American Consequences - August 2017

By Dr. David Eifrig


pantyhose when she went to the grocery store. Hanes had recently released the product and was placing the distinctive egg-shaped package near the cooler case. The marketing touched metaphors of freshness and goodness inside, and even youthfulness of a perfect product. He asked his wife’s friends, and they too were smitten. The “total domination” was clear. Lynch bought Hanes for the Magellan Fund and made something like 10 times his money. Most people think Lynch stopped there... with the recognition that people were buying and using things. But that’s not completely true. Lynch talked about understanding companies you invest in. “I found out the average woman goes to the supermarket or a drugstore once a week. And they go to a woman’s specialty store or department store once every six weeks,” Lynch explained in a 1997 interview with the PBS show Frontline . “And all the good hosiery, all the good pantyhose, is being sold in department stores. They were selling junk in the supermarkets. They were selling junk in the drugstores. So this company came up with a product... They had all the sizes, all the

ome say he was the greatest investor ever. In the public-fund business, I doubt there’s been anyone this good... Between 1976 and 1991, Peter Lynch was a rock star in the mutual-fund world. For 13 years, he returned 29% a year to the 1% of Americans who were clients of his firm, Fidelity Investments, and put their money in his Magellan Fund... me among them. The Magellan Fund was the first mutual fund I ever put money into. I was getting my MBA at the Kellogg School of Management and then working at Goldman Sachs when Lynch was at the top of his game. I’ve read all his books and remain a longtime student of his investing philosophy. My favorite, One Up on Wall Street, is required reading if you want to work for me. For example, I love how he describes the type of businesses you want to own over the next decade: “In business, competition is never as healthy as total domination.” One of the best-known Lynch stories (and

one of my favorites) is how he noticed his wife was always purchasing L’eggs

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