Move to Israel brings no regret for fund star

Having achieved riches and stardom, Morris Smith posed a fundamental question: `What else is there?'

December 08, 2005|By BERNIE KOHN | BERNIE KOHN,SUN REPORTER

Morris Smith was thrust into stardom in the financial world in 1990 when, at age 32, he succeeded the legendary Peter Lynch as manager of Fidelity Magellan, the world's largest mutual fund.

Amid a turbulent market, roiled by the Persian Gulf War and a numbing recession, Smith kept Magellan one of the better-performing stock funds and added $7 billion in new money. He grew resigned to, if not always comfortable with, the public pressures of Lynch's legacy.

And then two years later, a feeling overwhelmed him in the produce aisle.

Pondering heads of romaine lettuce for the Passover meal, it occurred to him: He hardly ever went grocery shopping. He hardly ever did a lot of things. Sure, he still "shut it off" every Friday afternoon to spend the Jewish Sabbath studying and praying, but 60-hour weeks were becoming 70, or more.

He loved analyzing businesses but had a tough time seeing his own performance analyzed once a week in The Boston Globe.

He'd had all the success anyone could ever hope for, and made more money than most people do in a lifetime. It was not a spiritual reawakening - "I was always awake," he says - but something more profound. "In 10 years, I've done it all. What else is there?" he remembers thinking.

So he went home, talked it over with his wife, Devora, and announced a stunning decision: He was leaving Fidelity and moving to Israel with Devora and their five children to live a life of Jewish study, self-fulfillment and charity.

Thirteen years later and now back in the U.S., he has no regrets. The son of Holocaust survivors says he's found his center in the absolute morality of the Torah, the Jewish holy texts, in a world of relative morality.

"It almost made no sense," Smith recalled yesterday in a rare public appearance in Pikesville for Etz Chaim, a Jewish outreach group. "People couldn't understand my decision because they couldn't understand the shoes I was walking in."

The challenge of balancing what Smith calls the tripod of life was at the core of his existence from the time Fidelity hired him out of the University of Pennsylvania's Wharton School in 1982, after a chaotic interview with Lynch.

"He must have asked me 30 questions about 30 industries in 30 minutes," Smith recalled for his audience of several dozen business people at the Woodholme Country Club. "And he's on the phone, and checking his Quotron machine, and there are people coming in and out of the office the whole time and there had to be hundreds of files on his desk. ... I went home and told my wife that I absolutely blew it."

He got the job. Within nine months, he was Lynch's assistant on the Magellan Fund.

Five years later, as head of the Fidelity OTC fund, he took a Thursday and Friday off in October for the Jewish holidays of Shemini Atzeret and Simchat Torah, even though the market was tanking. A colleague caught up with him as he was leaving Friday night services, warning him that everyone was expecting an awful Monday.

Smith slipped into the office Sunday and sold as many stocks as he could in the overseas markets. On what turned out to be "Black Monday," the stock market's worst day ever, and in the weeks to come, his fund's assets shrank by almost two-thirds, though he eventually made much of the money back.

Even after he relocated to Israel and entered a yeshiva - a Jewish seminary - the self-described "stocks junkie" continued to play the markets. He rode the Israeli stock market's boom in the mid-'90s, and now has his own little pot of hedge funds. But he invests only with his own money, on his own terms, on his own time.

Smith and his family returned to the United States after seven years away, for an accumulation of family reasons, but never sold their house in Israel and plan to return someday.

Smith said he spends 30 hours a week in religious studies, starting when his alarm clock rings at 4:25 a.m. His nonprofit ventures in the U.S. and Israel include a satellite TV network dedicated to Torah study. He does some consulting on the side for his friend Howard Jonas, chairman of the telecommunications firm IDT Corp.

He views the recent scandals in his old business more as inevitable than worthy of indignation. The next time, he hopes, corporations and mutual funds will police themselves so there's no need for an Eliot Spitzer figure. He considers jail sentences for corporate crime a healthy sign.

The 1990s, he says, were "a period of incredible greed. And greed begets bad habits."

Of course, it was pointed out to him, he was in the business of greed. Magellan's investors expected - demanded, even - that he make as much money as possible.

"The greed that is good is a greed for success," he responded, playing off the infamous "greed is good" line from the 1987 Oliver Stone movie Wall Street. "The greed that is bad is a greed for success at any cost."

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