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T. Rowe Price: The Father of Growth Investing?

The book The Money Masters: Nine Great Investors: Their Winning Strategies and How You Can Apply Them by John Train introduced me to Thomas Rowe Price Jr. (aka T. Rowe Price). I’m familiar with the investment firm bearing his name but not the man himself. I wanted to learn more, so I’m reading T. Rowe Price: The Man, the Company, and the Investment Philosophy by Cornelius Bond.

The book says that Price was one of the first investors to recognize the value of growth investing and adopt it as a strategy. After the Depression began, many people focused on preserving capital, so bonds were popular. In 1934, he recognized that the largest fortunes in the country had been created by owning growing businesses. He developed an investment strategy based on this insight and pitched the investment firm he was working for to test the approach.

With the country still feeling the Great Depression, the firm turned him down. Frustrated and having conviction about his approach, Price quit in 1937 to launch his investment firm, which would become T. Rowe Price Group.

After reading several biographies about famous investors, I’ve noticed that they all came to similar realizations about their investment approaches: investing in growing businesses is the key to outsize returns (Price’s biography details why this works so well). However, how these investors executed their strategies and built their firms varies drastically. Price built a firm that made decisions by committee and was paid by fees from customer accounts. Buffett created a decentralized conglomerate (after he shuttered his investment partnership) and increased his wealth through equity ownership in the conglomerate.

There’s more than one way to capitalize on an insight, as the stories of these investors prove. The most important thing is doing so in a way that aligns with the beliefs of the founder of the investment firm (or the investor, if they’re independent).

Connected Books
T. Rowe Price

January 2025

Biography of Thomas Rowe Price Jr., founder of T. Rowe Price Group. This book details his life and how, during the 1930s Depression, Price recognized that owning growing businesses generated the largest fortunes. It also details how he started his firm and created a growth investing movement.
Interesting to see how Price's macro top-down investing style worked and didn't work. He shouldn't have sold his firm imo. Read 2019 hardcover.
The Money Masters

December 2024

Biographical anthology about nine investors who founded their own firms. Details their lives, investment philosophies, and strategies. Investors include Warren Buffett, Paul Cabot, Philip Fisher, Benjamin Graham, Stanley Kroll, T. Rowe Price, John Templeton, Larry Tisch, and Robert Wilson.
A useful intro to nine investors who founded their own firms and the strategies they used. Read 1980 paperback.