Some phrases are so loud and make such a strong impression, that upon hearing them for the first time, you know that you are never going to forget them. Peter Lynch’s “bloodhound” style of investing is one of those phrases.
On page 87 in Beating The Street, Lynch writes, “The fact is that I never had an overall strategy. My stockpicking was entirely empirical, and I went sniffing from one case to another like a bloodhound that’s trained to follow a scent.”
The first time I read that sentence I thought two things. First, I thought “wow, I’m never going to forget that phrase, bloodhound,” and second, “what does empirical mean?” According to Merriam-Webster, empirical means “originating in or based on observation or experience” and “relying on experience or observation alone often without due regard for system and theory.”
Lynch goes on to say “I followed scents in every direction, proving that a little knowledge about a lot of industries is not necessarily a dangerous thing.” And “since Magellan was a capital appreciation fund, I was allowed to buy anything, domestic stocks of all varieties, foreign stocks, even bonds. This gave me the latitude to fully exploit my bloodhound style.”
And finally, another thing from chapter 4 that stood out to me was when Lynch said, “Flexibility was the key. There were always undervalued companies to be found somewhere.”
I loved this “bloodhound” way of describing an investing style. Like Lynch, I want to be able to go anywhere with my investing. Wherever assets are undervalued, I’ll be there. Whether it’s depressed cyclicals, out of favor high dividend value stocks, or expensive-looking (but undervalued) growth stocks, wherever there is value to be had, I’ll be there.
I’ll do the reading, do the work, and like Sherlock Holmes, I’ll go where the clues lead me. Like a bloodhound I’m trained to follow a scent, and my scent is value.
And also like Lynch, I’ll do this empirically. It won’t be about theory and concepts, rather, my investment style is boots on the ground, face in the 10K, and eyes open to the world. Whenever I’m physically in a business I’ll study everything about it. I’ll live in it. I’ll read all the information I can get my hands on, I’ll scour YouTube and podcasts for knowledge and interviews, and I’ll be present in the world, experiencing it fully, taking it in, and continually looking for value.