Not all common stocks are equally common." This was a direct attack on the efficient-market dartboard method of stock picking. Peter Lynch, who ran the Fidelity Magellan Fund for 13 years, pointed out that smaller companies are totally ignored by most funds, who prefer to buy well-known stocks rather than research something not well known. He believed this leads to great opportunities for small investors, by making it possible to find small stocks trading at very low valuations, often below book value. Lynch didn’t so much think that funds ignore small stocks because of the inability to make large purchases, he put it down to copycat fund managers not wanting to stick their necks out. Although a dreadful stock in many ways, no fund manager has ever been fired for buying IBM: it is said that IBM "disappointed the market", not that the fund manager screwed up. "The majority of fund managers would rather be part of the Wall Street herd than do any serious research of their own," said L...
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