The devoted following of Benjamin Graham, the father of fundamental investing, might be called a cult, if it weren't so huge.
He has influenced generations of portfolio managers through his principles for analyzing fundamentals of a company to search for undervalued stocks and bonds.
In 1934, he and student David L. Dodd published "Security Analysis," considered the bible of fundamental analysis. Now in its fifth edition, his book never has been out of print.
In 1928, he started teaching an investing class at Columbia University. In 1950, his most famous pupil, Warren Buffett, enrolled in his class.
Warren Buffett, the pre-eminent active investor of the 20th century, proved -- contrary to academic theory and the empirical record of money managers -- it is possible to beat the market consistently for a long time.
His astute market moves have made him the third-richest person in the country.
As chairman of Berkshire Hathaway Inc., the so-called sage of Omaha uses the publicly traded company as the vehicle for his investments. Mr. Buffett has become the most famous practitioner of value investing.
William F. Sharpe gave the world beta.
This pivotal measure of systematic risk reveals the volatility of an individ- ual stock against the entire market. Viewed as heresy when introduced, the notion changed the way investors value stocks and companies raise capital.
The Capital Asset Pricing Model, for which Mr. Sharpe shared the 1990 Nobel Prize in Economic Sciences, says expected stock returns include a risk premium over the risk-free rate plus an expected return for each individual stock relative to the entire market. At the equilibrium point he described, all stocks are fairly priced based on their respective riskiness. Thus, the most efficient portfolio is the entire market.
Most recently, Mr. Sharpe started Financial Engines Inc., which advises individuals on the best asset allocations in their 401(k) plans.
The father of the mutual fund concept, Edward G. Leffler, started the first mutual fund, the Massachusetts Investors Trust, in 1924 with $50,000. Today, it operates under MFS Investment Management, a company formed by the MIT fund trustees, and has $16 billion in assets.
Mr. Leffler designed the open-ended feature of the mutual fund. He brought his idea to Charles Learoyd and Ashton Carr. The three of them signed the original indenture of trust, creating the fund. His idea began the U.S. mutual fund industry, which as of September had 7,621 mutual funds, with $5.98 trillion in assets, according to the Investment Company Institute, Washington.
George B. Buck Sr. started the pension actuarial consulting business before World War I. In 1912, he set up Brown & Buck Consulting Actuaries, the first organization to specialize in setting up and valuing employee benefit funds. In 1916, he founded George B. Buck Consulting Actuary. It was instrumental in establishing several governmental retirement systems and pioneered the basic principles of sound financing of retirement plans.
Mr. Buck was an innovative authority on valuing and managing pension liabilities.
His original firm, known today as Buck Consultants Inc., remains a leading pension consultant.
William L. Fouse is the father of the index fund.
After Mellon Bank rejected his idea of creating a fund to track the market and applying a dividend discount approach to investing, Mr. Fouse went West. And, at Wells Fargo Bank, he formed the first index fund in 1971 for Samsonite Corp.'s pension fund.
In 1972, he created the first tactical asset allocation model, which systematically shifted money among stocks, bonds and cash. He also was the first to integrate the dividend discount model with the Capital Asset Pricing Model.
He returned to Mellon in 1983 to form Mellon Capital Management in San Francisco.
Sen. Jacob K. Javits kept pushing for pension reform when there was no hope in sight.
Showcasing pension "victims" across the country, the Senate Labor Committee he chaired received more mail on lost pension benefits than on the Vietnam War.
In 1967, Sen. Javits, R-N.Y., was the first to introduce a comprehensive bill requiring minimum vesting, funding and fiduciary standards, plus a termination insurance system. In the House, Reps. John Dent, D-Pa., and John Erlenborn, R-Ill., adopted a bipartisan approach to press for a pension law aimed to protect plan participants.
By 1973, the tax-writing committees and business realized the game was up. President Gerald R. Ford signed the Employee Retirement Income Security Act into law on Labor Day 1974.
When Rep. Barber Conable, Rochester, N.Y., inserted section (k) into Section 401 of the Internal Revenue Code in 1979, little did anyone know the impact it would have.
He acted to protect constituent companies from threats of IRS interference. The Treasury Department said the provision would not have any effect on U.S. government revenue.
But it drew the attention of Theodore Benna, a benefits consultant at The Johnson Cos., Newton, Pa. The company adopted the first 401(k) plan.
Mr. Benna then lobbied the government to allow such arrangements, arguing 401(k) plans would do a better job of stimulating savings than would expanding individual retirement accounts. The IRS agreed.