| Lynch also repeated a warning I often offer about trying to time the market. My view is that people attempting to time the market generally under-perform the market over time. Why? Because they only get out after it's clear that the market is correcting, and they only jump back in after it's clear that the market is rising. So their gains get clipped on both ends. As Lynch put it: Long term, the stock market's a very good place to be. But I could toss a coin now. Is it going to be lower 2 years from now? Higher? I don't know. But more people have lost money waiting for corrections and anticipating corrections than in the actual corrections. I mean, trying to predict market highs and lows is not productive. On the topic of knowing when to sell, I often explain that if the underlying story of the stock - the reason I bought into it in the first place - has changed, then that's perhaps a reason to sell. Or if the underlying fundamentals of the market appear to be changing. For example, I have advised people for a decade to largely avoid companies in the coal sector, because of major changes in the power sector. Lynch says something similar: Deciding when to sell is exactly the same thing as when you buy it. You have a certain story - why I bought this. This company's going from crummy to semi-crummy to getting better. And the company has plenty of cash, so they're not going to go bankrupt. You have to define when a company is getting close to maturity, and that's when you exit. Or the story deteriorates. If the story's intact, you hold on. Great investing advice from a legend. In this case, a man whose advice had a large impact on my life-long approach to investing.
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