Peter Lynch - Don't try to predict the market

"So, what I'm trying to tell you it'd be very useful to know what the stock market's gonna do. It'd be terrific to know that the DOW Jones avg. would be x or that we'll have a full scale recession or interest rates are going to be 12%. That's useful stuff. You never know it though. You just don't get to learn it.

So I've always said if you spend 14 minutes a year on economics you've wasted 12 minutes. And I really believe that.

Now, I have to be fair, I'm talking about economics in the broad scale. Predicting the downturn for next year or the upturn or M1 M2-3-B and all these Ms [...].

Economics to me is when I'm talking about scrap prices. When I own auto stocks I wanna know what's happened to used car prices. When used car prices are going up it's a very good indicator. When I own hotel stocks I wanna know what hotel occupancies are about. When I own chemical prices I wanna know what's happened to the price of ethylene. These are facts. If aluminium inventories go down five straight months that's relevant. I can deal with that. Home affordability I wanna know about that when I own [...] a housing stock. These are facts.

There are economic facts and economic predictions. And economic predictions are a total waste."

"But you should study history and history is the important thing you learn from. What you learn from history is that the market goes down. It goes down a lot.

The math is simple, there's been 93 years this century, this is easy to do. The market's had 50 declines of 10% or more. So 50 declines in 93 years about once every 2 years the market falls 10%. We call that a correction. [...] Of those 50 declines, 15 have been 25% or more. That's known as a bear market. We've had 15 declines in 93 years. So every 6 years the market's gonna have a 25% decline.

That's all you need to know. You need to know that the markets can go down sometime. If you're not ready for that you shouldn't own stocks. And it's good when that happens. [...] You take advantage of these declines."

• Peter Lynch, Cooper Academy (2020. Sep. 30. episode)