Peter Lynch Turned Fidelity Magellan From $18 Million Into $14 Billion With a 29% Annual Return. Here's Whether His "Invest in What You Know" Strategy Still Works Today.

There haven't been many better fund managers throughout history than Peter Lynch. Through his illustrious career, Lynch proved to be one of the best stock pickers in the investing world. Between 1977 and 1990, Lynch managed Fidelity's Magellan mutual fund and put up incredible returns. His annual average returns of roughly 29% helped turn $18 million into $14 billion over that time frame, far outperforming the broader stock market and making him one of the best on Wall Street.

When asked for advice for common investors, Lynch always recommended that people simply "invest in what you know." By this, Lynch refers to a concept in which people draw on personal experiences and their understanding of the products and services they use in their own lives to generate investment ideas.

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While I can't provide a definitive, data-driven answer on whether Lynch's strategy is foolproof, I definitely think it still works and is important to anyone's investing process.

Looking at products and services you use in the real world is a great way to identify investment opportunities. Even the greats like Warren Buffett do it.

For instance, Buffett got the idea to purchase Apple for Berkshire Hathaway 's massive equity portfolio when he saw how upset one of his friends was after losing his iPhone, Apple's flagship product. Today, Apple is the largest position in Berkshire's portfolio.

If there's a product you are really passionate about, there is a high likelihood that others feel the same and that the company has developed a real moat , which can lead to strong pricing power and margins.

Additionally, the prominence of social media and review websites has enabled investors to get more feedback on just about anything. There are certainly investors today who invest based on sentiment alone.