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That's the status Peter Lynch enjoys. From 1977 to 1990, Lynch was Mr. Mutual Fund Wonder Boy, as he ran up incredible growth numbers for Fidelity's Magellan Fund. At the end of his tenure, the fund was so huge it almost was the stock market, even as it managed to outperform it. No one had ever seen anything like his feat, and no one has repeated it.
Lynch gave up his 100-hour work weeks to become the equivalent of a color commentator, sitting on the Fidelity board and writing several best-selling books about investing and being available to any reporter or talk show. And here he is doing it again, as the celebrity host of "The Stock Shop with Peter Lynch," a new CD-ROM from Houghton Mifflin Interactive (Windows, $69.95).
The latest HMI title is a welcome sign that big-time publishers are not giving up on the adult CD-ROM format. It joins such other celebrity titles as "Tom Peters' Career Survival Guide," "Jay Conrad Levinson's Guerrilla Marketing," and "Roger Peterson's North American Birds," all very well-wrought and entertaining packages. They add a grown-up flavor to a catalog which otherwise tilts in the direction of Curious George.
The Stock Shop is an educational package, as opposed to one that you actually invest with. It tells you standard stuff like how to research companies, what to look for in those cryptic annual reports, how to read a balance sheet, what ROI is, and why you want some.
This is valuable all by itself, because the world and vocabulary of investing can be terribly off-putting to newcomers. Lynch has a friendly, approachable, boy-next-door quality that belies the masses of money he has moved around in his time.
Beyond that the CD-ROM gives you an insight into how an investor like Lynch thinks. This was what made his books One Up On Wall Street and Beating the Street interesting reading. Lynch is not a knee-jerk contrarian, heading left when everyone else heads right. He's more of an outside-in thinker, standing apart from the fashions and fads of Wall Street and looking at investments from a down-to-earth, invest-in-what-you-know perspective. He wants to know what makes this company, and its long-term prospects, better than its competitors.
Lynch suggests that you think of every company as a "story" that you can synopsize in a few words, a story that has a cogent beginning, a hectic middle, and a rewarding end. The end is important, he says, because knowing when to sell a beloved stock is the number one downfall of most investors. Until that "hundred-bagger" stock is actually sold, you didn't make a dime on it, even if it appreciated 100 times its original price.
Speaking of getting out while the getting is good, that's what Lynch did when he left Magellan when he did. The "Death Star Fund," as it is known in mutual fund circles, was able to outperform the S&P500 only twice in the eight years since he split.
After you've waded through the stockpicker's tips, you have to get down to the scutwork of research. The Lynch package explains how to research stocks, both informally ("Say, they sure seem to be doing a booming business over at The Pep Boys") to the rigorously formal, with the charts, 30-day moving indicators, and other data downloads. The package provides a front porch for an online research called Telescan, which allows you to track and record changing prices.
This part seems to me to partly contradict the seat-of-the-pants investing advice in the rest of the package -- how "invest-in-what-you-know" is research that anyone and his dog can download? On the other hand, I imagine Lynch himself does more than just drive by The Pep Boys to get investment ideas.
Using this kit, will you become the master investor that makes the world forget Peter Lynch ever existed? No. This is a program for eager beginners. To successfully manage a fund like Magellan (now tipping the scales at $51 billion and scandalized by the hasty resignation this year of second-string wonder boy Jeff Vinik, for ethical questions) you will need a CD-ROM plus a couple of videos and maybe even a book.
In fact, it's a mystery to me why any eager investor, apart from the fun of picking one's own stocks, doesn't pick a couple of god mutual funds instead. It's a cinch the fund managers, even if they're not Peter Lynch, will be better at it than you are. But you'll probably do a better job than Curious George.
To visit Mike, bring your handwritten invitation to http://mfinley.com, and knock three times. Or write him directly at mfinley@mfinley.com.
To the stocks with you!
by Michael Finley
You know you have arrived when your name is synonymous with excellence and achievement in your profession. And you really know you've arrived when you're still the symbol of your profession eight years after you quit working in it.
Copyright © 1996 by Michael Finley
