DON’T TAKE IT FOR GRANTED

Wall Street is an institution that some, especially today, seem to take for granted. It didn’t appear one day from some biblical fairy tale. Instead, Wall Street exists as it does because of nearly two centuries of pioneering, innovation, perspiration, mistakes, and scandals. Throughout Wall Street’s evolution, survival of the fittest dictated which innovations would be incorporated and which mistakes would be corrected—and it was these improvements that made the market the wonderful institution so many now take for granted.

But it was the individuals behind the improvements who drove the making of the market. This book presents 100 such people, each of whom contributed something—a lesson, an innovation, or a scam. Their minds made the innovations and their impact made the market what it is, so ultimately and simply, it was their minds that made the market—hence the book’s title.

Looking back on their lives is invaluable for anyone who never stopped to think how the market came about and essential for everyone connected with today’s market and tomorrow’s future. As the saying goes, “Those who do not learn the lessons of the past are doomed to repeat them.” Here you have 100 of the best teachers available to save you from learning the hard way the lessons their lives so vividly portray. In reading 100 Minds That Made The Market, you will find the story behind Wall Street’s gradual formation as fascinating and engrossing as the market itself.

HOW TO READ THIS BOOK

100 Minds is presented in a form that chronicles Wall Street’s evolution. Eleven categories (chapters) describe people who laid the basis for the institution; those who chronicled its growth and the deal-makers who financed it; those who innovated it; and those who assimilated it into the American economy. Then came those who reformed it, systematized it, scandalized it, and those who made and lost money in it; plus a few miscellaneous others. Within each category, the stories are presented in chronological order so you can follow the flow of time.

It’s important to remember that the categories aren’t as important as the people themselves. In writing the book, the people were chosen first and categorized later. The descriptions of each of them needed to stand on their own as cameo biographies before being fitted into any particular framework. Only after the 100 were written were they placed into groups that logically flowed from the stories themselves; then chapter summaries were written to bring the 100 together with overarching themes and lessons.

As important, I wanted you to be able to choose between reading the book cover-to-cover and just picking it up from time to time for a quickie on a single person whenever someone becomes of interest to you. As a writer of two previous books, a columnist in Forbes for eight years, and an author of a lot of other material, I hope 100 Minds is entertaining and educating enough to be worthwhile to many of you in a cover-to-cover format. But I am also mindful of how many more things I would like to do than I ever have time for and presume the same is true for you. By putting it in a format where you need not read it cover-to-cover, I am freeing you to use whatever bits of the book benefit you most. If one day someone mentions Lucky Baldwin and you haven’t the foggiest as to who he was, you can save yourself the embarrassment of asking or doing a lot of library legwork by simply flipping to the index and reading a four-minute cameo story. If you want to read further about Baldwin, just flip to the appendix where there’s a bibliography for each story that shows you where to go next. And if you want to find more subjects like Baldwin, just browse around his chapter.

Many of these fascinating folks can actually be placed into several different categories. How can you put J.P. Morgan into one box? And Ben Graham was an author, but he was much more, as were so many of these great pioneers. Yet I had to categorize them somewhere and did so where they made most sense to me. If you see it differently, I beg for your patience. Also note that many of these lives are interrelated, so when one subject is mentioned in another’s story, he or she is cross-referenced by boldfacing their name upon first reference, so you can quickly flip to that story for more.

WHY 100 INSTEAD OF 103?

I had to stop somewhere! And 100 Minds sounded good to me. Admittedly, this isn’t the perfect list of 100 Minds That Made The Market; that would be impossible to compile—no one could ever track every single contributor. It is almost certain that many material but quiet contributors were simply lost to history because, while their contributions may have been significant, they as people weren’t noted by society.

These 100 are my 100—based on what I’ve learned from 20 years as an investment professional and prior schooling in finance and history. They were chosen as my interpretation of the big contributors as opposed to finding people somewhere to fill certain slots (“Oh, I’d better find five more chartists and two more bankers!”). Yes, this is my list of 100 Minds. If you shuffled history you might come out with a few different names, but I’d bet most would be the same. We might disagree on a few, but it would be fun debating why some folks deserved to be included while others didn’t. So hopefully you will enjoy reading about my choices even if you disagree.

MADE IN AMERICA—AND OTHER EXCLUSIONS

Most of these 100 Minds are Americans. There were only a few foreigners I could envision whose contributions to the evolution of American financial markets were so great that they couldn’t be excluded. This isn’t an attempt to chronicle those who made hay in the evolution of European markets or markets as a whole. This simply details who made our market “the” market, for despite all the current fascination with global investing and overseas diversification, the American stock market is still the bellwether market of the world; the one on which everyone around the world focuses.

Some notable American financiers didn’t make it on the list for reasons such as being too industry-oriented or being too obscure in the history books. Automobile empire builder E.L. Cord, railroaders Collis P. Huntington and Leland Stanford, and investment banker August Belmont, Jr., were among those too industry-oriented to have made any significant contribution to our market system. This doesn’t discount their own unique contributions in their respective industries, but it puts them behind others who significantly affected our markets in a direct way.

Those who were too obscure in history were sadly left out because adequate biographical material was not available. Kuhn, Loeb partner Otto Kahn, technical analyst (and John Magee’s inspiration) Richard Schabacker, and even E.F. Hutton were all quite famous on Wall Street, yet surprisingly little was written about them, so I couldn’t really penetrate their lives or their minds. In Kahn’s case, there was plenty written about his wardrobe and love of opera, but the heart of the matter—his deal-making—was too inadequately described to get a good enough handle on him. I really wanted to cover him because I’ve always sensed his importance, but he seems beyond my grasp.

Richard Wyckoff, who pioneered ticker tape reading with his book Studies in Tape Reading, also falls into the too-obscure category, as does Addison Cammack and the Claflin sisters. Cammack was credited with coining the warning, “Don’t sell stocks when the sap is running up the trees!” He was described as the consummate trader in Edwin Lefevre’s Reminiscences of a Stock Operator, but I’ve never found anything in-depth on him . . . If you ever do, I’d love to hear from you.

The Claflin sisters—possibly the first female stockbrokers—rate mention in this introduction, if only because their story is so sensational. Outlined in Dana L. Thomas’ The Plungers and the Peacocks, the flighty, calculating pair—Victoria and Tennessee—went to New York in 1869 to court one of my 100 Minds, Cornie Vanderbilt, a genuine dirty old man. In 1870, he set them up in their own brokerage firm, feeding them lucrative tips and loving the commotion they stirred! While Tennessee presumably minded the mysterious business, Vicky advocated free love, women’s freedom, and a host of other then-radical ideas, and became the first woman to be nominated for the U.S. Presidency! After Vanderbilt died, his son and main heir, William H. Vanderbilt (who you can also read about here), bought the Claflins’ silence regarding their escapades with the old man. Both sisters eventually left New York and married British aristocrats. While interesting, the Claflins didn’t really make the market; a true contribution is hard to define. But they are a nice complement to Vanderbilt, who actually was a major contributor, which leads to another point.

This book is primarily about men, and in this day and age women may take offense at that. I beg your pardon, but Wall Street’s early years were almost exclusively a man’s world. The role of women in this book is almost totally confined to aspects that today would be thought of as stereotypically sexist: housewives, bimbo-mistresses and supportive seconds to the men who are featured. In terms of women who independently affected the market, I am sadly able to feature only three: Evangeline Adams, Natalie Laimbeer, and Hetty Green. But even among them there is some taint of oddballism that modern woman may find offensive. Adams was too astrology-oriented to be taken seriously, and Green was fabulously chintzy. If women are poorly represented in this book, I apologize and defer to the simple fact that the book is an accurate portrayal of the historical information available. Despite modern day desires for coverage of women in history, you can’t do that in this case and be historically accurate.

TRYING TO BRING THE DEAD TO LIFE

Note that everybody in the book is dead: This is not a scorecard of today’s players. (Four of the 100 Minds I can’t actually say are dead, but they have dropped from public view long enough to be presumed dead. When out of public view, it is virtually impossible to find obituaries.) Why dead heads instead of current market moguls? Clearly some of the living have made huge contributions—measurably bigger contributions, for good or for bad, than some of my 100 Minds. But, with no disrespect to folks like Warren Buffett, John Templeton, Ivan Boesky, and Michael Milken who have had great impact, they and others like them have already been heavily covered by the press; so today, anyone who has the slightest interest in financial types already holds his own views about them. No value added by covering that turf, so I don’t.

Furthermore, I can be openly critical of my subjects when appropriate, simply because dead people don’t sue. Among these stories you will see men I praise and others I damn. But with the dead I can’t be accused of ruining a career no longer in existence. Then, too, there was my father, Phil Fisher. In some ways he made me realize the beauty of limiting my book to the dead. When I first contemplated the book I envisioned including about a dozen living legends—and that would be impossible without covering my father, due to his vast formative and seminal contributions to the school of growth stock investing.

But I felt too emotionally uncomfortable writing about him: it was too easy to lose the forest for the trees . . . too easy to be too laudatory, or to compensate for that by putting up artificial walls to distance myself from him. In many ways I would rather have someone who is more naturally distanced than I write about my father. Of course, John Train did that when he wrote his classic book, The Money Masters, which chronicled nine great modern-era investors. Warren Buffett also wrote of him, and he has been covered at some length in the press over the years: In time, others will write more. Then it dawned on me: The living get covered and it is the dead who fall from sight and whom I can bring to life for you.

Most of the names in this book are fairly obscure—perhaps only a quarter of them are easy to learn about in the library. But the rest provided slim pickin’s and required digging; in many instances, this is the most complete and condensed account of their lives. If you decide you want more on a subject, just look up his or her bibliography. But what you won’t find in any biography is meaningful analysis of these lives regarding their impact on the market—and that is what I think my other contribution in this book is. As in my second book. The Wall Street Waltz, which operated in a short-story format, and as with my Forbes columns which operate in a single-page format, I’m used to condensing an entire saga into a few paragraphs. Because I’ve done a lot of that, I hope my experience makes me better able to do so for you with these 100 wonderfully interesting people. In each case, I have tried to put their contributions into perspective, give you overview, and show you a key lesson or two.

AT THE CORE OF FREEDOM

None of these characters are ordinary. You see extremes, from the most flamboyant to the most introverted, to the most brilliant, to the most crooked: None are run-of-the-mill. Before there was ever a thought of People Magazine or The National Enquirer, many of these market leaders were folks about whom gossip flowed. Many of their lives read like novels, but in many instances, fact is stranger than fiction! Above all else, these were people who did not feel constrained by those around them. They allowed themselves the freedom to do what others hadn’t or couldn’t do; and they wouldn’t be ruled by convention, history, society or, in many instances, the law. They gave themselves permission to bend, push, stretch, and at times simply break the rules that others all around them obeyed.

Allowing for innovation is the fundamental determinant of success or failure of economic systems. As Milton Friedman wrote so well, capitalism and freedom are truly impossible to separate. Democracy without capitalism is far from freedom because all the decisions are cast in a mode where some 50 percent win and 50 percent lose—which is a hell of a way to run a railroad. Too many lose. Only in the marketplace is everyone acting on decisions when it is in his best interest. And obviously, as recent history shows, non-selfinterested central control, as in communism, fails because, basically, if people can’t do what they want, they won’t do very much of anything. Likewise, self-interested business in a totalitarian state is destined to failure. Without the regulator of competition—what Adam Smith referred to so well in The Wealth Of Nations as the almost divine “invisible hand”—capitalism is destined to go astray. Consider what occurs in all fascist countries eventually.

And everywhere capitalism and freedom reside in a modern economy, there must also be capital formation, and thereby the financial markets. And it is in the financial markets where capitalism has its most potent effect for good or bad. It is here where innovation is the most fluid—the very nerve center of capitalism. Here where fear and greed are so easily stampeded into action. Here where the wealth of nations burns like gas on a fire, at times exploding in our faces. Here where unique individuals expose themselves at their best and worst and most bizarre. It is because Wall Street is so potent and important to the functioning of capitalism that the 100 Minds That Made The Market are so important to our past and future.

All these 100 Minds were innovators. And because innovation is what makes Wall Street and capitalism great, fluid, and ever current, the 100 are in many ways the very personification of what made and makes America great. If you love the market, remember that it is made up of people, and you will love these 100 fascinating people. Their lives are telling—telling the story of Wall Street.