What is Peter Lynch's investing strategy?

Lynch's Growth-At-a-Reasonable-Price (GARP) framework looks for earnings growth above 15%, PEG ratio below 1.0 (P/E divided by growth rate), positive free cash flow, and manageable debt. Lynch ran Fidelity's Magellan Fund from 1977 to 1990 and returned 29% annualized - the highest sustained mutual-fund performance in modern history.

What is the PEG ratio and why does Lynch use it?

PEG = P/E divided by earnings growth rate. A PEG of 1.0 means the market is paying exactly the growth rate (20× P/E for 20% growth). Below 1.0 = growth is cheaper than the price implies. Lynch uses PEG instead of raw P/E because high-growth businesses look 'expensive' on P/E alone but reasonable on PEG.

How does Lynch differ from Buffett?

Lynch is faster and more aggressive. He'd own 1,400 stocks at peak; Buffett owns 40 in concentrated positions. Lynch accepts shorter holding periods and higher portfolio turnover. Both demand quality, but Lynch's bar is 'reasonable growth at a reasonable price' while Buffett's is 'exceptional business at any price you can stomach.'

What returns did Lynch achieve?

29% annualized over 13 years running Fidelity's Magellan Fund (1977–1990) - meaning $1,000 invested at the start became $28,000 at his retirement. He grew Magellan from $18M to $14B AUM in the same window. No mutual fund has matched that record since.

Growth at a reasonable price (GARP)

Peter Lynch's Investing Strategy

Peter Lynch ran Fidelity's Magellan Fund from 1977 to 1990, returning 29% annualized. His Growth-At-a-Reasonable-Price (GARP) framework adapted Graham for growth investors.

Last reviewed: January 1, 2026