunkin Donuts. I can 
understand it. When there were recessions,  

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I didn’t have to worry about what was happening. 
I could go there and people were still there. I  

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didn’t have to worry about low-price Korean 
imports. I mean, I just got out. You know,  

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I can understand it. And you laugh, I made 
10 or 15 times my money in Dunkin Donuts.

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Those are the kind of stocks I can understand. If 
you don’t understand, it doesn’t work. This is the  

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single biggest principle, and it bothers me that 
people are very careful with their money with the  

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public. When they buy a refrigerator, they get 
a Consumer Reports. They buy a microwave oven,  

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they do that. They ask people what’s the best 
kind of radar range or what kind of car to buy.

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They do research on apartments. 
When they go on a trip to Wyoming,  

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they get a Mobile Travel Guide, or 
California. When they go to Europe,  

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they get the Michelin Travel Guide. People hear a 
tip on a bus on some stock, and they’ll put half  

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their life savings in before sunset — and they 
wonder why they lose money in the stock market.

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And when they lose money, they blame 
it on the institutions and program  

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trading. That is garbage. They didn’t 
do any research. They bought a piece of  

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junk. They didn’t look at the balance 
sheet. And that’s what you get for it.