The Peter Lynch Investor » Newsletter » I'm an amateur but I still make money investing

I’m an amateur but I still make money investing

Darcy Paterson

Jul 17, 2021  
Advice, Books, Education

The idea that a person with no background in economics, business or finance can make money investing seems crazy. However, I am proof that it is possible.

Not only is it possible but there are certain advantages that amateur investors have over professionals. For one, amateur investors have different incentives than the professional. If you get a chance pick up the book, The Education of a Value Investor by Guy Spier. The book is a personal account of how he went from a Wall Street professional to becoming a Warren Buffett style value investor.

In the book he recounts how he was forced to recommend a company that he knew wouldn’t be a good investment. Reading it you realize that professionals aren’t always to be trusted. They’ll take advantage of your ignorance to sell you shares they wouldn’t buy themselves.

That’s why I like investing for myself. I might not know as much about business as they do but I know I can trust myself. Plus, in time you’ll start to see that the professionals are often ignorant as well.

In 2008, I worked for Yellow Pages. It was a dying company. Google and the internet made it irrelevant. The entire company was filled with people who were overpaid and did nothing. I myself sat at a desk for 40 hours a week but I maybe did 5 hours of actual work a week.

Despite all of this, there was an investment professional on BNN (Business News Network) who was recommending the Yellow Pages as a good investment. The guy had no idea. If he had spent any time in the actual office, he would have seen all the unproductive staff taking 3-hour breaks.

This is why I like Peter Lynch. He says that amateurs have advantages that professionals do not. They see things that professionals do not. This is the amateurs edge. Using it can help you make wise investment decisions.