Whenever someone discovers I work in the investment field, they’re always eager to share what they’ve invested in and ask my thoughts on their portfolio. But invariably, in these conversations, I always get asked this one question… “What’s the hottest new stock I should buy right now?”
While we all would like to land the next 10-bagger, I’m often reminded of these wise words from one of the world’s greatest investors…
“Often it is unnecessary to run around looking for the perfect stock, you may already have it in your portfolio…So buy more!”
You may have never heard the above quote before…
But the man who said it was one of the world’s greatest small cap investors.
In fact, he beat the S&P 500 by 13.2% on average, every year, for 13 years.
Over the same period, he grew his fund’s assets from $18 million to $14 billion.
And because of his exceptional track-record, he’s regarded as the greatest mutual fund manager of all-time.
If you haven’t already guessed who I’m talking about…
It’s Peter Lynch.
And the above quote is from his world-renowned book, One Up on Wall Street.
In fact, It’s actually one of his most successful investment principles.
Even though his book was published 26 years ago, this principle is still relevant – especially in today’s uncertain market where identifying new stocks to add to your portfolio can be challenging. That’s why it’s an important principle I apply to my Real Wealth portfolio.
If ever in doubt, your portfolio is the first place to look…
As an investor, there’ll be times when new investment opportunities become hard to find. You could end up researching for hours, even days and still come out empty handed.
I’ve experienced this on many occasions, but is it something to worry about?
Of course not!
You see, a common investor mistake is buying a new company without understanding what it does, how fast its growing and if it has the momentum to continue its growth.
Peter Lynch agrees.
He famously cautioned, “People buy a stock and they know nothing about it. That’s gambling and it’s not good.”
Gambling is the quickest way to lose money.
That’s why, Peter Lynch encouraged investors to look at their own portfolios first, instead of relentlessly looking for a new stock to buy.
The reason?
You don’t get many REALLY good quality companies, so often you may already have them in your portfolio hiding in plain sight. And you would do well to simply buy more of these great stocks than to go out to and find something new.
Remember this the next time you are about to invest in a so called hot stock.
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