Peter Lynch, the Stock-picking guru, is sitting in his cramped office in downtown Boston, ignoring for the moment the ham-and-tomato sandwich on his cluttered desk and the blinking computer behind it. He closes his eyes and goes into a mental drift, remembering his boyhood days as a caddie at Brae Burn Country Club, in the heart of Boston's well-hedged suburbs. The man is an investing legend, credited with growing the Fidelity Magellan Fund 29.23% a year, on average, from mid-1977 to mid-1990, when he stopped managing it. His memory for numbers, particularly stock prices, is photographic. But at the moment he is trying to recall what he earned in 1955 as an 11-year-old "C" caddie at Brae Burn, and for this faded number his memory is hazy.
His eyes stay shut for 15 seconds or so. He seems to be a self-absorbed man, but maybe that comes with his territory. He doesn't say thank you to the woman who brings in his sandwich. He doesn't offer a midday guest anything to eat or drink. He shakes hands with four limp fingers. He goes off wildly, amusingly, on conversational tangents. He's a self-made billionaire.
"My mother sewed padding in the shoulder of my shirts, and I got maybe $2 a loop, with tip, that first summer, but that was carrying a single," Lynch says. "By the time I was an 'A' caddie, in high school, I was carrying two bags, doing two rounds, making $10 a day. My friends who had newspaper routes couldn't make that in a week."
His experiences at Brae Burn shaped his life. He attended Boston College—where his father, who died the winter before Lynch became a caddie, had been a math professor—on a Francis Ouimet Caddie Scholarship. Tuition at BC in the mid-1960s was $1,000 a year. The caddie scholarship paid $300 of that, and Lynch earned the rest working at Brae Burn.
It was at Brae Burn that he learned about the stock market. Young Lynch would hear the men at the club—lawyers and doctors and businessmen—talk about their stock picks, and he was entranced. He began charting stocks.
One of his regular loops was a man named D. George Sullivan, who was the COO of Fidelity Investments. "Outstanding person, big tipper, bad golfer," Lynch says. Lynch carried for him, and others, for 10 years. In the fall of 1965, Lynch applied for a position at Fidelity for the following summer. There were 75 applicants for three spots. Lynch secured one of them. Except for a stint in the army, he's never worked anyplace else.
All his success, he says, is rooted in what he learned in golf. As a teenager he was giving golf advice to men four times his age, men who had fought in wars, made fortunes, been audited, raised families, men accustomed to professional counselors. Because the kid knew what he was talking about and wasn't afraid to express his opinion, they listened to him on the most sensitive subjects of all: How does this putt break? Can I clear the water from here? In the 40 years since then, the only thing that has changed for Lynch, whose title now is Vice Chairman of Fidelity Management and Research, is what he is analyzing.
"Golf courses are dynamic places, and so are businesses, always changing," says Lynch, a 16 handicapper who plays infrequently these days, owing to a litany of old injuries. "On different days you have different pin placements, different winds, different weather conditions; the golfer is different from day to day; you have these variables. You have to have concrete reasons to pick a stock, just as you have to have concrete reasons to pick a club. If a guy needs a three-iron to get over the water, but he can only hit his three-iron well enough to get over one time in four, it's not a good pick."
He learned disappointment as a caddie, too. In 1963 the U.S. Open was played at The Country Club, in Brookline, three bowls of chowder from Brae Burn. One hundred seventy-five local caddies entered a lottery to get bags in the Open. All but about 25 landed jobs, Lynch not among them. "That was crushing," he says, "but guess what? There are crushing things in life. I learned to move on."
One of his investment adages is, "Know what you own and why you own it." He doesn't invest in golf companies because he doesn't follow them. He wishes he had bought Callaway stock when "you had to wait in a line to buy the club." He would have sold "when I saw the clubs being given away as raffle prizes." You have to know what you own and why you own it.