Growing Rich - Arabictrader.com

GROWING RICH WITH GROWTH STOCKS
ally, was the genesis of what is now the Vanguard Group, which
specializes in low-cost index funds. “Some other major funds of that
period were the Massachusetts Investment Trust, Canadian Fund,
Atomic Development Fund, and Chemical Fund,” Stovall adds. “A lot
of them have since either changed names or liquidated.”
The biggest obstacle for mutual funds of that era may have been
their lack of a unique sales hook. “What the brokers did like was the
meaty 8 percent sales load attached to most of these funds,” Stovall
says. “This was long before discounted and negotiated rates, when
all commissions were posted and fixed.”
1953…A YEAR TO FORGET
In the summer of 1953, the Commonwealth Investment Company
fired Stovall’s wholesaling firm, putting it out of business. To make
matters worse, his father died suddenly of a heart attack and his wife
almost lost her life during childbirth. “After all this bad news, I got
a job with E. F. Hutton as a junior research analyst,” he says with a
sigh of relief. “I just walked in off the street and was hired to write
their morning news wire. This was before we had electronic transmission
of news. It came and went over the wire in Morse code. This was
a major research product for our clients. E. F. Hutton was especially
big in California. In fact, Mr. Edward F. Hutton founded the company
in 1902 to bring investment services from the East to the West via
private wires. He owned the telegraph lines. This was very high tech
for that time. When I joined the firm, most of its production was in
California, Arizona, and Texas. It also had a few offices in Chicago,
Kansas City, and New York. I had to get the wire written and on the
desks of the brokers in California before seven o’clock in the morning,
West Coast time.”
Stovall’s reports talked about the market overall and featured investment
ideas from the firm’s small team of analysts. “To put this
report together, I did all kinds of research,” he says. “I would collect
newspapers and magazines as fast as I could get them. I read
everything from Chemical Week to Engineering News Record and the
Physician’s Desk Reference. Our in-house analysts followed the regulated
industries that ordinary brokers had a hard time understanding,
like the utilities, oil and gas pipelines, railroads, airlines, and banks.
They also had two or three industrial and technical analysts.” The
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