Peter Lynch Averaged a 29.2% Annual Return Running Fidelity's Magellan Fund From 1977 to 1990. Here's What Made That Track Record Nearly Impossible to Repeat.

Younger investors may not recognize the now-rarely spoken name. Students of the stock market's great gurus (and anyone over the age of 60), however, are likely aware of the impressive returns that Fidelity's Magellan Fund (NASDAQMUTFUND: FMAGX) achieved when Peter Lynch was at the helm. While he was in charge from 1977 until his retirement in 1990, Fidelity's average annual return was a hefty 29.2%. Amazing.

Just don't mistake that result as something that's readily repeatable, or even realistically repeatable. Lynch also benefited from heading up a high-profile, highly flexible fund during a period of incredible growth for the U.S. economy.

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It was the best of times, it was the ... actually, just the best of times

Don't misunderstand. Peter Lynch was a brilliant stock picker. But he was a stock picker at a time when the U.S. economy was exploding for a range of reasons.

One of these reasons is the prolonged economic bounceback following a near-decade-long period of sky-high inflation over most of the 1970s, augmented by significant corporate tax relief enacted by then-President Ronald Reagan in 1981, followed by a round of major corporate tax rate cuts in 1986.

Sweeping deregulation also helped in this era, including the eventual inflow of capital from new, smaller investors into the stock market following the end of fixed-rate brokerage commissions in 1975.

Then there are the less apparent -- but perhaps more important -- contributing factors. Chief among them is the technological revolution that materialized during this period. Although personal home computers and the internet (remember dial-up?) didn't become commonplace until the mid-1990s, workplace computers had already made businesses much more efficient a decade earlier.

Moreover, a little bit of economic prosperity dramatically empowered consumers at the time, leading to malls being built in droves in the suburbs that had exploded in the 1960s and 1970s, following the crowd where it was living rather than where it was working, and turning shopping into a form of entertainment.

That said, it would also be naïve to pretend that the proliferation of cable television during the 1980s didn't accelerate economic growth by delivering more information and entertainment. The number of cable customers in the United States grew from around 15 million in 1980 to more than 50 million by 1990. This attentive crowd was ripe for -- and responsive to -- television commercials.

The perfect (100-year) storm

It was quite an era of converging changes to say the least! And, much of it translated into an opportunity for someone like Peter Lynch, who could connect the proverbial dots. It's unlikely we'll ever see this much interconnected change again (for this long) that isn't obvious to a huge number of people, minimizing the opportunity to capitalize on it. While artificial intelligence could be such an opportunity, everybody's already jockeying for position, undermining their upside.

That said, don't chalk up Lynch's smashing success to mere lucky timing. Although he clearly plugged into a tailwind, the S&P 500 (SNPINDEX: ^GSPC) still only averaged an annual gain of 14% between 1977 and 1990. The fact that Lynch doubled this average return still points to his genius vision and discipline.

James Brumley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.