Word: magellan
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...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...
...recalls, "as I swung backward, head down, into space, holding onto a steel bar for dear life." He hoped that the stone would give him luck rather than eloquence. But when he called the office that night, he learned that the Dow had plunged another 108.36 points. Worse, Magellan customers besieged Fidelity's 1,500 telephone operators with orders to redeem shares. Net withdrawals on Friday amounted to $265 million, or about 2.5% of the fund. "I told Carolyn that if this continued, we would have to go back," says Lynch...
...sell a huge bundle of stocks to meet redemptions, he decided to concentrate on unloading issues that were down only 10% or so, rather than take heavy losses on shares that had taken a worse beating. In particular, he chose to sell many of the British stocks in the Magellan portfolio, since the London Exchange had not fared as badly as Wall Street. But even as Lynch was deciding what to sell, he was overcome by a bold urge to buy. "I was expecting a major rally the next day," he says. Prominent on his shopping list were Merck, Eastman...
...mother, who lived through 1929 and "always said you should never own stocks." He wondered, "Maybe this is the start of the real thing." Most of all, he thought of the people who had bet on him, though he had always told them up front that in any downturn, Magellan would do worse than the market. Then Lynch, who had been earning between $2 million and $3 million a year, began thinking about his own finances. He felt relieved that the money for his three daughters' college educations had been set aside in money-market funds, saving accounts...
...whisked in a Fidelity limousine to his office, where he worked on what is now known as Terrible Tuesday until just before midnight. Though the blue-chip stocks in the Dow staged a rally, the rest of the market took a drubbing again. The price of a Magellan share fell by another 2%. Says Lynch: "Tuesday was the worst day of my career...