{"url":"https://etfiq.com/investment-committee/peter-lynch/","section":"investment-committee","title":"Peter Lynch's philosophy, applied to ETFs | ETFIQ","description":"Peter Lynch on the IQ Investment Committee: 1 criterion sourced to Peter Lynch's own books, One Up on Wall Street and Beating the Street.","as_of":"Oct 22, 2026","structured_data":[{"@type":"TechArticle","headline":"Lynch-style Growth at a Reasonable Price","version":"1.1","datePublished":"2026-10-22","dateModified":"2026-10-22","url":"https://etfiq.com/investment-committee/peter-lynch/","citation":["Peter Lynch with John Rothchild, One Up on Wall Street: How to Use What You Already Know to Make Money in the Market (Simon & Schuster, first edition, 1989)","Peter Lynch with John Rothchild, Beating the Street (Simon & Schuster, hardcover, 1993)"],"isPartOf":{"@type":"TechArticle","name":"The IQ Investment Committee: 11 investing philosophies, applied to ETFs","url":"https://etfiq.com/investment-committee/"}},{"@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"ETFIQ","item":"https://etfiq.com/"},{"@type":"ListItem","position":2,"name":"Investment Committee","item":"https://etfiq.com/investment-committee/"},{"@type":"ListItem","position":3,"name":"Growth at a Reasonable Price","item":"https://etfiq.com/investment-committee/peter-lynch/"}]},{"@type":"WebPage","name":"Peter Lynch's philosophy, applied to ETFs","description":"Peter Lynch on the IQ Investment Committee: 1 criterion sourced to Peter Lynch's own books, One Up on Wall Street and Beating the Street.","url":"https://etfiq.com/investment-committee/peter-lynch/","dateModified":"2026-10-22","isPartOf":{"@type":"WebSite","name":"ETFIQ","url":"https://etfiq.com"},"speakable":{"@type":"SpeakableSpecification","cssSelector":[".lede"]},"publisher":{"@id":"https://etfiq.com/#org"}}],"characters":22528,"truncated":false,"content":"ETFIQ / Investment Committee / Growth at a Reasonable Price \n \n Version 1.1, published Oct 22, 2026: 1 criterion, 2 sources, 1 of the 1 measures backed by peer-reviewed research.\n Peter Lynch's philosophy, applied to ETFs\n In the tradition of Peter Lynch, this seat reads 1 criterion from ETFIQ data, version 1.1 of Oct 22, 2026. Is the growth worth the price?\n 1 Criterion \n 2 Sources \n 1.1 Version \n\n Seat: Lynch-style Growth at a Reasonable Price.\n No investor named is affiliated with or endorses ETFIQ. Not investment advice. Peter Lynch is living. This profile uses only what he has published and what institutions he belongs to state about him; nothing in it suggests that he or Fidelity has any connection with ETFIQ. ETFIQ has no connection with Fidelity, and the seat reads Fidelity's funds by the same rules as every other fund's.\n Bio\n Peter Lynch earned a B.S. from Boston College in 1965 and an M.B.A. from the Wharton School in 1968. He has worked for Fidelity since 1969, as director of research from 1974 to 1977 and then as manager of the Fidelity Magellan Fund.\n He took over Magellan on May 31, 1977, and turned off his quote machine for the last time on May 31, 1990, exactly 13 years later. Fidelity had closed Magellan to new buyers, and it did not reopen until 1981, four years later. The author note in *Beating the Street* says that when he retired Magellan was the top-ranked general equity mutual fund, and that $1,000 invested in it in 1977 was worth $28,000 in 1990. The American Academy of Arts and Sciences, which elected him a fellow in 1991, states that the fund averaged 29.2% a year under him and that its assets grew from $18 million to $14 billion. That figure is the Academy's; it is not taken from Fidelity's fund reports.\n After leaving the fund he stayed at Fidelity. The Museum of American Finance, which gave him its 2025 Lifetime Achievement Award, describes him as vice chairman of Fidelity Management & Research Company and a member of the Fidelity Funds advisory board, and as president of The Lynch Foundation.\n With John Rothchild he wrote three books for individual investors: *One Up on Wall Street* (1989), *Beating the Street* (1993) and *Learn to Earn* (1995).\n Philosophy\n Lynch's central claim is that an ordinary investor has an edge over professionals, if investors use it. People see companies at work in their jobs, their towns and the shops they use, often long before Wall Street analysts take notice. *One Up on Wall Street* makes this case from its first chapters, and its chapter 6, \"Stalking the Tenbagger,\" says to start looking for a stock that rises tenfold close to home.\n Noticing a product is only the start. Lynch's books give much of their length to research into the company behind it, from its earnings to its balance sheet, and his chapter titles say as much: \"Getting the Facts\" and \"Some Famous Numbers.\" Investors should be able to say plainly why they own a stock; Lynch puts that rule among the Golden Rules that close *Beating the Street* (see the first quote below).\n He sorted companies into six kinds: slow growers, stalwarts, fast growers, cyclicals, asset plays and turnarounds. Sorting a company first tells the investor what kind of result to expect from it, before looking at the numbers.\n On price he was a growth investor with a value discipline, which is why his seat is called growth at a reasonable price. In *One Up on Wall Street*'s chapter 13, \"Some Famous Numbers,\" he set out the rule of thumb that a fairly priced company's price-to-earnings ratio is about equal to its growth rate, so a stock with a ratio well below its growth rate may be a bargain and one well above it may be dear. For dividend payers he gave a refinement: add the dividend yield to the long-term growth rate and divide by the price-to-earnings ratio. In his example, 12% growth plus a 3% yield over a ratio of 10 gives 1.5, and he called anything below 1 poor. The same chapter tells the reader to check a company's cash position as part of judging its price.\n The rules at the end of *Beating the Street* also warn that long shots almost always miss the mark. Another says that nobody can predict interest rates, the future direction of the economy or the stock market, and tells the reader to dismiss such forecasts and concentrate on what is happening to the companies owned. Lynch was a stock picker, not a market timer.\n His books are written for individuals with a handful of holdings, not for a fund of billions, so ETFIQ's seat applies the book method to a fund's look-through holdings: what each company is, how fast it is growing and what is being paid for that growth.\n Key works\n - Peter Lynch with John Rothchild, *One Up on Wall Street: How to Use What You Already Know to Make Money in the Market* (Simon & Schuster, 1989; later editions with new introductions). - Peter Lynch with John Rothchild, *Beating the Street* (Simon & Schuster, 1993; paperback 1994). - Peter Lynch and John Rothchild, *Learn to Earn: A Beginner's Guide to the Basics of Investing and Business* (Simon & Schuster, 1995).\n What we cannot know\n Magellan's fund reports from Lynch's tenure are not among the sources here, so the widely quoted 29.2% average is not checked against them, and how much of the result came from stock picking rather than the fund's size, sector bets or the 1980s bull market cannot be separated from public sources.\n Source quality\n Moderate. His three books are primary and their wording was checked in scans, but the track-record figures come from his own book's author note and from institutional biographies rather than from Fidelity's audited fund reports.\n Sources\n American Academy of Arts and Sciences, member page \"Peter S. Lynch\": elected 1991; vice chairman of Fidelity Management and Research; with Fidelity since 1969; director of research 1974 to 1977; manager of the Magellan Fund from 1977 until he retired in 1990; Magellan averaged a 29.2% annual return; assets grew from $18 million to $14 billion; B.S., Boston College, 1965; M.B.A., Wharton, 1968. amacad.org \n Peter Lynch with John Rothchild, Beating the Street (Simon & Schuster, 1993): he turned off his Quotron at Magellan on May 31, 1990, exactly 13 years from the day he took the job; Fidelity had closed Magellan to buyers, and it was reopened four years later, in 1981. the book at the Internet Archive \n Beating the Street , author note: until his retirement in 1990, Magellan was the top-ranked general equity mutual fund; $1,000 invested in 1977 was worth $28,000 in 1990. the book at the Internet Archive \n Museum of American Finance, \"Peter Lynch\": ran Magellan from May 1977 to May 1990; $1,000 grew to about $28,000; vice chairman of Fidelity Management & Research Company; Fidelity Funds advisory board; president of The Lynch Foundation; 2025 Lifetime Achievement Award. moaf.org \n Publication years and publishers from Open Library catalog records.\n Peter Lynch with John Rothchild, One Up on Wall Street (Simon & Schuster, 1989), part II, chapter 6, \"Stalking the Tenbagger,\" opening line. the book at the Internet Archive \n One Up on Wall Street (1989), chapter 7, \"I've Got It, I've Got It. What Is It?\": the six categories. Same scans.\n One Up on Wall Street , chapter 12, \"Getting the Facts,\" and chapter 13, \"Some Famous Numbers\": the price-to-earnings ratio of a fairly priced company equals its growth rate (.\n Beating the Street : the 1993 Simon & Schuster hardcover closes with \"20 Golden Rules,\" pp. 303 to 305, among them \"You have to know what you own, and why you own it\" on p. 303, the edition quoted above. The 1994 Fireside paperback expands the list to \"25 Golden Rules,\" pp. 305 to 307, the source of the warning that long shots almost always miss the mark and the rule that nobody can predict interest rates, the economy or the stock market. the book at the Internet Archive \n In his words\n \u201cYou have to know what you own, and why you own it.\u201d\n Peter Lynch, Beating the Street (Simon & Schuster, 1993), \"20 Golden Rules,\" p. 303 of the hardcover The Lynch-style Growth at a Reasonable Price seat\n Lynch-style Growth at a Reasonable Price is one seat of the IQ Investment Committee. It applies Peter Lynch's own books, One Up on Wall Street and Beating the Street to ETFIQ data.\n Scope\n Every ETF ETFIQ covers.\n Before this seat publishes: Not published until the ETF adaptation is signed off and the nightly look-through publishes for US funds, with the share of weight that meets each test.\n Source strength: Strong: the investor\u2019s own books, letters or memos. Lynch's own books. His price lines are his; the narrow bands beside them, the lines between his categories and the balance-sheet pass mark are ETFIQ's readings, labelled.\n Lenses apply publicly known investing principles to ETFIQ data. No investor named is affiliated with or endorses ETFIQ. Not investment advice.\n What the investor published\n In ETFIQ\u2019s words, with the source of each. Sourced to Peter Lynch's own books, One Up on Wall Street and Beating the Street.\n Place every company in one of six categories before judging it. (Peter Lynch with John Rothchild, One Up on Wall Street: How to Use What You Already Know to Make Money in the Market (Simon & Schuster, first edition, 1989), ch. 7, pp. 99-115) \n A fairly priced company's P/E equals its growth rate; half the growth rate is very positive, twice it very negative. (Peter Lynch with John Rothchild, One Up on Wall Street: How to Use What You Already Know to Make Money in the Market (Simon & Schuster, first edition, 1989), ch. 13, p. 198) \n Growth plus dividend yield over P/E: less than 1 is poor, 1.5 okay, and 2 or better what he looks for. (Peter Lynch with John Rothchild, One Up on Wall Street: How to Use What You Already Know to Make Money in the Market (Simon & Schuster, first edition, 1989), ch. 13, p. 199) \n A cyclical's low P/E is a warning, not a bargain. (Peter Lynch with John Rothchild, Beating the Street (Simon & Schuster, hardcover, 1993), p. 231) \n Sources\n The published work each criterion is sourced to Source What the seat takes from it Edition Link \n Peter Lynch with John Rothchild, One Up on Wall Street: How to Use What You Already Know to Make Money in the Market The six categories (ch. 7), the P/E against the growth rate with half and twice it (ch. 13, p. 198), growth plus yield over P/E (ch. 13, p. 199), the cash position and the normal balance sheet (ch. 12 and 13), and the checklist by category (ch. 15) Simon & Schuster, first edition, 1989 source \n Peter Lynch with John Rothchild, Beating the Street A cyclical's low P/E as a warning (p. 231), and knowing what you own and why (p. 303) Simon & Schuster, hardcover, 1993 source \n\n Research behind the measures\n Peer-reviewed research on how each measure is taken. It never adds a criterion, and where it weakens one the criterion says so.\n Dwi Kartikasari (2016), A Test of Graham's and Lynch's Stock Screening Criteria on Shares Traded on the Indonesian Stock Exchange (IDX) , Journal of Indonesian Economy and Business 31(1), 22-38 ( doi:10.22146/jieb.10318 ). Portfolios that had to pass Graham's criteria in full held too few stocks to be diversified and did not beat the market consistently after risk; Lynch's combined criteria did better.\n Peter D. Easton (2004), PE Ratios, PEG Ratios, and Estimating the Implied Expected Rate of Return on Equity Capital , The Accounting Review 79(1), 73-95 ( doi:10.2308/accr.2004.79.1.73 ). The PEG ratio ranks stocks almost as a fuller model does, and far better than P/E alone, but expected returns read from it are biased low because it treats short-run growth as the long run: a sound ranking tool, a weak absolute measure of value.\n Louis K. C. Chan, Jason Karceski and Josef Lakonishok (2003), The Level and Persistence of Growth Rates , The Journal of Finance 58(2), 643-684 ( doi:10.1111/1540-6261.00540 ). Long-term earnings growth shows no persistence beyond chance, and analysts' long-term growth forecasts are too optimistic and add little: neither past growth nor forecasts is a reliable growth figure.\n Mark T. Bradshaw (2004), How Do Analysts Use Their Earnings Forecasts in Generating Stock Recommendations? , The Accounting Review 79(1), 25-50 ( doi:10.2308/accr.2004.79.1.25 ). Analysts' stock ratings line up with PEG and their long-term growth forecasts, but strategies on those growth forecasts have the weakest link to later excess returns.\n Definitions and method\n Each criterion reads one ETFIQ measure against two thresholds. Each holding is read on the seat's tests, and the state comes from the share of the fund's measured weight alone: Supports where 60% or more meets every test, Mixed where 30% or more meets them or sits within the band, failing none, Challenges below, and Not enough data where under 70% of the weight could be measured. Nothing else softens or lifts it.\n The weights. One criterion decides the seat: the share of the fund's measured weight meeting both tests.\n Each holding is read on these tests , and the seat counts the weight meeting every one; each is listed below with the criteria.\n Each holding: The price test for the company's category (ETFIQ\u2019s measure) a stalwart or fast grower: P/E no more than its long-run earnings growth, his fairly priced, growth above 25% a year counted as 25; up to 10% above it within ETFIQ's narrow band; a slow grower: growth plus dividend yield over P/E of 2 or better, what he looks for; from 1.5, his okay, to 2 within the band; under 1.5 failing, ETFIQ's reading of the stretch his words leave between poor, under 1, and okay; reading it on slow growers is ETFIQ's adaptation, since he gives the formula for no category; a cyclical or turnaround: not measured. The investor\u2019s own line. Sourced to: Peter Lynch with John Rothchild, One Up on Wall Street: How to Use What You Already Know to Make Money in the Market (Simon & Schuster, first edition, 1989), ch. 13, pp. 198-199; Peter Lynch with John Rothchild, One Up on Wall Street: How to Use What You Already Know to Make Money in the Market (Simon & Schuster, first edition, 1989), ch. 15, pp. 230-232; Peter Lynch with John Rothchild, Beating the Street (Simon & Schuster, hardcover, 1993), p. 231. Each holding: The balance sheet (ETFIQ\u2019s measure) net cash meets, cash and current marketable securities against long-term debt, as his own example reads them; otherwise long-term debt no more than a quarter of debt plus equity, short-term debt set aside; read on the latest balance sheet only; where buybacks shrank the book, read also against the book with its fall over the ten years added back, at most the buybacks (ETFIQ's adaptation): where the two read the same, that stands; where they differ, the adjusted book is read only with losses covered and deals under half the buybacks, else not measured; a bank or a utility not measured; within 0.05 sits within the band. ETFIQ\u2019s reading. Sourced to: Peter Lynch with John Rothchild, One Up on Wall Street: How to Use What You Already Know to Make Money in the Market (Simon & Schuster, first edition, 1989), ch. 12, p. 193; Peter Lynch with John Rothchild, One Up on Wall Street: How to Use What You Already Know to Make Money in the Market (Simon & Schuster, first edition, 1989), ch. 13, pp. 199 and 201. Share of the fund in growth at a reasonable price (ETFIQ\u2019s measure) How much of the fund sits in companies priced fairly for their growth, with a sound balance sheet? Measure: the share meeting both tests. Of the fund's measured weight, the share in companies that meet both of the Lynch seat's tests (the price test for the company's category, and the balance sheet): 100 times the weight passing over the weight measured. A cyclical, a turnaround, a bank and a utility are not measured on the tests Lynch's rule leaves them out of. Each weight is in percent of the fund's positive non-cash weight, to one decimal. Null where under 70% of that weight is measured. Supports where the share meeting both tests at or above 60%. Challenges where the share meeting both tests or within the band below 30% and the share meeting both tests below 60%. Mixed between. Threshold: ETFIQ\u2019s figure, because the investor published none. Supports where 60% or more of the fund's measured weight meets every test; Mixed where 30% or more meets them or sits within the band, failing none; Challenges below. 60% is a clear majority and 30% a large minority: ETFIQ's lines, the same on every seat read holding by holding. On price, Lynch's own words set the lines: \"The p/e ratio of any company that's fairly priced will equal its growth rate\" (p. 198), and for a slow grower growth plus yield over P/E of 2 is what he looks for and 1.5 okay (p. 199). His words name nothing between his fair price and twice it, which he calls very negative, so the band beside his fair price is ETFIQ's and narrow, a P/E up to 10% above the growth rate. On the balance sheet the band is ETFIQ's, 0.05, for measurement. Printed with: the share meeting both tests or within the band: Of the fund's measured weight, the share in companies that meet both of the Lynch seat's tests or sit within the band on them (a P/E up to 10% above the growth rate, growth plus yield over P/E from 1.5 to 2, debt within 0.05 of the line), failing neither: 100 times the weight passing or near over the weight measured. Each weight is in percent of the fund's positive non-cash weight, to one decimal. Null where under 70% of that weight is measured. Weight: 100%; required. Sourced to: Peter Lynch with John Rothchild, One Up on Wall Street: How to Use What You Already Know to Make Money in the Market (Simon & Schuster, first edition, 1989), ch. 13, p. 198; Peter Lynch with John Rothchild, One Up on Wall Street: How to Use What You Already Know to Make Money in the Market (Simon & Schuster, first edition, 1989), ch. 15, pp. 230-232. Research, supports the measure: Dwi Kartikasari (2016), A Test of Graham's and Lynch's Stock Screening Criteria on Shares Traded on the Indonesian Stock Exchange (IDX) , Journal of Indonesian Economy and Business 31(1), 22-38. Lynch's combined criteria did better. Research, weakens the measure: Peter D. Easton (2004), PE Ratios, PEG Ratios, and Estimating the Implied Expected Rate of Return on Equity Capital , The Accounting Review 79(1), 73-95. P/E against growth ranks well but is biased as an absolute measure, so the 1.0 line is Lynch's and the ranking is the stronger use. Research, weakens the measure: Louis K. C. Chan, Jason Karceski and Josef Lakonishok (2003), The Level and Persistence of Growth Rates , The Journal of Finance 58(2), 643-684. Past growth does not persist, which is why growth is capped at 25% and read over ten years. Research, context, not a test of the measure: Mark T. Bradshaw (2004), How Do Analysts Use Their Earnings Forecasts in Generating Stock Recommendations? , The Accounting Review 79(1), 25-50. Is about analysts' forecasts; the seat reads filed growth. Compare and model modes\n In compare mode funds are ordered by the seat\u2019s score, and ties break on the share meeting both tests, highest first.\n In model mode: In each sleeve, the fund with the largest share of its weight in companies meeting both of the tests.\n How the seat is tested\n The cases this seat must pass before it ships, with the result each must give.\n Mostly growth at a reasonable price : Supports. Two thirds of the measured weight meets both tests: a clear majority.\n A large minority at a reasonable price : Mixed. Under half meets both tests, but more than 30%: a large minority.\n Priced near the growth rate : Mixed. A fifth meets both tests, and with the weight within the band on them, 35% of the fund is on or near the lines, failing neither.\n Little growth at a reasonable price : Challenges. Under a tenth of the measured weight is on or near the lines: whatever the typical holding reads, the seat Challenges.\n Too little of the fund measured : Not enough data. Under 70% of the weight could be measured, so the seat says nothing.\n GARP : any result but Supports. A fund built to own growth at a reasonable price by its own index rules. On Lynch's own price line, a P/E no more than the growth rate, 12.0% of the 81.5% of its weight measured meets both of the seat's tests, so the seat Challenges it: the index's GARP is not Lynch's. The case asks only that the seat never Support it on so little. Figures read on Oct 22, 2026.\n IWD : any result but Supports. Large-cap value: priced low, but with little earnings growth for the price to be reasonable against.\n VUG : any result but Supports. Large-cap growth priced at well above its growth rate.\n ARKK : any result but Supports. Growth without earnings has no price-to-growth ratio to call reasonable.\n What this cannot tell you\n The story behind each stock, and asset plays: hidden assets a balance sheet does not show.\n Bank debt against funded debt, which the filings do not tell apart.\n A growth rate anyone can rely on: the seat reads ten years of filed growth.\n Whether to own the fund. The seat applies published principles to data and gives no advice.\n Changes to this seat\n Version 1.0, Oct 22, 2026: First version: the share of the fund meeting the price test for its category and the balance sheet, his own lines on price with a narrow band beside them.\n Version 1.1, Oct 22, 2026: A book that is not positive, where the book before buybacks is not positive either, fails with debt: both readings fail. It was not measured.\n How to check any of this\n This seat\u2019s criteria, thresholds, weights and cases are in the committee file , the same file the committee reads.\n Where to next\n The Investment Committee Low Cost Margin of Safety Quality Global Contrarian All-Weather Cycles & Risk Macro & Liquidity Diversification Disruptive Innovation Trend Following The Skeptic Every method \n Cite this page. ETFIQ, Peter Lynch's philosophy, applied to ETFs, data as of Oct 22, 2026. https://etfiq.com/investment-committee/peter-lynch/ Free to use with attribution for figures ETFIQ computes; issuer data stays under its owner's terms. The underlying files are at Open data .\n Other forms Plain ETFIQ, Peter Lynch's philosophy, applied to ETFs, data as of Oct 22, 2026. https://etfiq.com/investment-committee/peter-lynch/ APA ETFIQ. (Oct 22, 2026). Peter Lynch's philosophy, applied to ETFs. Retrieved from https://etfiq.com/investment-committee/peter-lynch/ Markdown [Peter Lynch's philosophy, applied to ETFs (ETFIQ, Oct 22, 2026)](https://etfiq.com/investment-committee/peter-lynch/)","source":"ETFIQ, independent ETF data. Recomputed nightly from public filings and prices.","publisher":{"@id":"https://etfiq.com/#org","name":"ETFIQ","url":"https://etfiq.com"},"license":"https://etfiq.com/license/","license_text":"Figures ETFIQ computes are free to use with attribution: ETFIQ (etfiq.com). Issuer data stays under its owner's terms.","citation":"ETFIQ, Peter Lynch's philosophy, applied to ETFs, data as of Oct 22, 2026. https://etfiq.com/investment-committee/peter-lynch/"}