The Story of Hetty Green: America's First Value Investor and Financial Grandmaster

Abstract

Famed investor Benjamin Graham, author of the bestselling books, Securities Analysis and The Intelligent Investor, is almost universally regarded as the founder of value investing. However, contrary to conventional wisdom, Graham was not the first American to pioneer the principles of value investing. Before Graham was even born, a woman by the name of Hetty Green applied these principles to tame the wild markets of the Gilded Age and establish herself as the richest woman in America. Further, Green developed these principles instinctively at an early age, enabling her to thrive during several market panics that ruined many of her male contemporaries. In contrast, Graham embraced value investing only after narrowly avoiding financial ruin after levering his portfolio prior to the Great Crash of 1929.

This paper recounts the life of Hetty Green, isolating several of her key operating principles. These include thrift, skepticism, persistence, patience, and a natural aversion to leverage. These principles enabled her to thrive in the unforgiving and male-dominated markets of the Gilded Age. In addition, despite unfriendly media reports during her time, Hetty Green was not the "Witch of Wall Street." Instead, she loaned generously to many of the wealthiest stock operators, companies, and the entire city of New York during several market panics. Her contributions during the Panic of 1907 were especially noteworthy, but not quite as impressive as her prediction of the looming Panic well before her peers – including the legendary J. Pierpont Morgan.

It is uncommon for investors to possess any of Hetty Green's talents (much less combine them with admirable character), but it is a true marvel when a single individual possesses all of them. At minimum, this qualifies her as the best female investor in U.S. history – but in this author’s opinion, Hetty Green’s accomplishments transcend gender, making her the best investor of all time.

Keywords: Hetty Green, Value Investor, Value Investing, Financial History, Gilded Age, Panic of 1907, Ned Green, Sylvia Ann Wilks, New Bedford, Isaac Howland, Sylvia Howland

JEL Classification: N11, N12, N81, N82, G01, G02, G03, O16, N91, N92, B32, B31, B30