Success story : Joseph Pulitzer

• Crusading newspaper publisher funded the Pulitzer Prize for journalism.
• Lesson: Aim to become a major influence for good.
• "Always be drastically independent."

(from IBD 7/20/15) Joseph Pulitzer came to America to fight. And that was well before he created his lasting Pulitzer Prize. A Union Army recruiter had promised good pay to leave Budapest, Hungary, and he arrived in Boston in 1864 at age 17.

After a few skirmishes, he had to find new work once the Civil War was over.

Those fighting skills turned out just right for his new profession — journalism. As he exposed corruption in high places, he had to thwart threats of physical harm while taking on libel suits.

"He built a newspaper empire based on serving the people and was fiercely dedicated to the public good," Mike Bernhardt, a member of the Pulitzer clan and author of the forthcoming "Crime, Dodges, Tricks and Swindles: An Insider's Untold Stories of Wall Street, the Pulitzer Legacy and the Recession of 2008," told IBD. "Most newspapers in the late 19th and early 20th century were funded by political parties, but he was dedicated to being independent and telling readers the truth, relying on a large circulation and advertising. He was the father of modern mass media."

In the process, he earned a fortune — $30 million (worth $771 million today), according to "The Wealthy 100" by Michael Klepper and Robert Gunther, who rank Pulitzer No. 79.

From Europe To America

Pulitzer (1847-1911) was born in Mako, Hungary, to a Jewish family of merchants. In 1853, they moved to what is today called Budapest and opened a shop. His father died five years later, and the business went bankrupt. Joseph tried to join several regional armies, but was rejected because of poor eyesight.
Then he met the Union recruiter. Even though the combined deaths of soldiers North and South averaged 15,000 a month, Pulitzer decided to take his chances and accepted the trip from Hamburg to Boston.

On arrival in August, he discovered that recruiters were pocketing most of the enlistment bounty. So he left the military camp and made his way to New York City, where he earned $200 (worth $3,000 now) to replace someone in a German-speaking company of the "Lincoln Cavalry" under Gen. Phil Sheridan's command (Pulitzer spoke German and French, as well as Hungarian).

After some minor clashes with Confederates in the fall and spring, peace came and he returned to New York as a civilian.

His English was too poor to get hired, but he heard about a booming job market in St. Louis, home to a large German population.

Out of money, he rode freight trains to Missouri and took any odd job that came along.

Then he was promised a great job down the Mississippi River and joined a group of workers on a steamboat. But it was a swindle, and they were forced off and walked 30 miles back to the city.

He decided to write about the experience for the local German-language paper, the Westliche Post, which led in 1868 to an offer of a job as a reporter.

Pulitzer had found his calling. He worked 16 hours a day at his new profession and spent his precious free time at the library, learning English by reading an array of books.

He soon became an accomplished speaker for causes he believed in. In 1869, his energy and idealism made him so popular that he was elected as a Republican legislator, even though at 22 he was three years below the minimum age, and he moved to the capital of Jefferson City for two years.

He returned to St. Louis to take over as managing editor of the Westliche Post.

The job came with shares, and he bought more as the paper grew in circulation.

Soon he was rolling in cash. In 1873 he sold his stake for $30,000, the equivalent of $600,000 now, then made a series of shrewd investments to add to his stack.

In 1878, Pulitzer, 31, married Kate Davis, from a wealthy Mississippi family, and they would have seven children, five of whom lived to adulthood.

The same year, he bought two St. Louis evening papers and merged them into the Post-Dispatch.

He honed his populist message, which found an audience in the rising middle class, tripling circulation to 28,000 and giving him an annual income of $48,000, or $1.2 million in today's money.

"Pulitzer's goal was to publish every day at least one article so intriguing, so unusual, so provocative that it could cause people to talk about it," wrote James McGrath Morris in "Pulitzer: A Life in Politics, Print and Power." "Every day for two weeks, Pulitzer detailed the monopolistic practices of the gas company. ... His staff obtained copies of the tax returns for the city's richest residents that cast an embarrassing hue when published for all to see."

Pulitzer was disappointed that the national political candidates he endorsed lost, and he felt the only way to have sufficient impact was to buy a New York paper.

So in 1883 he met financier Jay Gould, who sold him the New York World for $346,000 in installments (worth $8.4 million now), despite the fact that it was losing $40,000 a year.

Long-Distance Aim

Although Pulitzer retained ownership of the Post-Dispatch, he rarely returned to St. Louis.
Now he embarked on a grand plan to expand circulation, aiming it at the huge working class and the poor by running human interest pieces, news of crime and scandals, riveting sports coverage, entertainment stories and exposes.

He hired legendary investigative journalist Nellie Bly, and other top reporters followed. Lawsuits by those he exposed only made the New York World more popular, and he always won in court.

"Put it before them briefly so they will read it, clearly so they will appreciate it, picturesquely so they will remember it and, above all, accurately so they will be guided by its light," he instructed his staff.

Pulitzer made the paper more appealing by producing the first comics in color along with eye-popping ads.

By 1886, the World was making a $500,000 yearly profit ($13 million now). The same year, he led a campaign to pay for the Statue of Liberty, the symbol of America's welcome to immigrants like Pulitzer.

"The French effort had raised more than $750,000," wrote Morris. "The American committee remained $100,000 short of the $250,000 needed. Pulitzer could have used his own checkbook to make up the deficit, but chose to finish the project as it had been intended, by turning to the public for support. He called on them to send money, however little, and in return, he pledged that every donor's name would be published on the front page. By the next morning, the first of 120,000 contributions began to pour in, raising more than the $100,000."

Persevering

As Pulitzer turned 40 in 1887, he was nearly blind, so he managed the paper by telephone, telegraph, messenger and letter from his New York mansion, his summer home in Bar Harbor, Maine, his yacht, and his winter retreat on Jekyll Island, Ga.

With an eye on his legacy, Pulitzer paid for the opening of the world's first formal school of journalism, in 1908, at the University of Missouri.

In 1911, Pulitzer was on the way to Jekyll Island when he died on his yacht at 64.

He was feisty to the end. At the time of death, 73 lawsuits were pending against the World and 18 against the Post-Dispatch.

William Randolph Hearst, whose New York Journal battled the World, paid tribute to his greatest rival:

"In his conception, the newspaper was not merely a money-making machine. It was the instrument of the will and power of its hundreds of thousands of readers, the fulcrum upon which that power could be exerted in the accomplishment of broad and beneficial results."

Pulitzer left most of his estate to his family, but also gave bonuses to employees, while donating $2 million to New York's Columbia University to establish a journalism school that opened in 1912.

An additional $500,000 went to fund the Pulitzer Prize to recognize great reporting, beginning in 1917, with categories expanded for achievements in literature, drama, poetry, history and music.

The Pulitzer family published the World until 1931, when it was sold to Scripps-Howard and was merged into the World-Telegram.
The Post-Dispatch was part of Pulitzer Inc. when it was sold in 2005 to Lee Enterprises for $1.5 billion.


Bernhardt said flatly, "Joseph Pulitzer was one of the most selfless business leaders who ever lived."

Success story : T. Rowe Price

(from IBD 9/22/14) Launching a stock investment company in 1937, in the thick of the Great Depression, took guts.

But Thomas Rowe Price had the courage of his convictions.

He believed strongly in American ingenuity and the capitalist system despite the battered economy.

Amid that '30s abyss, the notion of investing in anything other than the safest bonds was "pretty foreign," said James Kennedy, the current CEO of investment firm T. Rowe Price Group (NASDAQ:TROW). "But he was a strong believer that we had a lot of years of growth ahead even in an economy on its back that was just starting to sit up."

Today, Price's company manages more than $738 billion of clients' money, and Price's bet on American business ingenuity was proved right. Price became known as the father of growth stock investing.

T. Rowe Price today offers more than 90 mutual funds with an array of strategies. The result for the firm has been soaring revenue — more than doubling from 2005 to $3.5 billion last year — and a 290% stock rise since 2009.

Maryland Man
Price (1898-1983) was born in Glyndon, Md., the son of a country doctor. With a comfortable upbringing, he was expected to follow his father into science or medicine.

He earned a chemistry degree at Swarthmore College in 1919, according to T. Rowe Price's corporate website, and joined DuPont (NYSE:DD).

But the work didn't interest him, and Price reckoned he had more of a knack for business than science.

Price went to work for a small brokerage. But according to George Roche, a former T. Rowe Price president who worked alongside Price at the brokerage, it had poor management and failed.
That was a lesson for Price, who later stressed solid management.

In 1925, he shifted over to Baltimore's Mackubin, Goodrich & Co., the predecessor of Legg Mason (NYSE:LM), rising to become its chief investment officer before deciding to strike out on his own in 1937.

Price hadn't liked the way his employer charged customers for transactions. He thought portfolio managers would have a "greater community of interest" with customers if they were paid based on the assets that clients had with the firm instead, Roche said.

It wasn't just the customer experience that Price wanted to change. He was also working out a new strategy, one that would become known as growth stock investing.

But Mackubin wasn't interested.

Gambling on the growth of U.S. firms while soup lines wound through America took a strong stomach. At the time, bonds yielded far more than stocks. But Price held firm, Roche told IBD: "He said, you want to find good growth companies operating in fertile fields, and they'd compound and grow, and returns would be much higher. Even your income returns, over time, would pass what you could have gotten on fixed income."

All Price had to do was convince people to think differently and let a novice run their investment.
Good luck with that. It wasn't just the recent trauma of the 1929 Wall Street crash that made customers wary. America had yet to dig out of the Depression eight years later.

Then Came A Break
Barron's wrote a glowing profile of the young man in 1939, and customers began to stream in.

That "fertile fields" notion was central to Price's strategy. In a 1973 memo, he wrote that by the early 1930s he was already developing his theory, defining a growth stock as "a share in a business enterprise which has demonstrated long-term growth of earnings, reaching a new high level per share at the peak of each succeeding major business cycle and which gives indications of reaching new-high earnings at the peaks of future business cycles."

A stock's earnings per share should rise faster than the cost of living, Price noted, and the EPS of the overall portfolio should increase an average of 100% over 10 years.

The firm, T. Rowe Price, has always been in Baltimore. Its first formal mutual fund, launched in 1950, invested first in IBM (NYSE:IBM).

In the 1980 book "The Money Masters," John Train wrote that many of Price's early stock picks were winners. Over 35 years, his 1937 investment in Black & Decker (now Stanley Black & Decker (NYSE:SWK)enjoyed an 8,500% return.

Honeywell (NYSE:HON), which he held for 34 years, skyrocketed 3,300%.
"Like most of the greatest investors — or artists or professionals of any sort — Rowe Price lost himself in the task; his first interest was always in superior performance, not in making a killing for himself," Train wrote.

TROW monthly chart

On Top Of Things
As a young T. Rowe Price analyst, CEO Kennedy was surprised to learn that Price, who'd retired years before, was still watching the company's every move.

When Kennedy wrote a note in 1979 recommending the firm invest in railroad stocks, as he believed deregulation loomed for the industry, Price called him and pointed out that railroads were hardly a growth strategy.

Kennedy stood his ground. His buy recommendation carried the day, the railroads were deregulated and the firm made good money on that pick, a result that the CEO remembers fondly.

Gerry Frigon, founder of California's Taylor Frigon Capital Management, hews closely to the growth strategy Price developed.

Frigon's father-in-law and mentor, Richard Taylor, worked alongside Price at T. Rowe Price and passed what he learned to Gerry.

Price was committed to "owning a business, rather than trading a stock, and moving with it through market cycles," Frigon said.

And Price said that investing at the start could be profitable. "It is better to be early than too late in recognizing the passing of one era, the waning of old investment favorites and the advent of a new era affording new opportunities for the investor," he wrote.

Price's study led him to see that big shifts in the economy, including the buildup to war and more money spent on social services, meant a spark in inflation. So he developed a fund that would hedge against, even profit from, a higher-inflation environment, with investments in gold and energy.
He used that strategy ahead of the soaring inflation of the 1970s.

New Era Fund (PRNEX), which invested in energy and basic materials companies, saw an average annual return of 17% through the '70s, including two years when returns topped 50%, according to data provided by the company. And it's more than doubled shareholders' investments since 2009.
Beyond quizzing young analysts to make sure that they'd done their homework, Price used a team-of-rivals approach. It helped make sure that everyone on the investment committee thought through every component of a stock. Long before email, Price and his team sent memos back and forth, discussing potential merits and faults of securities, says Frigon.

Price believed in surrounding himself with smart and young people because he valued varied opinions, said Roche: "He used to say, 'I love a good investment fight.'" That made him "a good man to work for."

Price's early experience working for a poorly managed company made strong teams a hallmark of his investment strategy. In a memo, he noted that "capable, dynamic management" was a key trait of good growth companies.

Downshift
Price eventually sold his stake in the company to his associates and was completely divested by 1971, when he retired, according to a New York Times obituary.

T. Rowe Price Group went public in 1986, three years after Price died of a stroke at his Baltimore home.

Price always had a fine sense of humor, recalls Roche, and was fond of giving out three pieces of advice: Marry an intelligent woman, hang around young people as long as they'll put up with you, and save some money for the nurses.

Price's Keys

• Launched a successful asset management firm that capitalized on a new investment strategy.
• Overcame: Depression-scarred investors.
• Lesson: Apply diligent analysis to smart instincts and macro themes.
• "One does not have to go to college to be able to select fertile fields. All one needs is what my grandfather called gumption, my grandmother called horse sense, and what most people call common sense."

Success story : William O'Neil

(from IBD 4/25/14) William O'Neil built IBD's "10 Secrets To Success" as an action plan for anyone who wants to create a better life for oneself or for others.

Secret No. 1? "How You Think Is Everything." In other words, stay focused on success.

Secret No. 10: "Be Honest And Dependable; Take Responsibility."

Perhaps an 11th secret helps the chairman of Investor's Business Daily and Investors.com continue to influence readers today:

No matter how big you've hit it, be modest. Stay humble.

Walk into his office at IBD's Los Angeles headquarters and you'll find it similar to the way it was 10 years ago, when IBD celebrated its 20th birthday.

The room is the same size as before, with barely enough space to house a conference table and shelves. Same metal desk. Same gray carpet. No mahogany paneling. No Impressionist or postmodernist paintings on the wall.

Instead, it features a portrait of a dog, front pages of IBD and a photo of O'Neil meeting President Reagan in the Oval Office in the 1980s.

In Touch

When a reporter recently asked O'Neil, "Outside starting IBD, what is the achievement you are most proud of?" the 81-year-old native of Oklahoma arched his eyebrows, breathed deeply and shrugged.

"I don't think of that, don't look at that very much," he replied. "I think starting a business is important because you've got the total freedom to start and create what you want. We've obviously created products that have helped a lot of people."

He added: "If you want to start a business, you've got to have some experience in the field. If you're going to be selling peanut butter or something, you better have some experience with peanut butter."

O'Neil never joins a conversation with an intention to boast. He publicly cares less about what success he's had and more about the organization's mission today: Make readers smarter investors.

"I think the stock market is complicated itself, and not very many people really understand how the stock market works," he said. "If you're going to invest in the stock market, you're going to make mistakes. The typical person doesn't want to buy and then turn around and sell it for a loss. To some extent, to be very successful in the market, you've got to do what you have to do, which means taking some profits and taking some losses."

O'Neil has done very well in a large number of stocks over the decades. In 1962, as a broker at Hayden Stone in Los Angeles, he made profits of more than $200,000 ($1.5 million in today's money) in a short play on discount department store chain Korvette, a long investment in Chrysler and a buy in Syntex, one of the first companies to cash in on the birth control pill.

That haul helped the graduate of Southern Methodist University start his own institutional stock research firm — William O'Neil + Co. — on Nov. 7, 1963. One of the company's early achievements: managing money for the Vatican.

Last year, O'Neil's research firm celebrated 50 years in the business. It remains a force in the world of institutional stock research.

He was one of the first people to use computers to collect vital information, and one of the first to place key information on fundamentals and buying trends by mutual funds and top money management firms right on the stock chart.

This simple innovation made his products stand out immediately.

"How did William O'Neil + Company survive and grow over 50 years? We concentrated on stocks, the one thing we know best," O'Neil wrote in the introduction to the book "50 Years of Independent Market Vision." "People asked me why I didn't buy bonds or commodities. The answer was simple: I didn't want to be distracted."

He added: "Just the concept of concentrating, seeing all the details, is important to innovation and being the best."
Twenty-one years after founding the securities company, O'Neil in 1984 launched Investor's Daily (later changed to its current name) with a mind toward building a new business and helping people use the same tools as top money managers to find stock market winners.

Today, IBD is more than a paper and a website. It hosts dozens of beginning-to-advanced-level workshops as well as its Leaderboard Summits to help investors of all levels, including money managers.
Awareness of IBD continues to grow. Investors.com draws 30 million page views a month.

Long-Distance Applause

Brian Edwards, a former high school English teacher who moved to Southeast Asia to start an online toy manufacturing business, first met O'Neil during a two-day Level 4 Masters program workshop in Los Angeles in 2004.

An active growth investor, Edwards asked O'Neil about the paper's online direction and whether he felt overwhelmed by the changes sweeping the media industry.

"I was looking for insights. Bill's response was knowledgable and reassuring, down-to-earth, the meat-and-potatoes variety. I like meat and potatoes," Edwards told IBD. "Bill's investment approach is similar. He urges one to follow historically valid rules and not to get overwhelmed by emotion. He has found stability in an environment others find chaotic."

Does O'Neil ever take losses in stocks? Of course. One reason for his success in the market is the ability to consistently keep losses small, usually in the 3%-4% range.

He quickly learned the benefit of acting fast when you realize you have made a mistake.

In addition, early in his stock-investment career, O'Neil made a point to meet Gerald Loeb in New York. Loeb was making serious money as a stockbroker and wrote the investment classic "The Battle for Investment Survival."

In that book, he advised people to limit losses to 10% in any stock.

Loeb, a California native, went to Los Angeles and visited O'Neil, who recalls: "As he was leaving, I asked Loeb, 'Do you always sell every stock in trouble at 10%?' He said, 'I would hope to be out of them much quicker than that.'"

Onward In Oklahoma

Born in Oklahoma City, O'Neil moved with his family to Muskogee, roughly 40 miles southeast of Tulsa, when he was young.

His father had left the family by then, but O'Neil says his aunt motivated him to strive for success. She encouraged him to sell magazines to women in the neighborhood when he was in grade school.
O'Neil listened. Soon he landed a better-paying job on a newspaper route. He loved sports, particularly baseball, and worked hard to earn the extra $20 needed to buy a new glove or bat. After school, he hustled to finish his newspaper route so he could join baseball games.

"I was a pitcher. You're competing with nine batters all game long. You can do all right, then in the sixth inning, one of them beats you," said O'Neil, who also played the cornet. "I think I learned something from sports and a couple other activities."

O'Neil stresses that it's crucial to listen and learn from the very best in their respective fields.
The same philosophy applies to books. O'Neil once bought a library of investment books and found that most were junk. Only five or six really helped him learn how to make money in the stock market.

O'Neil himself has produced four editions of "How to Make Money in Stocks," a best-seller.

"Everyone and his brother have written a book on investing," he said. "Find out who is successful in a field, and if they've written a book, then the writing is from somebody who's been there, done that and been successful in that field. That, I think, is the whole key."

O'Neil is upbeat about the stock market's prospects over the next 30 years. "The country will grow and continue to grow as it's done in the past. You cannot hold human nature down," he said. "And you've got this freedom in the country, so there's a lot of opportunity. There will be new inventions, new developments, new companies. That I wouldn't worry about.

"You have this constant renewal of new products coming along, new services coming along, and a company does pretty well for a while. Then the company either gets too large to grow or is replaced by someone else. That's been going on for cycle after cycle after cycle."

O'Neil's Keys

1. Bought a seat on the NYSE at age 29. Pioneered stock research with studies of fundamental, technical and institutional shareholding factors among greatest winners during bull markets over the past 130 years. Started IBD in 1984.
2. Overcame: Skepticism by Wall Street and the mass-media industry, intense competition, multiple bear markets.
3. Lessons: Choose carefully what you read and to whom you listen. Do not be afraid to learn. Correct mistakes quickly.
4. "Yes, you have to listen to people, but half of the things that come to you are not perfect."

Success story : Charles Schwab pioneered discount brokerages

Charles Schwab pioneered discount brokerages, making investing safer, cheaper for Americans

(from IBD 3/26/14)   Charles Schwab entered the brokerage business in the early 1960s and found it rife with hidden charges and conflicts of interest.

"Adverse incentives were rampant," Schwab, 76, told IBD. "It was an industry built upon sales and the inherent commissions."

He would not conform. "This gave me my early beginning," he said. "I wanted to be completely different from the rest of those firms."

Schwab remains chairman of his namesake financial service company, Charles Schwab Corp. (SCHW)

It's one of the nation's largest brokerages, with $2.3 trillion in client assets. The firm had 2013 sales of $5.4 billion, and its stock has been on a 150% run since 2011.

Schwab himself sits on an estimated net worth of more than $6.2 billion, according to Forbes.
Meanwhile, he has revolutionized an industry that could seem revolting to him for the way it treated customers.

"He treats every individual with equal respect," said Stephen McLin, who has known Schwab since 1981 and is a longtime member of the company's board. "He's as polite and nice to the guy bringing the food to the conference room as he is to the president of the Federal Reserve Bank."

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One For All

John Kador wrote in his 2005 biography of Schwab: "In the beginning when investors were at the mercy of stockbrokers, financial self-determination ... was reserved for the well-off. Then Charles Schwab beat Wall Street and reinvented the brokerage industry. Now Charles Schwab & Co., Inc. continues to liberate the world of personal finance and we are all, rich and poor, better off for it."

In building his empire, Schwab overcame deeply entrenched financiers and investment brokers who did not appreciate his concept of offering discount brokerage service and transparent transactions to ordinary people. He contends they denied him access to financing and tried to block his business.

Schwab overcame them with humility and mild-mannered perseverance, says McLin.
The boss fostered a corporate culture far different than those engendered by his naysayers. "We're not going to make money trying to sneak fees or rip off some of our customers," McLin said. "You remember Goldman Sachs referring to customers as Muppets? Nobody would last long doing that around here."
Schwab was born amid the Great Depression to Terrie and Lloyd Schwab. He grew up on a farm 25 miles from Sacramento, Calif.

His father was a small-town lawyer who instilled in his son the traditional values of a rural, Roman Catholic family trying to get by at that time. In the mix were honesty, respect and sweat.

"Money was tight," Schwab recalled. "I learned that hard work was the only way to get ahead."

As a teen and into his 20s, he worked on railways and in oilfields and drove a tractor on a sugar beet farm. He slept in a bunkhouse with mostly Mexican farmworkers who didn't speak English. He'd get up at 6 a.m. to grease the tractor. "I was paid $1 an hour, or $12 a day," he said. "They subtracted $3 a day for room and board."

Schwab took an early interest in money because there was so little of it in his life. "I didn't like the lack of resources I grew up in," he said.

He read books, but found reading difficult. Only when he was in his 40s would he learn why: dyslexia.
Yet his passion pulled him through the pages. "I read the biographies of great men," including J.P. Morgan, he said. "I learned the most successful people in America were people who came out of finance. So I wanted to learn about that, how they did it."

Schwab struggled through high school with his reading problem, but often got by on his natural charm. This strategy didn't work so well at Stanford University, so he studied subjects with more numbers than words: economics, finance and accounting.

While working toward an MBA, which he landed in 1961, he spent nights and weekends as a financial analyst for an investment firm in Menlo Park, Calif. That gave him an insider's view of the industry.

"What I learned about was the massive set of conflicts firms lived under in order to sell to their clients and how their profits were made," he said. "The higher the risk was for the client, the more the broker made. This was never explained to the client."

For Schwab, investing helped Americans buy homes, fund businesses and pay for education, family vacation and retirement. It was not supposed to be a sales program for oversized commissions.
Staying in Northern California, Schwab founded his firm in 1971 as First Commander Corp. in San Francisco, renamed it Charles Schwab in 1973 and turned it into a discount brokerage two years later.
The discount brokerage benefited from regulatory changes that made possible lower commissions — to today's $8 per trade from the old days of $89.
Long-standing brokerages hated the idea of a discount operation, even badmouthing Schwab's firm as a "bucket shop," he recalled.
"We were breaking down the barriers. This really upset the traditional firms," he said. "We were very disliked. On one occasion I was called unethical."

Open For Business

He persevered on one core belief: "I just had a deep sense of the value of investing as the most important way for saving and building wealth," he said. "I thought it was reasonable to expect thousands of people getting interested."

Great trials awaited Schwab after he took his firm public in 1987. He endured a stock market crash that year, then the catastrophic earthquake that shook his firm's home base of San Francisco in 1989.

"You've got to be eternally optimistic," he said of the leadership traits that carried him through. "You've got to come up with the most positive things that can be said about the business and what you're doing, even in the most adverse times. And you've got to believe. Only then can your team believe in you."

Schwab rode a generational wave of investors who wanted to make money decisions on their own. He accommodated them with his investor-friendly innovations.

In 1984 his firm had launched its Mutual Fund Marketplace with 140 funds — no-load so its clients weren't out of money on Day One.

"Chuck Schwab," said Kador, "will be remembered most for making it as convenient for customers to buy mutual funds as easily as they could pluck items off the shelf at Wal-Mart (WMT) ."

Company Plans

The firm also launched a no-fee individual retirement account, money-market mutual funds, a Schwab 1000 index fund, services for independent financial advisers, automated telephone trading and, in 1996, online trading accounts.

Charles Schwab went on a 1,000% stock sprint in the next three years.

True to his earliest observations about his industry, Schwab did not pay his brokers commissions. "We pay people salaries and bonuses based on the happiness of clients, not based on revenues," he said.

As the needs of Main Street grew more complex, so did Schwab's offerings. The company had always attracted investors who didn't want money advice, but in 2002 it started offering guidance.

Then came:
• Traditional banking in 2003.
• Managed investment portfolios in 2006.
• Exchange traded funds with commission-free trading in 2009.
• A mobile app in 2010.
• A platform for active traders in 2011.
• Schwab Index Advantage, bringing a large selection of index funds to 401(k) investors, in 2012.
• The Schwab ETF OneSource platform, offering its customers more ETFs than anyone else in the industry, in 2013.

Today, Schwab is as much a part of the fabric of Wall Street as any firm, and it aims for more growth.
"Given the fact that we still have a small share of the actual market, we see huge upside," Schwab said.
Schwab, who left the CEO post in 2008, likes to point out that a reputation for fair dealing carries his firm: "Most clients come from referrals from other clients. We measure that every day."

As he looks back on his career, he said he hopes the key words in his legacy include "democratizing investing" and "bringing investing to millions of people."

"We've helped clean up Wall Street," he said. "We've taken a lot of the mystery out of the business."

Success story : Henry Royce Drove Rolls-Royce Hard To Make Best Cars

(from IBD 3/12/14) Henry Royce was a driven man.

A perfectionist obsessed with improving mechanical things, he became an early innovator of cars and created a brand — Rolls-Royce — that's still shorthand for the absolute best in any field.

Then the British government asked him to invent a better engine for the Royal Air Force, just in time. His Merlin motor powered the RAF to victory over the Luftwaffe in the Battle of Britain.
In London's Westminster Abbey, a stained-glass window honors Royce's memory.

Frederick Henry Royce (1863-1933) was born in the village of Altwalton in the middle of England. His father owned a mill, but had to foreclose when Henry was 9. His father took him and a sister to London as he searched for work, while his mother and the other children went to the local poorhouse.

His father died soon thereafter, and Henry earned a living delivering newspapers and telegrams until age 14, when an aunt paid for an apprenticeship with a railroad.

That's where he began learning about machinery.

Moving on to toolmaking, he took night courses in electricity and joined a company that installed lights on streets and in theaters.

Moving Up

The next year, 1884, 21-year-old Royce and a friend, Ernest Claremont, pooled their savings to start a company in Manchester to make electrical components and devices.

Calling it F.H. Royce & Co., they lived above their workshop and hired four girls to make light bulbs, door bells and switches.

Big contracts started coming in when Royce invented a commutator, a device that reversed the flow of current in a generator or dynamo. Fires had been a problem where they were used, but his was sparkless. He also improved the standard tram motor controller.

In 1893, Royce married Minnie Punt, whose sister was Claremont's wife.

Already a workaholic, Royce stayed up nights tinkering, while eating almost nothing. This hurt his health and relationship, leading to a divorce in 1912.

Next, Royce turned his attention to electrical crane construction. As with his prior innovations, he didn't invent something from scratch, but saw ways to improve function and safety. "The Royce crane became legendary for its longevity and reliability and in due course it was exported throughout the world," wrote Peter Pugh in "The Magic of a Name."

By 1899, sales at F.H. Royce & Co. had reached $1.3 million in today's money. But a recession the next year and cheaper imports reduced demand.

Royce refused to compromise quality to allow a price reduction, and he proved right, with crane orders resurging at the company that would be sold in 1932.

Meantime, Royce needed another hot product. He had been driving French motor cars since 1901 and began thinking about ways to make them better. In three years he had several prototypes.
Then came the shift for the ages.

One investor saw a winner in Royce's work and introduced him to Charles Rolls, an auto racer with a dealership selling foreign cars. Rolls was also impressed with the prototypes — and in 1906 they formed a partnership.

Rolls-Royce Ltd. was born.

A vintage Rolls-Royce wheels near London's Palace of Westminster in 2011, celebrating the 100th anniversary of car's Spirit of Ecstasy ornament. 

Each car that rolled through the new company was handcrafted to Royce's exacting standards.
Most early autos from other companies were noisy. Not so with Rolls-Royce. Henry made sure his cars operated quietly.

The need for better engine cooling led to a distinctive radiator design at Rolls-Royce that endures today. Also, Henry's cars ran without repairs for long distances, picking up engineering awards.
On top of that, Rolls raised the firm's profile by winning races.

While the brand's reputation was rising, disaster hit the founders.

Rolls died at age 32 in 1910 when the airplane he was piloting crashed.

The next year, Royce fell ill from overwork and poor diet, and his doctor ordered him to take a vacation.
Rolls-Royce managers were glad to get him out of the factory because his attempts to upgrade everything interfered with production. Even while supposedly resting in the south of England, Royce sent a stream of designs back to the factory in Derby, near Manchester, to be tested.

Being away helped him communicate his ideas. His memos were "so admirable as examples of extreme care, foresight and analytical thought that they were printed and bound so that copies would be available for study by all engineers in the future," wrote David Coles and Peter Sherrard in "The Four Geniuses of the Battle of Britain."

"He had very high standards and was never satisfied with the status quo just because something was merely very good," George Cook, executive professor at the University of Rochester's business school, told IBD. "But perfectionism not only has its pluses; it can be a negative if carried to an extreme. The goal should be to strike a balance between the ideal and the practical, something he found hard to do."
With World War I raging by 1914, Britain's government ordered a halt to consumer car production and called on Rolls-Royce to supply armored staff cars.

Tough To A T.E.

The powerful result — with R-R cars cruising over terrible roads — received rave reviews.
T.E. Lawrence (aka Lawrence of Arabia) wrote in "The Seven Pillars of Wisdom" about his experiences in leading the Arabs against the Turks: "A Rolls is nearly impossible to break. They were worth hundreds of men to us, more precious than rubies."
Then came Royce's plane engines. The British government had ignored aircraft until 1912. By WWI's outbreak, only 100 planes per year were being made.
Royce saw an opportunity to make top-quality aircraft engines, and late in the war they powered the Bristol fighter, the best the English had.
Royce's lesson is to change course as conditions change.
In the 1920s, Rolls-Royce kept busy with back orders for cars that were the most expensive in the world. But when it tried to sell the luxury model in America in 1930, the price tag of $14,000 — worth $190,000 today — was too far above the Cadillac at $6,000.
A new Rolls today can run from $250,000 to over $700,000.

Step On It

Royce and his engineers created the R engine and a plane that set a world speed record of 408 mph. In 1930 he was knighted for his contributions to aircraft development.

The next year, the company bought out the troubled carmaker Bentley Motors and produced its version of another iconic luxury brand two years later. This first Bentley had Royce's last innovation — an adjustable shock absorber.

Before Royce died at age 70, he also approved the latest version of the R, called the PV-12. His company renamed it the Merlin and installed it in the Hawker Hart light bomber for tests in 1935.

When World War II broke out four years later, 4,800 of the engines had been delivered, and they powered the Hurricane and Spitfire fighters in the Battle of Britain.

After losing 1,600 planes in fighting over Europe, the RAF was outmatched 3-to-1 against the Germans, whose attacks on coastal cities began in July 1940 and continued with the London blitz.

British countered with aircraft that had an edge in acceleration and maneuverability. By autumn, the Germans had lost 1,652 planes to the Brits' 1,087. It was Hitler's first major defeat.

The Merlin would also be placed into the Mustang — called the P-51D — manufactured in America.
In 1971, Rolls-Royce Ltd. hit a rut of high costs developing a jet engine; the firm was nationalized.
The car division was spun off as Rolls-Royce Motors Cars , which is now part of the German automaker BMW.

It sells over 3,000 Rolls-Royce cars per year.

The parent company eventually turned into Rolls-Royce Holdings. It is one of the world's largest makers of aircraft engines, with sales of over $19 billion a year.

Success story : Charles Tiffany's Jewelry Stores

(from IBD 3/10/14)

A blue box tied with a white ribbon is synonymous with Tiffany — the storied emporium from which dazzling jewels are bought and an acclaimed novella and Oscar-winning movie wrought.

As for the true saga of Tiffany & Co. (TIF), it's as compelling as any jewel, novella or movie — and ongoing. Tiffany employs more than 9,900, with 290 stores in 25 countries, according to Mark Aaron, the company's vice president of investor relations.

Tiffany & Co.'s flagship store on the corner of New York's Fifth Avenue and 57th Street opened in 1940 and it secures 12% of the company's global sales, according to the New York Times.

Charles Tiffany wearing a top hat in the 1880s at one of his stores, which today number 290 in 25 countries.

Meanwhile, Tiffany shares have been on a 430% stock market run since 2009.

monthly chart

Behind the sparkle is a story of struggle, discovery, risk taking and a passion for quality, luxury and craftsmanship. All from a visionary with the celebrated last name — Charles Lewis Tiffany.

Tiffany (1812-1902) founded this glittering jewelry and silver store — now 177 years old — while helping shape the American ideal of luxury.

Glittering Retail

"Charles Tiffany fundamentally grasped the idea that shopping and retailing should be an entertaining experience," Linda Buckley, vice president of global relations for Tiffany & Co., told IBD. "It should be fun, make you feel better and fulfill a shopper's dream.

Tiffany saw his store as a way to add beauty to a person's life, and he had an innate sense that in 19th century America a growing affluent class could be reached with high-quality products."

Tiffany's journey, like so many brilliant 19th century entrepreneurs — think Dr. Scholl, Adolphus Busch, Oscar Mayer — was not an overnight success. He required a persistent ambition.

The son of a textile manufacturer, Charles was born and raised in Killingly, in the northeast corner of Connecticut. He wasted little time getting a good feel for money, running the family mill store by age 15.

Buckley notes that as Tiffany grew up in Killingly, he was close to Bridgeport, Conn., the home base of P.T. Barnum, the showman and businessman celebrated for his colorful marketing.

"Undoubtedly, Barnum influenced Tiffany," said Buckley, "and we clearly see it in how Tiffany developed his own set of promotional skills and its effect on key business ventures."

Two centuries later, he's Killingly's most celebrated resident.

"We still rave about him," Marilyn Labbe, executive director of the Killingly Historical & Genealogical Society, told IBD.

As he turned 25, Tiffany looked to the big time: New York City.

He saw a chance to make serious money with a store, so he borrowed $1,000 — worth $25,000 now — from his father and, with friend Eben Young, founded Tiffany & Young. The shop sold stationery and fancy goods such as jewelry, silverware, bronze curiosities from India, Chinese porcelain and the latest French accessories.

On opening day — Sept. 14, 1837 — sales totaled less than $5.

Tiffany & Young limped along from there. Then came 1841, with marriage to Harriet Young, sister of his partner, Eben Young, on the way to six children. Also that year came a third business partner, J.L. Ellis.
With a new name — Tiffany, Young & Ellis — Tiffany perfected the marketing tips he'd picked up from Barnum.

Take the way Tiffany's profited from France's 1848 revolution and the fall of King Louis Philippe. Buckley notes how aristocrats who had benefited from the king suddenly ran for their lives, needed cash, looked to load their diamonds and crashed the Continent's jewelry market.

Tiffany pounced. He persuaded his partners to pour profit from their fledgling business into diamonds — marking the first appearance of major gemstones on a mass scale in America.

Tiffany & Co. went on to sell those diamonds at great profit, rocketing the firm beyond solvency.
Further PR glory came when the press noted the carat-topping deal and crowned Charles Tiffany the King of Diamonds.
"That move established Charles Tiffany," Buckley maintains.

Mining For More

In 1851, Tiffany saw gold in the silver market.

To meet Victorian society's rising demand for the bright metal, he teamed with New York silversmith John Moore and established the company's design and silver manufacturing heritage.

Tiffany instructed Moore to make the silverware on par with English sterling — 92.5% silver and 7.5% base metals — a standard that America eventually adopted.

That decade, Tiffany's firm shone as one of the world's leading jewelers and silversmiths.
Also in 1851, Tiffany opened a shop in Paris, opening the door to establishing an international market, according to the Killingly Historical Society's files.

Young and Ellis retired in 1853. Tiffany purchased their shares and renamed the firm Tiffany & Co.
Tiffany's pursuit of excellence continued.

Knowing in 1858 that a telegraph cable was winding its way under the Atlantic Ocean, he bought 20 miles of extra metal that the financier Cyrus Field was tossing in the trash heap.

Tiffany cut it into 4-inch brass for paperweights, canes, umbrella handles and watch charms. A sensation resulted on the day the souvenirs went on sale. The clamoring crowds, vying for a slice of history, had to be controlled by police.

Still another Tiffany PR coup came at 1867's Paris Exposition.

"In America during the mid-19th century, said Buckley, "Tiffany established dominance in the silver market, but the store was as yet little known in Europe. But at the Paris World's Fair, Tiffany challenged the Europeans and received the grand prize for silver, the first time an American design house was so honored by a foreign jury."

Rock-Solid Move

Then came another smart move.

In 1877 one of the world's largest yellow diamonds was discovered in South Africa. Tiffany leapt again, buying the 287.42-carat stone for $18,000, which translates to $385,000 today.

Acclaimed gemologist George Kunz supervised the stonecutting of the Tiffany Diamond into a cushion-shaped gem with a final weight of 128.4 carats and an unprecedented 82 facets. "It sparkles as if lit by an inner flame," said Buckley.

Audrey Hepburn famously wore the yellow gem in publicity stills for the 1961 film "Breakfast at Tiffany's."

Buckley estimates the stone has the height and width of a quarter. It's on display at Tiffany's flagship store in Manhattan.

Such Tiffany brilliance drew global plaudits. His company served as the royal jeweler to the crowned heads of Europe, as well as the Ottoman emperor, the czar of Russia and the shah of Iran.

Tiffany died at age 90, leaving an estate worth $35 million — worth a billion today. Louis Tiffany, Charles' second son and heir to the business, became the firm's first official design director in 1902, immediately following his father's death.

Louis established the Tiffany Artistic Jewelry unit, where precious objects were manufactured.

Art historian Antonio Masi said of the son: "Louis Comfort Tiffany was an internationally acclaimed American designer, a leader of the Art Nouveau Movement, who was revered for his whimsical jewelry and stained-glass creations. Though gone more than 80 years, his artistry moves and uplifts us still."

That style came from Charles Tiffany's brand, of whom Buckley said: "We know when we see a blue box tied with a white bow that the same care and quality goes into that box, no matter what's in it."

Success story : Charles Hires & Root Beer

(from IBD 1/13/14)

Something revolutionary was brewing in Philadelphia in 1876.
In the back of a small drugstore, a 24-year-old pharmacist named Charles Hires was tinkering with herbs, roots, berries and yeast.

Adding sugar to the mix, he came up with a recipe for a classic American soft drink — Hires Root Beer.

Although Hires (1851-1937) didn't invent root beer, he was the first to promote it.

He took his sweet, foamy drink to the same 1876 Centennial Exposition in Philadelphia where Remington's typewriter, Alexander Graham Bell's telephone and H.J. Heinz's ketchup were introduced.

The city was soon raising a mug to Hires, who initially sold his root beer as a solid concentrate. Four years later he launched a liquid concentrate, and in 1893 he introduced a bottled, ready-to-drink product.

By the turn of the century, Hires Root Beer was America's favorite soft drink. And by 1921, the company was worth $2 million — which translates to $26 million today.

"My success is by no means due to any extraordinary ability or mentality, but merely the result of a little practical vision, a great deal of ambition and absolute honesty," Hires told a Florida newspaper in 1929.

Ahead Of The Pack
Hires Root Beer is frequently cited as the original root beer, America's first popular soft drink and the country's oldest continuously operating major soft drink brand. The company paved the way for soft-drink giants such as Coca-Cola (KO) and PepsiCo (PEP).
Hires hoisted his product with groundbreaking marketing.
A Quaker and teetotaler, he cleverly advertised his root beer as a health drink and wholesome alternative to alcohol just as the temperance movement and soda fountains took root in the country.

In an era before brand names were common in America, Hires Root Beer was practically as prevalent as Coke is today.

"Charles Hires was a marketer," Andrew Smith, author of  "The Oxford Encyclopedia of Food and Drink in America," told IBD. "He was the right man with the right product, and he promoted it in a way no one else had done. At that point there wasn't much advertising of food and beverages. He created a lot of excitement and made it possible to expand his business very quickly and nationalize it in ways most companies weren't able to do prior to that time.''

Hires was born near Roadstown, N.J., the sixth of 10 children of a farming couple.

In 1863, after little formal education, the 12-year-old took a job as an apprentice to a pharmacist at a weekly salary of $12, worth $225 today. By 16, he yearned to advance, so he took night classes at the Philadelphia College of Pharmacy while apprenticing by day.

"I was a young boy with only 50 cents to my name," he recalled. "I wasn't interested in farming and wanted to make my own way."

In 1869, Hires, now 18, opened a drugstore in Philadelphia with a $3,000 loan. He slept over the store, ate his meals at a boarding house next door and worked grueling hours. Still, he couldn't get his business off the ground.

Then he noticed some workmen excavating a cellar in an old house down the street. As they dug down, they came to an oily substance called potter's clay, which was valuable for removing grease from clothing. At the time it was sold in drugstores in broken clumps.

Hires came up with the idea of packaging it in clean, convenient-sized cakes. He named it Hires Potter's Clay, advertised it as a grease and spot remover, and sold it to wholesale drug houses. This sideline business earned him several thousand dollars, which helped launch his root beer business.

Legend has it Hires and his bride were honeymooning at a New Jersey lodge in 1875 when they tasted the landlady's herbal mixture of sassafras bark, wintergreen, sarsaparilla root, hops, juniper berries and pipsissewa. The newlyweds were hooked.

When Hires returned to Philadelphia, he asked two college professors to help him develop a powder that could be mixed with water, sugar and yeast to produce a root beer like the one in New Jersey.

"After a great deal of experimentation, I hit (on) ... the right combination,'' Hires said.
Added Smith: "There would have been hundreds of other products available at the time. His combination of roots wasn't that unusual. Sugar was the key. When sugar is added, the audience is no longer adults who think they are taking this medication. They're relatively young people.''

Hires first planned to market his product as Hires Herb Tea.

19th Century American Trade Card for Hires Root Beer, 1894.

He changed the tag to root beer to appeal to the large market of tough Pennsylvania coal miners — an early sign of his marketing prowess.

Thirsty customers were ready when Hires launched his product at the Centennial Exposition, the first World's Fair in America.

"It was a very hot summer," Smith said.

With people guzzling the root beer, Hires marketed it as a solid concentrate.
Customers mixed the 25-cent packets into 5-gallon batches, making it the first soda drink to tackle the home market.

Commercial Boost

The drink might have fizzled if Hires hadn't run into a newspaper publisher in 1877.

"I was in the Philadelphia Public Ledger office one day," Hires told Printer's Ink magazine in 1913, "and George W. Childs saw me and led me back into his office. 'Mr. Hires,' he said, 'why don't you advertise that root beer extract of yours?' I told Mr. Childs that I hadn't seriously considered advertising it, and that I hadn't any money to spend for advertising in any event."

Still, Hires bought an ad, saw sales soar and quickly ordered more ads. Later that year he was at the forefront among manufacturers with his purchase of a full-page newspaper ad promoting a product. "My experiment with the Ledger was so successful that I began to wonder if the same thing could not be done in a national way," Hires said.

He added: "I think it was the year I went into the magazines that my expenditures into advertising amounted to $10,000 and the profits from my root beer business were $28,000. Next year I increased the space in the magazines and, encouraged by my success in the Ledger, added a list of big city newspapers.''

Hires set the tone again in 1884 with his purchase of a color advertisement on the back page of Ladies Home Journal.

Hires Root Beer rose to the top of American soft drinks at the turn of the 20th century and eventually became part of Dr Pepper Snapple Group. 

The Promoter
During a three-month period in 1893 "Hires spent more than $200,000 (worth $5.3 million now) on newspaper ads, signs, trade cards, posters and other forms of advertising — a remarkable expenditure at that time," Anne Funderburg wrote in "Sundae Best." "That same year, he promoted his root beer at the Chicago World's Fair by installing a soda fountain, where visitors could savor a free sample."

By the time he launched bottled, ready-to-drink root beer, soda fountains were changing American social habits.

On a typical weekend afternoon at one of these establishments, a family might be seated around one table, a group of 16-year-olds around another, a gaggle of adult friends around yet another — all of them sipping on Hires Root Beer.

"The soda fountain was the perfect gathering spot,'' Smith said. "(Before) there was no place for young people to meet. You aren't going to go into a bar or saloon — they only had men. If you really wanted to socialize, the location you could do it was the soda fountain. Simultaneously, you've got a real strong temperance movement, and a mechanism for bottling, so if you enjoy it, you can take it home. So you've got all these things going on all at once.''

Hires, who was married twice, remained in charge of his company until 1925, when he turned it over to his two sons.

Consolidated Foods bought the company from the Hires family in 1960 and sold it two years later to Crush International. Procter & Gamble (PG) bought Crush in 1980 and sold Hires Root Beer to Cadbury Schweppes nine years later.

Cadbury spun off its soft-drink arm in 2008, and the beverage company renamed itself Dr Pepper Snapple Group (DPS), which has been on a 300% stock run since 2009.

Today, consumers can still buy Hires' sweet carbonated drink — 138 years after the young pharmacist unveiled it to the public.

Hires' Keys

• A Philadelphia pharmacist, he introduced root beer as a commercial product at the 1876 Centennial Exposition in Philadelphia and went on to make it America's longest-running soft drink brand.
• Overcame: Ignorance of the product and technological barriers.
• Lesson: A breakthrough idea may not be profitable unless advertised.
• "Doing business without advertising is like winking at a girl in the dark. You know what you are doing, but nobody else does."