T. Rowe Price

T. Rowe Price, the Sage of Baltimore

In 1937, Thomas Rowe Price, Jr. founded an investment company in Baltimore that would become one of the most successful in the world. Today, The T. Rowe Price Group manages over one trillion dollars and services clients around the world. It is among the largest investment firms focused on managing mutual funds and pension accounts. Uniquely trusted and respected, the firm is considered the “gold standard” by many investment advisors.

In this book, Cornelius Bond tells the full story, for the first time, of how Price, a modest and ethical man, built the company bearing his name. From the private, unpublished personal and corporate records, you will get direct access to the creative process behind Price’s highly successful approach to investing.

• Personal insights based on Price’s own writings and the personal experience of the author who worked with him for many years.
• The Growth Stock philosophy as described in the words of the creator and master of this approach.
• Two fund managers who worked closely with Mr. Price reunite to consider the investment environment of the next five to ten years as Price himself might have viewed it.

This book will give you an insider’s access to the true story of Thomas Rowe Price, Jr.

Foreword ix

Acknowledgments xiii

Part One The Beginning 1

One The House on Dover Road, 1898–1919 3

Two Lessons Learned, 1919–1925 19

Three Mackubin, Goodrich & Co., 1925–1927 29

Four The Great Bull Market and the Crash, 1927–1929 43

Five After the Crash, 1930–1937 53

Part Two His Own Boss 65

Six Birth of T. Rowe Price and Associates, 1937 67

Seven “Change: The Investor’s Only Certainty” 79

Eight The Firm’s Adolescence and World War II, 1938–1942 87

Nine The Growth Stock Philosophy 97

Ten Postwar Era, 1945–1950 109

Part Three The Sage of Baltimore 121

Eleven New Opportunities: Mutual Funds, Pension Plans, and the Launch of the Growth Stock Fund, 1950–1960 123

Twelve Transitions, 1960–1968 139

Thirteen The United States Enters a New Era, 1965–1971 151

Fourteen Dark New Era, 1971–1982 163

Fifteen The Grin Disappears, 1972–1983 175

Part Four Market Analyses 195

Sixteen Investing for the Decade, 2017–2027 197

Seventeen Weak Performance of the Growth Stock Fund, 1970s 207

Epilogue: The T. Rowe Price Today 213

Sources 233

Index 241

CORNELIUS C. BOND joined T. Rowe Price as a technology analyst, rising quickly to become a member of the Investment Committee and an officer of the New Horizons Fund, which became the best performing mutual fund in the country. He spent almost ten years working directly with Thomas Rowe Price, Jr., and later became president of the T. Rowe Price Growth Stock Fund. He left to become the fourth general partner of New Enterprise Associates, which today is one of the largest venture capital firms in the country. Bond lives with his wife, Ann, and his standard poodle, Price, in San Francisco.

Thomas Rowe Price, Jr., is a legend in the investment world. Even those who are not familiar with his personal history know that the company he built, T. Rowe Price, is still among the top-performing and best respected investment firms in the world. How did Price, a modest man who adhered to a strict code of ethics throughout his life, manage to build such a financial powerhouse? The astonishing story comes to light for the first time in T. Rowe Price: The Man, The Company, and The Investment Philosophy.

Author Cornelius C. Bond joined T. Rowe Price as a technology analyst and worked closely with Price for nearly ten years. This privileged position gave him a unique view into the mind of the man whose Growth Stock Philosophy has generated above-average gains for investors for years. In T. Rowe Price, Bond draws on his personal relationship with Price, as well as on dozens of unpublished corporate and personal documents and writings, to tell the story of how growth investing took the investment world by storm—and how an average investor can benefit from this investment strategy today.

In this book, readers will discover the central principles of Price's Growth Stock Philosophy. Although Mr. Price was not secretive about his investment strategy, the simple principles he followed have never been presented in a comprehensive way, as they are here. Individual and institutional investment portfolios alike will benefit from this glimpse into the basic tenets of Price's investment strategy. This strategy became the foundation of legendary, unparalleled fund performance at T. Rowe Price—a level of performance that has stood the test of time, despite the rapid change of investment styles.

Praise for T. Rowe Price

"A fascinating biography of an ethical man which both reveals the individual and explores his Growth Stock philosophy. This book sheds light on one of the most successful investment gurus of the twentieth century. The description of his background, the growth of his company to a major entity in the industry, and his investment philosophy are a must read for both fans of biography and investors. The author draws on his own experience at the firm to enrich the details of this story." —Leon G. Cooperman, retired General Partner of Goldman Sachs; Founder, Chairman, and CEO, Omega Advisors

"For those who care about the investment world and its superstars, I highly recommend this thorough and interesting book on Mr. T. Rowe Price—a quiet giant of an investor and the creator of an enduring investment legacy." —David M. Rubinstein, Co-Founder and Co-Executive Chairman of The Carlyle Group

"T. Rowe Price was one of the great investment pioneers. He created three different kinds of innovative investing that have been successfully brought to life by the great firm that bears his name and continues to be admired by its competitors and clients as one of the world's finest investment organizations. Mr. Price was never easy and successful investing is never easy. Neil Bond offers every reader a clearly written introduction and insight into both the man and the firm." —Charles D. Ellis, author of The Elements of Investing and The Index Revolution

"T. Rowe Price was one of the great innovators of the investment management business. He was the first to recognize the potential of growth stock investing and he built an enormously successful firm around that concept. Neil Bond takes you through the development of his investment approach and the evolution of his company. Readers will learn much about stock picking and managing a business from this readable book." —Byron R. Wien, Vice Chairman of Private Wealth Solutions, Blackstone Group; retired Chief Investment Strategist, Morgan Stanley