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While Smith faces a daunting task as Lynch's replacement, many fund watchers are confident he will succeed. If Lynch had a weakness, such experts note, it was his tendency to keep Magellan fully invested in stocks. That made the fund highly profitable when the market surged but also vulnerable to sudden slumps. Magellan lost $4 billion -- nearly a third of its total value -- during the 1987 crash. By contrast, Smith likes to keep about 20% of his fund's assets in cash to cushion the impact of a market fall. "Smith will do a better job in a down market," predicts Michael Lipper, head of Lipper Analytical Services, which follows mutual funds.
Smith will also inherit a cadre of Magellan managers trained by Lynch. "A lot of the decision making on that fund was being made by a team of individuals," says Gerald Perritt, editor of the Chicago-based Mutual Fund Letter. Some 15 assistants helped Lynch keep abreast of the stocks in the gargantuan fund.
As for Lynch, he has already begun to savor the benefits of retirement. Says he: "I have a personal transmission of only two gears -- overdrive and park. I either work extremely hard or turn things off. Now I'll apply my overdrive instincts to different targets." Moreover, he vows, "I'm not going to run money again. I could probably sell a Lynch Mutual Fund, but I'm not going to do that." Yet even as he embarks on a more tranquil life, Lynch's integrity, zest and diligence will stand as his legacy to a Wall Street that sorely needs such old-fashioned virtues.