WALL STREET: The Prudent Man

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The fever that swept over Benny Hall Jr. brought some strange, upsetting symptoms. A $110-a-week printer in Detroit, Benny had lived contentedly for years in a $7,000 frame house, saved a nest egg of $5,000 with the help of his thrifty wife. One day in 1950 Benny Hall grew restless, excited, preoccupied. For a week or so afterward, at breakfast he riffled distractedly through the back pages of his morning newspaper. Finally he confessed to his wife:"I'm interested in the stock market."

Benny sought out a broker, told him of his yen to invest—though he hardly knew a stock from a bond. Having met hundreds of Bennys, the broker knew just what to do. Benny, he said, should invest in shares of a mutual fund. By last week Benny Hall's investment of $5,000 had grown to $20,000 without his putting in another penny. With his nest egg bigger than he had ever hoped, Benny has used his salary and the returns from the sale of his house to buy a $30,000 home, plans to take his wife on a grand tour of Europe.

Last week some 4,000 investors a day, with a similar desire to see their money grow, were plunking $10 million daily into mutual funds, which offer an almost irresistible lure: the chance to make a profit with a minimum of risk and worry. The investor entrusts his money to an organization that invests it in dozens—sometimes hundreds—of U.S. companies, spreading his risk as wide as the economy. Even more important, he also buys savvy in the stock market, letting the fund managers do his buying and selling for him. Says a St. Louis businessman who gave up making his own investments: "I'm going to stop worrying about stocks and take life easy. Let those boys do it."

"These Are My Hogs." Mutual funds sing a melodious song: cash in on a growing economy and build a valuable hedge against inflation. They have taken the specialized world of Wall Street and put it within reach of every man with enough money to buy a fund share, which is kept low-priced, usually between $10 and $15.

In the last decade, the funds have become the fastest-growing, most competitive and most controversial phenomenon of the U.S. financial world. Ten years ago they had fewer than a million shareholders with $1.5 billion invested. Last week they had nearly 3,900,000 with $14 billion invested in more than 200 different funds.

The shares are bought by maids and wealthy dowagers, by doctors and factory workers, by labor unions and clergymen. No amount is too large (many investors put in upwards of $250,000) or too small. A Maine farmer sent $5 "from the chickens I sold" to one fund, later followed it with a bigger check and a note explaining "These are my hogs"; by the time he had gone through his barnyard, he had invested $6,500, which has leaped in value to $14,000. Big investors also flock to the funds: such schools as Massachusetts Institute of Technology, the University of Oklahoma, and Texas Christian University have invested part of their endowments. The funds have been copied abroad in Great Britain, West Germany, Switzerland, Mexico. Ten years ago, most people had never heard of mutual funds; now, the term is a household word.

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