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The Equitymaster Research Digest

What Consistency Can Do to Stock Returns
Jul 26, 2016

  • Stand Still to Run Fast
  • 'No bad days in the market'
  • The mind of a successful trader
  • The Final Countdown

Peter Lynch's Magellan Fund at Fidelity Investments has been able to compound money at 29% for a little over a decade (1977 to 1990). But the average investor in his fund didn't see the full 29% his audited records claimed.

Does that make Lynch a liar?

No, of course not. Unfortunately, most investors in his fund didn't have the patience to see the stocks run their full course. They exited long before they could reap the rewards of selecting a consistent fund and an outstanding fund manager. Rather, they questioned the fund's claims.

Now, track records should be questioned when they seem unbelievable. So it's only natural when subscribers question the audited returns of our best performing recommendations. Returns going into three and four digits may seem too good to be true. But most subscribers fail to notice that the biggest returns are typically over very long time frames. Consistent fundamentals and long-term performance yielded the sterling returns.

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