Legendary investor Peter Lynch spoke with CNBC’s “Squawk Box” on Tuesday morning in a rare interview.
The former manager of Fidelity’s Magellan Fund, which under his guidance generated an annualized return of 29.20% from 1977 to 1990, shared his thoughts on the market, his investment strategy for today’s economy and more.
Responding to a question regarding his famous advice to “buy what you know,” Lynch compared buying stocks to any other large purchase.
“Well I think people when investing in individual stocks…it’s sad. They are careful when they buy a refrigerator or an airplane flight. They are careful with their money. But when they hear about a stock on the bus, they’ll put $5,000 or $10,000 on it and they have no idea what they do. So, you really gotta be careful. Look at the company, look at the balance sheet. What is the reason the stock should be higher? The sucker’s going up is not a good reason.”
Lynch then went on to say that he thinks looking for “something different” would be a good strategy in the current environment, using examples like TJX Companies Inc. (TJX, Financial) and Nvidia Corp. (NVDA, Financial).
“You have to find a company that is either a turnaround or a company that is going to grow like Panera (PNRA, Financial) or, you know Family Dollar stores,” he said. “I am not saying they are buys now…but you have to be looking for new companies and look at the balance sheet.”
Watch an excerpt from the full interview below.
