Known at the ‘father of growth investing’, Thomas Rowe Price was one of the founding fathers of investing and trading as it is known today. He was not afraid of change and as an investor who grew up during the Great Depression, he was not afraid to jump into an investment with both feet.
Thomas Rowe Price was born in Linwood, Maryland in 1898 and he spent his early career years working the best jobs he could find during the Depression. It was at this time that he learned to embrace stocks as compared to steering away from them as many of his peers were doing. He was one of the first investors to practice investing in good companies for the long term and he was of the opinion that investors needed to focus on picking stocks for the long term. Through discipline, research and process consistency, Price worked his career into a very successful one.
Price didn’t start out as an investor. Attending Swarthmore College, he graduated college in 1919 with a degree in chemistry. It did not take him long, however, to discover that he enjoyed working with numbers and shifted his focus to investing, going to work for Mackubin Goodrich, a brokerage in Baltimore. He worked his way up to become the company’s chief investment officer.
By this time Price had developed his own unique way of defining growth stocks. He became increasingly annoyed with Mackubin Goodrich and decided to start his own firm. That firm was T. Rowe Price Associates. Founded in 1937, Price practiced the principle that the client’s interests came before anyone else’s and the company prospered. Price founded their first mutual fund and remained the CEO till late in the 1960s. Considered one of America’s premier investment corporations, Price sold the company when he retired in the 1970s but it still retains his name.
T. Rowe Price’s biggest claim to fame is the company that he founded. T. Rowe Price Associates is one of the largest investment firms in the United States. He is also considered the father of growth investing as he was one of the first to look into long term investing.
Price believed that the client always came first and that in order to get a good investment one had to look at a company’s process consistency, discipline, and fundamental analysis. He put that philosophy to practice by investing in companies that were expected to prosper and grow faster than the current inflation rate and economy. He taught his growth stock approach to his employees and by 1965, he had spent most of his career as an advocate for growth stocks.
Even though he believed in growth stocks, Price became wary of the onrush of investors in the late 1960s. He felt that the market and investors needed to focus on more than just growth stocks. He also believed that the bull market was over and it was at this point in time he decided to sell the company. Stocks that were popular with Price were known as – and are still called today – ‘T. Rowe Price stocks’.