Forbes® Best Business Mistakes: How Today's Top Business Leaders Turned Missteps into Success

Chapter 3. PETER LYNCH

Managed Fidelity's Magellan Fund from 1977 to 1990

Popularized the theme "Invest in what you know"

Author of One Up on Wall Street and Beating the Street

From his office in Boston, Peter Lynch plays the role of investment guru to the current group of portfolio managers at Fidelity Investments.

"I guess that's what an old fund manager is—a guru," he laughs.

Well, not just any fund manager. If you had invested $1,000 into Lynch's Fidelity Magellan Fund in 1977, you would have had $28,000 by the time he retired from managing the fund in 1990. Not impressed? Look at it this way: If you had put $100,000 of your individual retirement account (IRA) savings into his fund when he started managing it, 13 years later, without adding another dime, you would have had $2.8 million. How does early retirement sound?

Lynch's returns averaged a remarkable 29.2 percent per year during that period, beating the S&P 500 in all but two years. "I loved it. It was great fun," Lynch says. "I just didn't like the hours. Twenty-four/seven wasn't enough. You could spend 24/7 just looking at insurance companies. There weren't enough hours in the day."

And when you talk to Lynch, you realize he probably puts a lot into a 24-hour day. If the speed at which he talks reflects the speed at which he thinks, there's a lot of brainpower being put into his research. He says, "I have a very small transmission. My gearbox is overdrive and off. And you can't sort of run a fund."

Now, as research consultant ...