The legendary Peter Lynch was a very strong fundamental investor. He always bought the "company behind the stock".

Peter Lynch investment style was very flexible. Often described as a "chameleon," Lynch adapted to whatever investment style worked at the time.

He was also a workaholic. He talked to company executives, investment managers, industry experts and analysts around the clock.

After retiring, Peter Lynch has devoted a fair amount of his time educating individual investors. He distills his investment style into these fundamental principles:

Investing in what you know

Peter Lynch notes that you can spot investment opportunities all around you by concentrating on what you already know and are familiar with. He always invested in industries he understood, especially if that business operated at the dim end of the glamor spectrum. 

Invest in good business model

Peter Lynch generally looked for these three qualities in a good company
- the company had to be making money, 
- the stock price had to be attractive, 
- and the business had to have a strong competitive advantage. 

Check the key numbers

Peter Lynch's advice when looking at the fundamentals of a business:
- If a particular product or service excites you, ensure that it accounts for a sufficient percentage of total company sales and that it makes a significant contribution to profits. 
- Favor companies with a strong cash position. 
- Avoid companies with high debt-to-equity ratios
- Avoid slow growers and cyclical stocks

Do not hold cash

Stay fully invested, otherwise you will likely miss out on market upswings. Don't panic at the gyrations of the market - ignore the ups and downs. 

Good management is very important

Buy good businesses run by competent, investor-oriented managers. 

Summarize the story behind your stock

Before you buy stock in a company, you should be able to explain why you're buying. You should briefly describe the reasons you are interested in the company, what has to happen for the company to succeed, and the obstacles that might prevent its success. 

Base your buy and sell decisions on specifics

Your profits and losses do not depend on the economy as a whole. So ignore the ups and downs of the market. Buy whenever you come across an attractive idea with a compelling story behind it. Sell when the stock price exceeds the intrinsic value and is, therefore, in danger of being overpriced.

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