Read The Very, Very Rich and How They Got That Way Online
Authors: Max Gunther
The Very, Very Rich and How They Got That Way (8 page)
The speculator now began to operate like a general directing a massive secret maneuver. The area to be staked was filled with hunters and vacationers and lay close to both a major highway and a Canadian Pacific rail line, and the risk of the operation’s becoming known was enormous. Geigers, tents, sleeping bags and tons of food had to be quietly assembled. To escape attention, Hirshhorn and his colleagues purchased mining licenses in scattered spots all over Ontario. Bases were set up at scattered points, one even at South Porcupine, 200 miles above Blind River. Lawyers were lined up to draft claim papers as fast as the staking parties made their way through the bush.
When the expedition’s pontoon planes took off from South Porcupine, they headed north, then swung southwest to Algoma and there deposited in the bush some of the four score stakers, who still did not know exactly where they were. For six weeks the crews snaked along a 90-mile Z, covering 56,000 acres. Bay Street was stunned. Joe and his friends had secretly staked out one of the most fabulous claims in Canadian history.
Like many a wondrous wish come true, the triumph of Blind River posed, for Joe, an old problem: Now that you’ve got it, what are you going to do with it? Two decades of speculating had involved him in operations spanning Canada – oil and real estate, gold, copper, iron ore (“In mining I have no favorites; I’ll mine granite if it will pay”). Blind River, on top of all this, was, in a way, just too much. The moment obviously called for stock taking in the fullest sense – combing all the corporations out of the pockets of Joe’s old clothes, adding them up and putting them together in some sane order. Joe had reached the point where one day he dropped a roll of several hundred dollars on the floor of his office without missing it. This sort of thing could get serious. Joe was getting exhausted trying to keep an eye on all his wealth.
As is his custom, Joe sought out some expert help – in New York, attorney Sam Harris, who became his most intimate counselor; and in Washington, the dignified former secretary of state, Dean Acheson. Acheson discovered that New Jersey Zinc and Phelps Dodge might be interested in taking over the Algom properties and problems. After poring over test drillings and cost-projection charts, the two firms offered to buy a two-thirds interest in Algom, but at a price so low that the offer was rejected – as Acheson wryly recalls, “It was too early for Christmas.” By November 1945, however, Christmas, in a businesslike way, came to Joe – in the shape of Rio Tinto Company of London. Rio Tinto had just finished selling the bulk of its great Spanish holdings in copper, sulfur and iron pyrites and it was especially interested in a uranium investment. This news came by the international grapevine to Sam Harris, who lost no time urging upon his client the chance to gather the pieces of his scattered empire into one neat pile.
It soon became clear that the longer-range interests of both Joe and Rio Tinto were neatly intersecting: Rio Tinto wanted permanent control over his whole Canadian mining empire, and Joe still needed a corporate package for all his holdings. The negotiations were complicated and delayed by Joe’s need to get a favorable tax ruling from the U.S. Treasury governing the transfer of his assets to a foreign concern. This ruling Dean Acheson succeeded in getting. The result... was Rio Tinto Mining Company of Canada. Into this elegant new receptacle Joe dropped all of his holdings in 46 different Canadian mining companies (one of which was itself a package of 17 earlier companies). Although Joe did not get voting control, he owned the biggest single slice of equity (55%).
There were some memorable moments during the long months of negotiating that threw Hirshhorn of Brooklyn into a room full of London’s financial aristocrats. As a personality, Joe made a sweeping conquest of his British confreres by remaining utterly, stubbornly himself. In conference with Rio Tinto’s Roy Wright, he would carelessly throw his feet on the furniture, chew his unlit cigar unremittingly and jar leisurely British discourse to an end with a phrase like “let’s cut the baloney and make a decision, eh?” When Rio Tinto’s stately 75-year-old chairman, the Earl of Bessborough (recently deceased), solicitously warned Joe to slow down and conserve his energy, Joe turned to him and said, “Look here, Earl, I got plenty of health.” When the whole improbable encounter of these men was concluded, there prevailed a mutual and affectionate respect. In Joe’s estimate, “Those British fellows – they’re
wonderful
.” Said one of Rio Tinto’s executives, “Mr. Hirshhorn is called just a promoter, and
promoter
is sometimes supposed to be a dirty word. But where would Canada be without promoters? There are people who will try to belittle him, but in a way he’s a great man.”
Hirshhorn is most impressive when – with unlit cigar jammed between tight lips, hand towel clutched tightly, ready for a sweating brow – he reaches for a telephone. To any broker the telephone is an indispensable tool of the trade. To Joe it is like a vital physical organ, certainly to be valued, for example, above one kidney or some miscellaneous glands or even countless pints of blood. This is not entirely figurative. His son Gordon recalls one night in 1947 when he and his sister were summoned to Joe’s bedside in a New York hospital, where Joe lay gravely ill with peritonitis. Joe was coming out of the anesthesia, both arms pinned beneath devices for transfusion and intravenous feeding. As the children tiptoed into the room, the semidarkness was rent with the scream: “Get this goddamn thing outta my arm – I gotta make a phone call.” The children softly retired, reassured.
The phone is where Joe works. He plays upon its switch buttons like a pianist, and the rhythm of his nasal “Yeah... Yeah... Yeah” is the pulse of his whole office. Into the telephone rattles the sense and humor of the man. To a nuisance: “Not interested, pal, not interested – I don’t wanna make any more money, get it? Take it to somebody else, please.” To a charitable solicitation: “OK, OK, OK, I got the idea – how much you want? – just tell me that... 100? ... I’ll make it a 150.” On being asked his opinion of an able executive: “He’s terrific, first-class – he took the company over when it was strictly ham and eggs, and he’s make it into a steak.” On a different kind of executive: “He knows as much about the market as I do about Latin. He’s crazy. He is also a dope.” To an exciting proposition: “I’m with you – put me on your team, kid – I wanna fix up the world, too – just gimme a hammer and nails and tell me what’s to be done... Yeah... Yeah... Yeah... Got it... You’re wonderful, you’re
wonderful
. You, my friend, are
wonderful
.”
“I have never,” his son Gordon relates, “seen him dead serious for a solid stretch of 20 minutes.” But much of this is planned therapy, Joe’s substitute for the medicine that other executives find on the fairways by day or at the poker table by night. At times his prankishness can get rather frenzied, as when he opens a board meeting by crooning a few bars of
I’m in the Mood for Love
– and doing a buck-and-wing as he leaves. But at any time the wrong wisecrack could cost him a couple hundred thousand dollars. He is not a man who stops thinking when he grins.
The chemistry of success is always hard to analyze. In the case of Joseph Hirshhorn only a few elements can be clearly isolated. Joe, irrepressibly articulate, tenders his own terse formula: “Time, guts and money – that’s what it takes.” Applied to himself, this sheds no dazzling light. He has had no more time than most others his age, and, to begin with, he had much less money than many. The element of “guts” has counted. He has always been a stranger to panic.
At the right time he was on exactly the right stage – that is, Canada, which for the last decade has spilled such wealth from its rocky earth, and Toronto, which, with less than one-tenth as many members as the New York Stock Exchange, last year traded almost 135% more shares.
He learned to hire good men, and as one aide notes, “He never tries to outsmart his experts – when he talks to his lawyers, he asks them, he doesn’t tell them.” More important still, he has known how to deal, wisely and warmly, with the mining prospectors. They like him. They trust him. And so, when they plod back from the bush to the big city, to report a staking and to seek financing, they are quite likely to head first for the Bank of Nova Scotia Building.
He has always been the lone wolf, disdainful of the well-worn track of the pack. His administrative methods are unorthodox, owe nothing to Wharton or Harvard. One of his office aides says plaintively, “He may at any moment send me out to get his pants pressed – and to pick up a box factory on the way back.” Dean Acheson, appraising Joe’s business methods, offers a historical note: “Joe reminds me often of Harry Truman in his early days in the White House. Mr. Truman thought it Napoleonic to make fast decisions and he drove us nearly crazy until we were able to convince him that there might be some merit in the considered opinion.”
There has never been any master design to Joe’s course of action. There has simply been that spur to action, the passion of the born speculator. “Just to test my judgment – that’s what gives me the great kick,” Joe explains. “The money doesn’t matter – not after the first million. How could it? You can’t wear more than two shirts a day or eat more than three meals.” As a speculator he preaches only a couple of axioms that he has practiced. One: “Don’t tell me how much I may win, but how much can I lose.”
But beyond that, according to one of Joe’s friends, there is in him a “passion for discovery,” a fervor for making something out of nothing. “I’m not interested in the industrial or manufacturing picture,” Joe explains. “That’s strictly competitive, not truly creative . . . No, I don’t have a very high regard for Wall Street – it’s parasitical – what does it
create
? But
resources
– that’s something else. There you’re in the world of the Harrimans and the Huntingtons and the men who really
built
. So look at Blind River. It took a lousy $30,000 to get it started – and now there’s four, maybe eight billion dollars in wealth there. But that isn’t all. There will be 20,000 people making their living there by the end of next year. There are railroads. There are mills. There are homes. There are schools. The whole works. It’s new. It’s just born. And I’m glad I helped build it.”
He is no easy bargainer. He gives equally hard scrutiny to a new mining proposition, to his architect’s estimates for a new house or to a dinner check. Meanwhile, he is a ready donator to Columbia University or Manhattan College or the Truman Library or the hospital at Blind River. His generosity sometimes is well hidden. When he has subsidized young American artists, he has carefully avoided publicity. When he has ventured upon a promising new enterprise, he has seen that everyone in his office – and the elevator boy – has had a chance to share in it. When his second marriage proved childless, he added two adopted children to the four children of his first marriage. And if he proved considerably less than generous of his time with that family, he could find an hour to pore over the pitiful problems of some mortgage-burdened miner or farmer who once met Joe somewhere and thought maybe Joe would see some way out of the awful muddle.
He has a scorn for the more conspicuous paraphernalia of the wealthy. Private yachts and planes strike him as preposterous. (His chauffeur-driven Cadillac is a matter of sheer self-preservation. As a friend observes, “At the pace he strikes in everything, if he drove, he’d be dead at the wheel in a matter of hours.”) He likes simplicity, and when he thinks of the rich or great whom he admires, he thinks of them in some homely phrase: “What a wonderful mother those Ford boys must have – they’re great people. Really nice. Simple.”
Even Joe’s closest friends have no clear glimpse of his likely future moves. When Joe recently left for several months’ rest in Europe, Gordon Dean could only remark, “His ship, I know, stops at Gibraltar. I would not be surprised if he came back with the Rock.”
***
The story you’ve just read captured Joe Hirshhorn at the climax of his career. He has continued to develop mining ventures and prospect around the stock market since then, but the pace has slowed.
Among his major moves in the late 1950s and the 1960s were an Arctic oil-and-gas speculation and a tin-mining venture in England. “But I’ve spent less and less time on business in recent years,” says Hirshhorn, today in his early 70s. “I’ve spent most of my time on what I guess you’d call my hobby – art.”
The Hirshhorn Museum in Washington, D.C., has about 3000 sculptures (mostly European) and 6000 paintings (mostly American). This is the main fascination in Joe Hirshhorn’s life at the moment. In this he is unlike most of the other rich men you’ll meet here. Most are compulsive capital gatherers. They go on furiously making money throughout their lives, long after they’ve accumulated more than they can possibly spend. Some have hobbies and other non-business interests, but these interests remain distinctly secondary to the main work of piling fortune upon fortune. Hirshhorn has gone the other way: His hobby has become more important than his business.
And yet he hasn’t been able to retire completely. The very, very rich never do. On almost any weekday you’ll find Joe Hirshhorn at his New York or Toronto office. He can’t stay away. “I don’t keep a market tape around anymore,” he says, “but I keep in touch with the stock market. I’ve got to. I like the action. I’d miss it too much if I went away.”
He is addicted to the stock market. He has been able to cut down the dosage somewhat but he will never be quite free. The addiction is known to be incurable.
1 Reprinted from the November 1956 issue of Fortune magazine by special permission. Copyright © 1956 by Time Inc.
[return to text]
JOE HIRSHHORN’S SPECULATIVE approach to the stock market is extremely, even frighteningly, risky. The fact that he came out a winner doesn’t alter the fact that he often operated from positions of high jeopardy. One false step, one thunderbolt of ill fortune, and he could have been smashed flat in an instant. There are thousands of men who have tried to parlay Canadian gold and uranium stocks into a fortune as Hirshhorn did and who haven’t made it. Many are broke. Many curse the miserable day they threw their first star-crossed dollars into the action.
Now let’s look at another poor kid from Brooklyn, who took a somewhat safer route to a market killing – the seller’s route. Bernard Cornfeld blundered into his life’s great work by sheer accident. Previously he had had little or no interest in the stock market. As a friend remarked, it was probable that Cornfeld had never before seen a stock certificate or known anything about the market or given a damn. But when he finally tripped, half-asleep, and fell into the action, he looked around and saw something that jolted him wide awake. What he saw, and what he developed for himself after a while, was an absolutely 100%-foolproof system for making money out of the stock market. The system didn’t depend on equity speculation. It depended on selling the speculative idea to other people.
It didn’t last. After a few years the amazing system began to go awry. There may be some obscure kind of poetic justice in this fact, for somehow it seems that nothing so golden should be allowed to last forever. The world’s puritan morality would never stand for it. The perfect get-rich-quick scheme belongs in dreams, not real life. But while Cornfeld’s system did last, its flash and glitter dazzled the eyes of businessmen all over the world.
The system could have come to fruition only in the warm, cozy, euphoric environment of a long-lived bull market. People in general had to be optimistic about stocks over the long term; the system needed that environment as a seed needs moisture to germinate. The early and middle 1960s were perfect from this point of view, and Cornfeld had the unbeatable three-way combination that makes men rich: He was in the right place at the right time with the right idea. The life-giving environment disintegrated in the late 1960s and has not been hospitable since. But if another long bull market develops and maintains itself later in this decade, Cornfeld’s system or a similar one can be nurtured again. If Cornfeld himself doesn’t do it (he is still only in his middle 40s), somebody else inevitably will.
The story you are about to read is not only the story of a complex and interesting man. It is also, in a sense, a recipe for somebody’s future success.
Consider the butterfly. He spends most of his life as a caterpillar, grubbing about amid the leaves, ugly, unwanted, unnoticed. The struggle seems to be too much for him, for after a while he abandons it. He wraps himself in a cocoon and retires from life in gloomy solitude. And then suddenly he emerges as a butterfly. For a few glorious summer days he flies from flower to flower under the sun, a piece of sheer living color, startling the eye with his brilliance. His whole life has led up to this brief climax of joy. Has it been worth the effort? The butterfly may wonder, for he quickly fades and is seen no more.
Thus it was with Bernard Cornfeld. He started as nobody in particular – an ordinary man like you and me, grubbing for money to pay bills and taxes, holding hard to a slippery lower rung of the lower middle class. And then, in the 1960s, his short, bright summer arrived. He became the international king of the mutual-fund business and an acknowledged prince of the global jet set.
Nobody ever went quite so far as to call him one of the Beautiful People.
Beautiful
wasn’t a word that could be accurately applied to Bernie Cornfeld. He was a man of middle height, somewhat plump, with a roundness of face accentuated by early baldness. But in all other respects he was a standout member of that leisured, highly visible, supremely affluent class. He had châteaus in Switzerland and great, expensively decorated apartments in Paris and London and New York. He wore custom-made French suits and Italian shoes in the latest of moneyed Mod styles. He affected a small, tufty beard at one time, though it failed to square or lengthen the moon-round face. He traveled everywhere with a covey of lesser, female butterflies, also brilliantly hued: long-legged, miniskirted young ladies of sundry nationalities, most of them ten or twenty years younger than he.
And then the summer ended as abruptly as it had begun. The empire collapsed and Bernie Cornfeld was seen no more.
He went out with money in his pocket, of course. How much? The question is hard to answer. Cornfeld himself has never offered any enlightenment on the subject. There have been a number of guesses, but that is all they really are – guesses. To settle on a median guess, let’s say Cornfeld’s net worth today is probably somewhere near $50 million. At the height of his fortune he was worth easily $150 million.
The specific figures may be in error, but the generality is correct. Bernie Cornfeld is very, very rich at the age of 44. He was very, very rich before he was 40, in fact. He has proven once again what other men in our gilded gallery have proven: that even in this era of high taxes and high costs and other apparent barriers, it is still possible to go financially from nowhere to somewhere rather rapidly.
Let’s see how on earth he did it.
Bernard Cornfeld was born in Turkey on August 17, 1927. His parents were Jews from central Europe, well educated, moderately well off. When Bernie was a grade-schooler they moved to America, impelled partly by a rising tide of anti-Semitism that was soon to engulf most of Europe. They settled in New York City’s unprepossessing but friendly borough, Brooklyn. The father, a theatrical promoter and actor, died shortly afterward. The family’s sole support from then on was the mother, who scrounged a meagre living as a nurse while recalling past glories in Europe. Young Cornfeld thus grew up in an atmosphere of shabby intellectual-style gentility.
Unlike many of the other moneyed folk we’ve met and are to meet in this gallery, Bernard Cornfeld seems to have been a perfectly satisfactory student in school. He graduated from high school with a B-plus average, served in the U.S. Merchant Marine during and after World War Two, went to Brooklyn College and came out with a bachelor’s degree in psychology.
“Nobody back then was predicting old Bernie would become a multimillionaire,” says Tom Pinker, a New York advertising man who was casually acquainted with Cornfeld in his college days. “In fact, he often talked as though he hated money. He was one of those campus reform-the-world nuts. You know, always going to weird political meetings and yakking about socialism and negative taxation and nutty stuff like that. Hell, I don’t think he even knew what a stock certificate looked like.”
After college Bernie Cornfeld drifted through a number of minor jobs, obviously and admittedly uncertain of the course his life should take. “Sometimes I think money is the answer,” he said once to a girlfriend, “and sometimes I think money is a damned illusion.” For a time it seems as though he was going to turn his back on money and follow the world-reforming urge he had displayed in college. He went to work for a Jewish social-cultural organization in Philadelphia as a kind of youth counselor.
“That was the kind of job we all thought Bernie would end up in,” reminisces Tom Pinker. “Most of us were actually more interested in money and security than he was. We were the silent generation, you may remember – the generation that was all shot up and beat down by the war. All we wanted from life was a steady job with guaranteed raises and free hospital insurance and a retirement plan. It wasn’t usual in those days for a college kid to go into social work the way kids do today. Social work didn’t pay the kind of money or offer the kind of security we were looking for. But Bernie wasn’t one of us in that sense. He didn’t seem to want money. He was heading in the opposite direction from the rest of us. It’s strange, when you think of it, that he was the one who finally ended by hitting the jackpot.”
Bernard Cornfeld, social worker. The cocoon stage.
What actually happened to him emotionally and intellectually in that cocoon, what transformations took place in his developing mind, is hard to say. Cornfeld himself has tried to analyze the transformations in logical fashion, but he hasn’t succeeded well, and neither has anybody else. It may be that this part of Cornfeld’s story cannot be told in rational terms. For it is a curious fact that some of the most momentous changes in a man’s life can spring from the most trivial circumstances – indeed, from external circumstances having nothing at all to do with the man’s strengths and weaknesses, his hopes and fears, his internal aches and itches. A man can drift into his life’s most colossal happening without meaning to and without even knowing where he is going. (For a fuller discussion of this baffling fact, see chapter 10, on luck.) Something like this appears to have happened to Bernard Cornfeld in 1954.
For no particularly compelling reason he left Philadelphia, drifted to New York and got a job as a mutual-fund salesman. It was an easy job to land, and that is certainly one reason why he took it. A psychology major with a background in social work could not choose from a great wealth of job opportunities in those pragmatic days. Few companies had any use for such a man. But mutual funds, then lustily growing in the post-war bull market, were desperately raking the undergrowth for salesmen. Almost anybody who could speak English and smile was welcomed in off the street, shot through a quick training course and shot back out to sell fund shares to an apparently limitless public of easy marks. Thus the young social worker was pulled into the fund business.
And thus, with no noticeable long-range planning and no fanfare and no awareness that anything very terrific had happened, Bernard Cornfeld launched himself on his life’s great work.
A mutual fund is ostensibly an outfit that, for the mutual enrichment of its shareholders, gathers money from them, puts the money into a pool and invests it – most commonly in stocks. If the investments are sound, the pool gets bigger and so does each investor’s share. In hustling fund shares to the public, salesmen usually stress two points: (1) that a small investor can command a greater diversity of stocks through fund ownership than he could by buying individual stocks himself, and (2) that he gets the advantage of what is portentously called “professional money management.”
What the small investor doesn’t always realize is how much this is going to cost him.
The salesman’s commission, management fee, performance fee and other charges can add up to well over 10% of what the investor kicks in. Thus, if he puts up $1000, $100 or more will disappear rapidly, and he is left with shares worth $900 or less. This $900 is what he will get if he decides he has made a mistake and elects to cash out. The per-share value of the fund will have to rise by more than 11% before the poor sucker can so much as break even, let alone score a capital gain.
Indeed, he may be even worse off than that. The lucky salesman may sell him a so-called contractual plan under which the investor mails in a stated amount per month for a stated number of years. (“See how it can build up!” enthuses the salesman, flashing gorgeous colored charts with Everest-steep lines climbing toward infinity.) What the salesman fails to explain is that the contractual plan is “front-end loaded,” meaning that all or most of the salesman’s commission for the entire five-year or ten-year deal will be scooped out of the first year’s payments. If the shareholder decides to cash out early (“That’s your privilege,” the salesman assures him, making a virtue out of it), he may find his actual shareholdings are worth only 50% or 75% of the money he has forked over.
In fairness it must be said that many investors have been served well by mutual funds – especially investors who were smart or lucky enough to get in at the beginnings of bull markets and who then were smart or lucky enough to stick with it for an appreciable time and thus out-earn the commissions and fees. Mutual-fund managers obviously would rather have their shareholders make money than lose; it’s better advertising and makes the salesmen’s job easier. But Bernard Cornfeld was introduced to the business by salesmen-teachers who viewed it from a special angle. It didn’t make any difference to them whether a given customer won or lost. They, the salesmen, won every time a new investor was brought into the fold.
What the salesmen had, in the booming 1950s, was a 100%-foolproof system for making money out of the stock market. There aren’t many such systems. No system that depends on investing in the market is foolproof. Most, in fact, offer little better than 50-50 odds. The salesmen, however, were in the lovely position of claiming a win every time somebody else’s money was invested.
Things aren’t so easy for fund salesmen today. With the 1969-70 market collapse not far behind us, we are now keenly aware that stock prices can go down far and fast – and, once down, can sit and sit and sit. But in the middle 1950s many people believed the Final Permanent Bull Market had at least been established. Fund salesmen didn’t have to talk very hard to convince people that one’s money could grow faster in the stock market than in a savings account – and not only faster but with equal safety. Everybody knew there weren’t going to be any more wars, depressions or bear markets of any great consequence or duration. Putting your money into a mutual fund, the salesmen could argue (quite reasonably, so it seemed at the time), was the same as putting it in a bank with an almost guaranteed annual interest rate of 20% or so.
No, it wasn’t hard for a salesman to find customers in those days. And young Bernard Cornfeld must have thought,
How long has this been going on? Why didn’t I get here sooner?
He plunged into his newfound profession with astonishment and delight.
His employer in those early New York days was a mutual fund called IPC – Investors Planning Corporation. (Later, one of Cornfeld’s companies was to buy IPC.) His colleagues there remember him as a competent but not brilliant salesman. He earned a good living for a young man of the period – enough, at any rate, to afford a car and an attractive Manhattan pad and an endless supply of girls. But he seemed not to be throwing his whole heart and soul into the salesman’s job. Having learned this much about the fund business, he wanted to know more. The more he learned, the more fascinated he became.
Up above the lowly salesmen’s level he saw worlds beyond worlds. There were supervisory salesmen, who took cuts from the commissions of salesmen under them; and there were district and national executives, who took cuts from the supervisory salesmen’s cuts; and up at the top were the fund organizers, who took cuts from everybody. Cornfeld, in those early New York days, spent nearly as much time learning about the fund’s financial engineering as he did selling.
He had now found himself in terms of profession but not in terms of environment. New York left him dissatisfied for a number of reasons. Competition among fund salesmen there was savage, for one thing. Cornfeld thought there might be other areas of the world less crowded with competitors. Moreover, he was still a young bachelor in a drifting mood. He had seen a little of the world with the Merchant Marine and had felt drawn by the romance of foreign lands. And so, late in 1955, he went to Paris (with IPC’s blessing but at his own expense) to see what could be done about selling mutual-fund shares there.
It turned out that a lot could be done. Most European governments forbade him to sell to their citizens, because they didn’t want scarce capital drained off to America. So Cornfeld looked around and discovered the American-expatriate market. Europe in those days was full of American troops, diplomats and businessmen, most of them stationed overseas for protracted periods with their families. Their U.S. paychecks went a long way in the European economy, which was growing more affluent but which still lagged far behind booming post-war America. They had a lot of spare dollars. Many of them had read about the grand times that were being had on Wall Street, but being far from the action, they had no convenient way to move their money in and out of U.S. stocks. Cornfeld offered them a convenient way.
He sold enough IPC shares to demonstrate that a large, rich market for U.S. mutual funds existed overseas. He then severed relations with IPC and turned his attention to a mutual fund that he considered much more exciting and more salable: the Dreyfus Fund. This was an early version – perhaps the ancestor and archetype – of the go-go funds that were to leap to high prominence in the 1960s. Instead of being satisfied with slow, steady capital appreciation, the Dreyfus Fund went after killings – and sold its shares on that basis. One of its more famous killings was Polaroid. Dreyfus bought this stock when it was selling at slightly over $30 a share in the late 1940s. As far as anybody then knew, the stock was a dog. But Jack Dreyfus’s hunch about it proved brilliantly right. His original shares, after numerous splits, eventually soared in value to more than $6000 apiece.