ON INVESTING
PETER LYNCH
My biggest mistake was that I always sold stocks way too early. In fact, I got a call from Warren Buffett in 1989. My daughter picks up the phone and says, “It’s Mr. Buffett on the line.” And I thought some of my buddies are kidding me because she was only 6. And I pick up the phone, and I hear, “This is Warren Buffett from Omaha, Nebraska.” You know, he talks so fast. “And I love your book, “One Up on Wall Street,” and I want to use a line from it in my year-end report. I have to have it. Can I please use it?” I said, “Sure. What’s the line?” He says, “Selling your winners and holding your losers is like cutting the flowers and watering the weeds.”
That one line that he picked in my whole book has been my greatest mistake. I visited the first four Home Depots ever built. I sold that stock after it tripled, and then it went up another fiftyfold. If you’re great in this business you’re right six times out of ten. But the times you’re right, if you make a triple or ten-bagger, it overcomes your mistakes. So you have to find the big winners. I sold way too early on Home Depot. I sold too early on Dunkin’ Donuts. Why did I do that? I was dumb. With great companies the passage of time is a major positive.

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