Maverick Wizard Behind the Wall Street Lion
filtered down through the skyscraping spires into the canyons of lower Manhattan.
The day was perfect and Keith Funston, president of the New York Stock Exchange,
was catching a breath of air in Battery Park. With a certain detachment he viewed
the collection of bums and winos who were taking their vicarious ease there,
close to the big money. Suddenly Funston found himself staring at one of the
idlers. Like some of the others the man was stretched out full length on the
grass; indisputably, however, he was wearing a suit that cost at least $300.
He was also shoeless and he was luxuriously engaged in wiggling his toes. Unbelieving,
Funston moved in for a closer look at…Jack Dreyfus!…fellow member of the Exchange,
head of a thriving Wall Street brokerage house, entrepreneur of the nation’s
most successful and spectacular mutual investment fund.
As Funston stood here, momentarily
undecided as to what reaction his official position called for, Dreyfus raised
himself on one elbow, smiled and issued an invitation, “Take off your shoes,
Keith, and join me.”
Jack Dreyfus is founder
of the billion-dollar Dreyfus Fund, whose lion stalks so imperturbably across
his TV tube, and president of the brokerage firm plugged by a pair of old TV
coots who play languid ping pong while discussing the fantastic view of the harbor
offered by Dreyfus & Co. He is a quite implausible creature to be found
maneuvering among Wall Street’s bulls and bears. A slender, soft-spoken perfectionist
at 52, he has thrived on the extreme competitive pressures of his environment.
Indeed, many of his contemporaries regard him as an overcompetitor—not only
in the realm of high finance but in almost anything else he lays a hand to—including
horse racing, bridge
and gin rummy, at all of which
he has been enormously successful. Yet he has the eye and ear of an artist and
the impulses of a beatnik.
almost two decades Dreyfus has taken impish delight in stepping on Wall
Street’s respectable corns. He has been called an upstart, an interloper
and a genius. Yet he is, without question, the most singular and effective personality
to appear in Wall Street since the days of Joseph Kennedy and Bernard Baruch.
When late last year he decided to get out of the biggest of his enterprises,
his exit was as theatrically pleasing as either of these two predecessors could
“Dreyfus has made some eyebrows
lift in this business,” admits Funston, who has followed his career with admiration
and, occasionally, alarm. Dreyfus first shook up the Old Guard 15 years ago
with a bold new approach to investment-house advertising. His ads,
and later his market letters, were written in bright, brisk English instead
of the traditional Wall Street Choctaw. At
a time when mass participation in the stock market was really beginning to burgeon—until,
today, one of every six Americans is involved in some way—Dreyfus decided to
woo the public with whimsy, TV cartoons and wry admissions of fallibility. “Management
can see things clearly and still be wrong, you understand,” he once advised
his shareholders, going on to characterize a certain action the fund had taken
as “an admission-of-ignorance position…. Had we been smarter, we would not
have taken the…position at all.” On
another occasion he summarized for a financial reporter a part of his market
philosophy: “In today’s market, studying securities can be fatal. While you’re
studying them, they’re apt to double and, by the time you find out that you
wouldn’t have bought them in the first place, they will probably have tripled.”
Under different circumstances
Dreyfus’ tradition-shattering methods might have been considered frivolous and
beneath note. But the fact is that Dreyfus has excelled at the one thing Wall
Street really respects—making big money—ever since, at the age of 32, he first
focused his enormous intelligence on the market. His
ability to prophesy the stock market dips and rises has made Dreyfus preposterously
rich. It also made millionaires of a number of his friends and added substantially
to the worth of several hundred thousand ordinary citizens who own shares in
the Dreyfus Fund, the institution which made Dreyfus’ name in The Street. Like
all of the mutual funds, the Dreyfus Fund enables the small investor, to “get
into the market” without having to be either an expert or a born gambler. Anyone
who can afford to invest even a modest amount in the market—with some funds,
it may be as little as $10—can put his money into a mutual fund which owns a
varied portfolio of securities and is managed by experts. In almost all funds,
including Dreyfus’, a part of the investor’s outlay is kept by the managers
as a sales charge—or “load”—to cover operating costs.
on the state of the market and the judgment of the managers, a fund will consist
of a “mix” of stocks and bonds and a certain amount of cash. Mutual funds, which
also invest money for such large institutional vehicles as pension, profit-sharing
funds, have wrought enormous changes in the traditional concept of capitalism.
They have turned bus
drivers and ditchdiggers into stockholders and transformed huge sections of
what Karl Marx viewed as the exploited proletariat into vested owners of industry.
More than three-and-a-half million Americans have amassed a staggering $35.2
billion stake in U.S. capitalism through the medium of funds—and another $4.5
billion is added every year. In the canyons once controlled by Jay Gould and
J. P. Morgan, the 225 active mutual funds now constitute one of the largest
and most powerful sources of investment money—and Jack Dreyfus’ fund early became
the most dramatic symbol of this phenomenon.
The Dreyfus Fund differs
from the others mainly in the matter of profit. This is sometimes referred to
as “how the numbers come out” and they have come out very well indeed for Dreyfus.
Money invested in his fund just 12 years ago and left there to grow has increased
by 604 percent. Over the same period the next most successful among all the
funds lags 102 points behind this figure. (The Dow-Jones industrial averages
over the same period rose by 346 percent.) Dreyfus’ total impact on Wall Street,
however, was achieved less by the “numbers” than by the kind of magic once used
by P. T. Barnum.
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