Word: lynch
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America' s top money manager, Peter Lynch, takes a personal look at the missed signals and painful lessons of Wall Street' s Crash...
Wrong. More than 1 million households in Boston's Fidelity Magellan, the biggest and most celebrated mutual fund, watched the price of their shares plunge by nearly 23% in three days of trading. In an unusually candid and revealing series of interviews with TIME, Peter Lynch, Magellan's manager, offers no excuses. "I was caught in a trap," he says. "I should have paid more attention to the red flags out there...
...morning of Black Monday, Oct. 19, when financial markets everywhere suddenly seemed to disintegrate, Lynch was playing golf on a windswept course in Killarney, Ireland. He tried to concentrate on keeping his shots straight, but his mind kept veering back to the gathering Wall Street storm that threatened to destroy everything he had worked to achieve over the past decade. By the time Black Monday was over and Lynch realized the full magnitude of what had happened, he knew his Irish vacation would have to be cut short. By 6 a.m. the next morning Lynch...
More than a vacation was wrecked. So was Lynch's aura of invincibility. For ten years, Lynch, 43, had been the wunderkind of the investment world, the man who could do no wrong. Magellan was the brightest star in the galaxy of mutual funds offered by Fidelity Investments, which manages more than $75 billion for investors. Between 1977, when Lynch took over Fidelity Magellan, and the beginning of last October, the value of the fund's shares grew by more than 2000%. A $1,000 investment made ten years ago was worth $21,437.70. No other mutual fund came close...
...Fidelity's 75 stock funds. Caught off guard with not enough cash on hand to meet the flood of redemptions, Fidelity was forced to sell shares heavily. On Oct. 19 alone, it sold nearly $1 billion worth of stock and thus helped to intensify the crash. Because Lynch is an aggressive fund manager who is usually light on conservative stocks, the Magellan Fund was especially hard hit by the collapse. An investment of $1,000 made on Sept. 30 is now worth...