When I think of Ken Fisher, I think of junk. Not junk bonds; junk mail.Fisher is the Chairman of Fisher Investments, a long-time columnist for Forbes Magazine, a best-selling author, and, last but not least, a billionaire. He is also a “proud junker,” and argues that his aggressive direct marketing campaigns merely “cut out the middleman.” [1]
But before Fisher became a marketing juggernaut he wrote 100 Minds That Made the Market, a delightful book with 100 three or four page chapters chronicling the men and women that – for better or for worse – built Wall Street.
In addition to the standard, though necessary, fare like Alexander Hamilton and J.P. Morgan, Fisher includes far lesser known but equally interesting personalities like Thomas Ryan and Floyd Odlum.
If these names don’t ring a bell, you’re not alone. Their lack of name recognition belies their important contributions as Ryan is the creator of the first corporate holding company and Odlum is the original corporate raider (pictured on the phone, poolside).
Clearly, heroes like Hamilton and Morgan deserve their place, but their name and influence is so well known that it is particularly enjoyable learning more about the smaller, yet still important players.
In addition to the famous and the unknown, there are many that fall in between. Famous names that you know today for one reason or another, although you probably don’t know the history.
For example, Charles Dow, (creator of the Dow Jones Index), started the Customer’s Afternoon Letter that ultimately became today’s venerable Wall Street Journal. Charles Merrill, founder of Merrill Lynch, started out as a semi-professional baseball player before famously bringing “Wall Street to Main Street” and started Family Circle magazine on the side.
It’s also easy to see how Main Street developed a healthy skepticism for those on Wall Street. Some of the juiciest stories are of the many criminals that have made their mark on Wall Street and Fisher makes the case that “crooks, scandals and scalawags” offer some virtue as a “sort of perverse” education. Fisher is right, although no one else seems to be getting the message since many of these crimes are still prevalent today despite the mountains of regulation that have been created to prevent history from repeating itself.
Consider Richard Whitney, one of the bluest blue-bloods on Wall Street in the 1920’s, serving top-tier clients like J.P. Morgan. It is said that his personal order to purchase 10,000 shares of U.S. Steele on Black Thursday helped stabilize the market.
His bold action provided him instant notoriety and propelled him to the president of the New York Stock Exchange (NYSE), where he presided until his demise in 1937. It was ultimately revealed that he lost millions of dollars in the Crash, his firm lacked profitability despite its high profile status and he continued to spend lavishly throughout the Depression.
He was able to keep up appearances for years by borrowing $27 million in 111 different loans from his also-prominent brother, acquaintances who knew him by reputation, and from creditors from some of his business dealings.
When all of his borrowing sources dried up, he turned to crime by taking stealing from his clients and the NYSE. He was sentenced to five to ten years in Sing Sing and was banned from the securities industry for life – not to mention suffering the media frenzy covering his fall from grace.
For every devious character, though, there is an inspiring story as well. Amadeo Giannini, for example, was a banker in San Francisco during the 1906 earthquake. The earthquake caused major fires throughout the city and as they encroached on his bank, he loaded the cash, securities and gold onto vegetable wagons and bravely walked the bank’s assets out of the city.
When the city was safe and the funds could be secured, he was the first banker to begin lending in an effort to rebuild the city. By 1929, he had 400 branch locations and over $1 billion in capital. His bank today is Bank of America.
Fisher makes a point of only including those who have passed away. He writes in the forward that his was partly due to his reluctance to write about his father, the famous practitioner who also wrote the classic book, Common Stocks and Uncommon Profits.
This viewpoint also ensures that only the truly great make the list avoids those who may just be a flash in the pan. Only after the final chapter is written can history appropriately be judged. In due time, there will be many more pioneers to write about, like the legendary international investor Sir John Templeton who passed away this month.
As Fisher brings the dead to life with interesting stories and antidotes, he is also tells an even more remarkable story: the creation of the most powerful and far-reaching capital markets system in the history of mankind. Wall Street is the nexus of global capital and each of the innovators outlined has a unique story of contribution worthy of telling.
In some ways, their stories also tell a broader story about America. Although Fisher doesn’t dwell on factors like heritage or religion, these he does describe how these were definitely challenging factors for many of the greats who were of Italian decent or Jewish faith.
Without a doubt that the next 100 minds will include a far more diverse group who will have overcome many of the same obstacles that unfortunately still persist in similar forms today.
Despite the obstacles, however, many of the next 100 will have worked their way to the top through the right combination with drive, determination and, most importantly, transformative ideas.
Based on this excellent book, I wish Fisher would spend less time on “Eight Investing Mistakes” or “Ten Predictions for 2009” and make the jump from junk to investment grade writing about America’s great financial history.
July 21, 2008
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Recommendation: Market Perform
100 Minds that Made the Market
By: Ken Fisher
John & Wiley & Sons, Inc., Hoboken, New Jersey 2007
First Published: 1993
ISBN: 978-0-470-13951-6
[1] Fisher regularly discusses his use of junk mail at industry conferences. The first quotation refers to conference held by Tiburon Advisors, one of the largest consultancy firms for the financial advisory industry. http://www.tiburonadvisors.com/06.11.03_Release_Highlights11th.html
The second quote refers to a statement from a 2004 Wall Street Journal article.
http://www.latrobefinancialmanagement.com/Research/Money_Management/Define%20Aggressive%20Fisher%20Sales.pdf
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