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A native of Boston, Lynch got his first taste of the investment world when he caddied for executives at a local country club. The duffers included D. George Sullivan, who at the time was president of the Fidelity group. After earning an M.B.A. at the Wharton School and serving two years in the Army, Lynch joined Fidelity as a research analyst in 1969. His ebullient pursuit of investment opportunities led to his 1977 appointment as head of Magellan, then one of Fidelity's smaller funds.
As he built the fund over the years, Lynch acquired a prodigious reputation for doing his homework. Unlike most money managers, Lynch has made a point of visiting companies before he buys their stock. On a typical tour he would call on three firms a day and take note of everything from the alertness of secretaries to the cleanliness of parking lots. In one visit to Chrysler he first met Chairman Lee Iacocca and then walked into an auto plant to talk with workers. "People often ask me to explain my strategy," he says. "When I tell them my strategy is to learn which companies are likely to grow, they're usually disappointed. That doesn't sound complicated enough."
Lynch has shunned scientific market analysis and short-term speculation. He has often held stocks for many years, as long as the companies remained healthy. By the same token, he has been quick to sell when he recognized that a stock was going bad. As he notes in his book, "You won't improve results by pulling out the flowers and watering the weeds."
He believes great stock tips come from everyday life, so he pays close attention to the buying habits of his wife Carolyn and their three daughters. When Carolyn began bringing L'eggs panty hose home from the supermarket in the 1970s, Lynch recognized a winning product. Magellan bought stock in Hanes, the panty-hose maker, and saw the value of its shares grow some 600%.
Earlier this year Lynch began to feel the pace of two decades of workdays that began at 6:45 a.m. and lasted long past dark. Adding to the load was his position as head of the Fidelity group of nine growth funds. A devout Roman Catholic, Lynch found that he was working not only six-hour Saturdays but also early Sunday mornings before attending Mass. "Alarm bells began to go off," he recalls. But when Lynch told Fidelity Chairman Edward Johnson III that he wanted to leave, Johnson urged his star fund manager to stay on in a less demanding post.
Lynch wavered for several weeks before making up his mind. On March 25, a Sunday, Lynch telephoned Fidelity President Gary Burkhead to say he definitely planned to retire. Over the course of three phone calls, the two men picked Morris Smith to be Lynch's successor. Smith could barely contain his excitement when informed the next morning. "I had to make sure my knees weren't knocking when I stood up," he recalls.