If you look at the careers of value investors like Warren Buffett, Benjamin Graham, and Peter Lynch, one thing stands out. They’ve seen markets crash. They’ve made mistakes. They’ve watched companies rise to glory and others go down in flames. But here’s the thing – they didn’t just survive. Over time, they thrived. And their success wasn’t just because they had clever stock-picking strategies. It was also because they had the right mindset. Today, I want to share two timeless investing lessons that can help you approach the markets with that same mindset – lessons that are just as relevant in 2025 as they were decades ago.
Volatility is part of the investing game
Peter Lynch – one of the most successful mutual fund managers in history – doesn’t really need an introduction.
From 1977 to 1990, he ran Fidelity’s Magellan Fund and achieved an incredible average annual return of 29%. To put that into perspective: if you invested R10,000 at the start, it would’ve grown to over R270,000 by the end.
Sounds like a dream, right?
Well… here’s the part most people don’t talk about…
During that incredible run, his fund took some serious hits.
• It dropped 10% fifteen times.
• It dropped 15% six times.
• It dropped 20% four times.
• It even dropped 35% once.
• And for more than half the time, the fund’s price was trading below its previous high.
In other words – gut-wrenching drops are normal. The path to big returns is rarely a smooth, upward climb.
But here’s the kicker: the average investor in Lynch’s fund actually earned less than the fund’s official return.
Why?
Because they kept jumping in and out. They bought when Lynch was doing well and sold when he was doing badly – in other words, they sold high and bought low (exactly backwards).
Lynch’s advice was crystal clear:
“Far more money has been lost by investors trying to anticipate corrections than lost in the corrections themselves.”
In plain English: stop trying to time the market.
Don’t put 100% of your money into stocks
This one comes from Benjamin Graham – the father of value investing – and was highlighted in Jason Zweig’s 2003 revised edition of The Intelligent Investor.
Graham’s rule was simple: Never have more than 75% of your money in stocks.
Why? Because when markets crash – and they will – you don’t want to be in a position where your entire portfolio is in freefall.
If you have cash and bonds, you’ve got a cushion. It gives you breathing room, helps you stay calm, and means you’re less likely to panic-sell at the worst possible time.
The truth is, if you panicked in 2008, in 2020, or during any other big sell-off, you’ll probably panic again in the next one. Having safer assets in your portfolio isn’t just about returns – it’s about protecting your mental state.
The beauty is here in SA, cash and bonds actually pay pretty decent yields compared to many other countries. That means your “safety cushion” can still earn you solid returns while you wait for the next buying opportunity in stocks
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