The Prairie de Chien Corner (1965)
At the same time that Daniel Drew — the bear — and Cornelius Vanderbilt — the bull — were fighting it out in New York, the beginning stages of the mutual fund had come in the form of the investment pool. An enterprising bullish investment pool operator, William Marston, was becoming very wealthy organizing stock market corners with a small group of investors. By November 6, 1886, he had gained control of the entire 29,880 share-outstanding float of Prairie du Chien Railroad Company and just as much short interest.
See The New York Times, 11/07/1865, Financial Affairs section.
Mr. Marston, as leader of the bull pool, called for settlement that very morning and drove the stock straight up in price. The New York Times reported this to be “one of the sharpest, and beyond all precedent, the most sudden corners known to the 40-year history of the New York Stock Exchange.” Investment pools were major market manipulators, and this gave them a very bad reputation. For this very reason the same band of thieves behind the investment pool renamed it the “mutual fund”!
– Doc Brown
BIO: Doc Brown is a national expert on the stock market. His courses “How to Make a Million Dollar Portfolio from Scratch” at the Oxford Club is a national bestseller. Dr. Brown’s research appears in some of the most prestigious academic journals in the field of finance. See Journal of Financial Research and Financial Management. Scott is an associate professor of finance in the Graduate School of Business at the University of Puerto Rico.
SURVIVAL RULE: If you have to invest in mutual funds as you do in a 401(k), only invest in no-load index funds.
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