In a recent Wall Street Journal interview with Joel Tillinghast, the 28-year veteran manager of Fidelity’s Low-Priced Stock Fund discussed his view that investing is “as much about avoiding mistakes as picking winners” and shared some insights concerning the current market.

This month, Tillinghast says, Fidelity is shifting its definition of “low-priced” from stocks priced at $35 or less to stocks priced at either under $35 or those with a “higher-than-index-earnings yield (that is, a low P/E).” The new definition, he says, represents an effort to find low-priced stocks relative to intrinsic value which, he adds, “is how I have always run the fund.”

Here are some interview highlights:

• Tillinghast says that finding low-priced stocks involves determining whether a you have the “right attitude and knowledge; if the company has the right management/people; is in the right business; and has the right price, relative to value.” He argues that investors should avoid a stock if they are approaching it with a short-term, irrational mindset or don’t have a clear understanding of the industry or economic environment in which it operates.
• On when to sell: “I’m not very good at selling,” he says, “but it always has to be in the context of your other opportunities and how well you know them.”
• One of the most difficult stock-picking lessons for investors to learn, says Tillinghast, is facing poor results. “People who have had success in other parts of their lives,” he asserts, “have difficulty accepting how much failure there is in the stock market.”
• In the past, says Tillinghast, his approach focused on buying “statistically cheap terrible businesses with mediocre managements.” But he realized over time, the article says, that value depends on “future cash flows, and that depends on management and the quality of the business.”