Peter Lynch: The Easy Way to Spot Winning Stocks

00:00:00,400 --> 00:00:04,720
You can wait three years after Microsoft went 
public and make ten times your money. If you  

00:00:04,720 --> 00:00:07,360
knew something about software. I know nothing 
about software. If you just have a software,  

00:00:07,360 --> 00:00:11,840
you would say, these guys have it. I don’t 
care who’s going to win, Compaq, IBM. I don’t  

00:00:11,840 --> 00:00:16,080
know who is gonna win Japanese computers. 
I know Microsoft MS-DOS is the right thing.

00:00:16,080 --> 00:00:20,480
You could have bought Microsoft. 
Again, I’m repeating myself,  

00:00:20,480 --> 00:00:24,320
stocks are not a lottery ticket. There’s 
a company behind every stock and you can  

00:00:24,320 --> 00:00:29,200
just watch it. You have plenty of time. People 
are in an amazing rush to purchase a security.  

00:00:29,200 --> 00:00:37,680
They’re out of breath when they call up. You don’t 
need to do this. You need an edge to make money.

00:00:38,800 --> 00:00:43,040
People have incredible edges, and they throw 
them away. I’ll give you a quick example of  

00:00:43,680 --> 00:00:49,280
SmithKline. This is a stock that had 
Tagamet. Now, you didn’t have to buy  

00:00:49,280 --> 00:00:53,760
SmithKline when Tagamet was doing clinical 
trials. You didn’t have to buy SmithKline when  

00:00:53,760 --> 00:00:58,400
Tagamet was talked about in the New England 
Journal of Medicine or the British version,  

00:00:58,400 --> 00:01:03,920
Lancet. You could have bought SmithKline when 
Tagamet first came out, a year after it came out.

00:01:03,920 --> 00:01:08,800
Let’s say your spouse, your mother, your father, 
you are a nurse or druggist. You’re writing all  

00:01:08,800 --> 00:01:13,200
these prescriptions. Tagamet was doing an 
amazing job of curing ulcers, and it was  

00:01:13,200 --> 00:01:16,960
a wonderful pill for the company because if you 
stopped taking it, the ulcer also came back. See,  

00:01:16,960 --> 00:01:20,800
it was what you meant — a crummy product 
you took for a buck, but it went away.

00:01:20,800 --> 00:01:24,080
But it was a great product for the 
company. But you could have bought  

00:01:24,080 --> 00:01:29,200
it two years after the product was on the 
market. It made 5 or 6 times your money.  

00:01:29,840 --> 00:01:34,240
I mean, all the druggists, all the nurses, all 
the people, millions of people saw this product  

00:01:34,240 --> 00:01:39,280
and they’re up buying oil companies, 
you know, drilling rigs. It happens.