The Power of Common Knowledge

There sat my new white 2013 BMW 528 four-door sedan. I double-checked the Avis registration card sitting on the dashboard to confirm it was mine for the weekend.
I couldn't believe I had been upgraded so well. It's not normal for me to be driving $50,000 cars on the weekends. Usually, I rent the "intermediate car" class – mundane models, like Nissan Altimas or Chevy Cruzes.
But this time, thanks to Avis' loyalty bonus program, the folks working at the rental office at the San Francisco International Airport set me up with a real treat for my weekend in the Napa Valley.
Or so I thought...
I banged my head twice on the frame climbing in and out of the car. The electronics were hard to figure out, and the drive was noisy and uncomfortable. The wipers didn't work in the cool mist and fog of San Francisco.
The next time I rented a car, I was relieved when they handed me the keys to a Ford Taurus. The car is 40% cheaper and 100% more comfortable than the BMW. Since then, I have rented the Focus, Flex, Edge, Fusion, Mustang, and the hybrid C-Max.
The ease of connecting my electronics, the fit and finish, the quietness and road handling have all been exceptional. After months of experiencing these cars, I'm convinced Ford is building some the best cars in the world today...
And that reminded me of what Peter Lynch – the legendary head of Fidelity Investments' Magellan Fund – has called the "Power of Common Knowledge."
Lynch is one of the stock market's all-time great investors. He ran the Magellan Fund from 1977 to 1990, growing its assets from $20 million to $14 billion. His average annual return was a dazzling 29%.
He called one of his core techniques for finding big winners the "Power of Common Knowledge." In his book One Up on Wall Street (one of my top 10 investing books), Lynch described it this way...

I talk to hundreds of companies a year and spend hour after hour in heady powwows with CEOs, financial analysts, and my colleagues in the mutual fund business, but I stumble onto the big winners in extracurricular situations the same way you could.

He goes on to give a few examples, including how he found companies like Dunkin' Donuts by drinking its coffee and Apple by using its computers. He believes that by wandering around and asking people what they're doing, seeing, and buying... you'll be clued in on great businesses. And in time, a few of these will become great winners.

In this month's issue, we're following Lynch's advice. After driving Ford products a dozen times in the past months, I'm convinced it has returned to making great cars and trucks. And as the middle class around the world keeps growing, it will be looking for great value and experiences in the products it buys... Ford's got them.

The company's old tag line, "Have you driven a Ford lately?" rings true to me today. If you have any doubts about this month's idea, rent one, any one. I can almost guarantee you'll be convinced.