In an environment like Today’s where the stock market has virtually treaded water for the past 10 years, we do not hear the stories about Secret Millionaires the way we did in the Nineties.
Secret Millionaires are those people that amass fortunes well beyond what might have been expected based on their incomes, and keep it quiet. Because they keep it quiet, few people know about their riches until after they pass. Even then publicity generally comes when they leave the money to charitable institutions that share the good news of the gift with the public. The following are four stories about secret millionaires.
Raymond Fay
Raymond Fay lived a modest life in Philadelphia. He died at the age of 92 in December, 1995. Never earning more than $11,400 a year, he retired as a high school chemistry teacher in 1969. He spent the next 26 years reading books -- nearly 16,000 of them, and catalogued them neatly on 3x5 cards he kept in shoe boxes. At his death he left the Free Library of Philadelphia $1.5 million which he had accumulated in municipal bonds.[1]
Donald and Mildred Othmer
Donald Othmer was a picture of industry, frugality, intellect and charity. Othmer was a professor of chemical engineering at Polytechnic University in Brooklyn, NY. Donald died in 1995 and his wife Mildred passed away in 1997. They left hundreds of millions to their favorite charities. How did they do it?
Don’t be disappointed to learn that they invested with Warren Buffett. Frugality and industry played a big part as well.
Othmer was born and raised in Omaha, NE. According to stories, in his youth he earned money picking dandelions from neighbors’ yards, delivering newspapers and telegrams, and walking a farmer’s cow to and from pasture. He graduated from University of Nebraska and received a Ph.D. from University of Michigan in 1927 after which he went to work for Eastman Kodak in Rochester, NY. His research resulted in 40 patents for Kodak, but he grew unhappy earning only a $10 bonus for each patent so he left in 1931 to become a professor at Polytechnic in Brooklyn where he could keep his patent earnings and have the use of graduate assistants for his research and consulting. He often worked six days a week. Othmer achieved commercial and academic success as the co-editor of the Kirk-Othmer Encyclopedia of Chemical Technology which became an industry bible.
His first marriage fizzled but in 1950 he married Mildred Topp, a former high school teacher who had received a master’s degree from Columbia Teacher’s College in 1945. Their wedding was held at the Plaza Hotel in New York City, a sign that they had achieved some significant means at that time. They then settled in a townhouse in Brooklyn Heights. They lived on two floors, and rented out the other three. They never had children.
Warren Buffett recalls that Mr. Othmer’s mother first approached him in 1958 when he was 27 years old about managing some money for the family. At this time Buffett was managing less than $1 million. Other Othmer family members withdrew money, but Donald and Mildred were patient investors. When Buffett dissolved the Buffett Partnership in 1969, the Othmers took shares in Berkshire Hathaway. Donald’s investment had grown to $770,000 and Mildred’s to $817,000.
The couple’s initial Buffett Partnership investment had been $25,000 each. The Berkshire Hathaway that they received in 1970 was valued at $42 per share. That would equate to 18,333 shares for Donald and 19,452 for Mildred. Along the way they must have sold or bequeathed some, because at the time of his death in 1995, Donald’s estate contained about 7000 shares of Berkshire that were sold after his death for just under $30,000 per share. Mildred’s estate at the time of her death in 1998 held 7500 shares valued at approximately $75,000 each.[2]
Florence Ballenger
It was a surprise to many in 1999 that Florence Ballenger, a retired junior college English teacher, was a wealthy woman when she died at the age of 92. Her personal estate totaled $3.6 million and her late husband’s trust totaled about $3 million, having grown from $387,000 in 1985 at the time of his passing.
She did it by saving her pennies and investing in common stocks. Most of her wealth had been accumulated in General Electric that her husband bought in the sixties when he started work there as an engineer.
However, she was also known as a saver who spent little on herself except for her one indulgence of an efficiency apartment in London that she would rent in the summer to escape the Florida heat. She also kept herself busy, volunteering at St. Petersburg Junior College as an English tutor five days a week from the time of her retirement from the school in 1976.
She never had children, and when she died her money went to educational institutions. $1.2 million to St. Petersburg Junior College, her former employer, $1.2 million to her Alma Mater Eastern Illinois University, and $1.2 million to Kennedy-King College in Chicago where she had also taught. Her husband’s trust, which she never took a withdrawal from, left its $3 million to Clemson University in S.C. She was very modest and very particular about trying to live on her social security and teacher’s pension according to a long-time friend.[3] [4] [5]
Theodore and Harvey Baker
Nothing in the history of Ted and Harvey Baker of Chilton, WI spoke of great wealth. Their parents removed them from school in the eighth grade to work on the family farm. Harvey, the older brother, took care of Ted who was mentally disabled. In the late 1950s they sold their family farm for perhaps $50,000 and moved into town to take unskilled factory jobs. How did Ted and Harvey amass $2 million and $4 million estates by their respective deaths in 1989 and 1994?
According to their lawyer they did it through frugality, and by investing in blue chip stocks. The Baker brothers did not turn on lights at night. They cooked in bacon grease, and for years they had no car. According to their long time stock broker, Harvey Baker knew the closing stock prices every day.[6]
Secret Millionaires are those people that amass fortunes well beyond what might have been expected based on their incomes, and keep it quiet. Because they keep it quiet, few people know about their riches until after they pass. Even then publicity generally comes when they leave the money to charitable institutions that share the good news of the gift with the public. The following are four stories about secret millionaires.
Raymond Fay
Raymond Fay lived a modest life in Philadelphia. He died at the age of 92 in December, 1995. Never earning more than $11,400 a year, he retired as a high school chemistry teacher in 1969. He spent the next 26 years reading books -- nearly 16,000 of them, and catalogued them neatly on 3x5 cards he kept in shoe boxes. At his death he left the Free Library of Philadelphia $1.5 million which he had accumulated in municipal bonds.[1]
Donald and Mildred Othmer
Donald Othmer was a picture of industry, frugality, intellect and charity. Othmer was a professor of chemical engineering at Polytechnic University in Brooklyn, NY. Donald died in 1995 and his wife Mildred passed away in 1997. They left hundreds of millions to their favorite charities. How did they do it?
Don’t be disappointed to learn that they invested with Warren Buffett. Frugality and industry played a big part as well.
Othmer was born and raised in Omaha, NE. According to stories, in his youth he earned money picking dandelions from neighbors’ yards, delivering newspapers and telegrams, and walking a farmer’s cow to and from pasture. He graduated from University of Nebraska and received a Ph.D. from University of Michigan in 1927 after which he went to work for Eastman Kodak in Rochester, NY. His research resulted in 40 patents for Kodak, but he grew unhappy earning only a $10 bonus for each patent so he left in 1931 to become a professor at Polytechnic in Brooklyn where he could keep his patent earnings and have the use of graduate assistants for his research and consulting. He often worked six days a week. Othmer achieved commercial and academic success as the co-editor of the Kirk-Othmer Encyclopedia of Chemical Technology which became an industry bible.
His first marriage fizzled but in 1950 he married Mildred Topp, a former high school teacher who had received a master’s degree from Columbia Teacher’s College in 1945. Their wedding was held at the Plaza Hotel in New York City, a sign that they had achieved some significant means at that time. They then settled in a townhouse in Brooklyn Heights. They lived on two floors, and rented out the other three. They never had children.
Warren Buffett recalls that Mr. Othmer’s mother first approached him in 1958 when he was 27 years old about managing some money for the family. At this time Buffett was managing less than $1 million. Other Othmer family members withdrew money, but Donald and Mildred were patient investors. When Buffett dissolved the Buffett Partnership in 1969, the Othmers took shares in Berkshire Hathaway. Donald’s investment had grown to $770,000 and Mildred’s to $817,000.
The couple’s initial Buffett Partnership investment had been $25,000 each. The Berkshire Hathaway that they received in 1970 was valued at $42 per share. That would equate to 18,333 shares for Donald and 19,452 for Mildred. Along the way they must have sold or bequeathed some, because at the time of his death in 1995, Donald’s estate contained about 7000 shares of Berkshire that were sold after his death for just under $30,000 per share. Mildred’s estate at the time of her death in 1998 held 7500 shares valued at approximately $75,000 each.[2]
Florence Ballenger
It was a surprise to many in 1999 that Florence Ballenger, a retired junior college English teacher, was a wealthy woman when she died at the age of 92. Her personal estate totaled $3.6 million and her late husband’s trust totaled about $3 million, having grown from $387,000 in 1985 at the time of his passing.
She did it by saving her pennies and investing in common stocks. Most of her wealth had been accumulated in General Electric that her husband bought in the sixties when he started work there as an engineer.
However, she was also known as a saver who spent little on herself except for her one indulgence of an efficiency apartment in London that she would rent in the summer to escape the Florida heat. She also kept herself busy, volunteering at St. Petersburg Junior College as an English tutor five days a week from the time of her retirement from the school in 1976.
She never had children, and when she died her money went to educational institutions. $1.2 million to St. Petersburg Junior College, her former employer, $1.2 million to her Alma Mater Eastern Illinois University, and $1.2 million to Kennedy-King College in Chicago where she had also taught. Her husband’s trust, which she never took a withdrawal from, left its $3 million to Clemson University in S.C. She was very modest and very particular about trying to live on her social security and teacher’s pension according to a long-time friend.[3] [4] [5]
Theodore and Harvey Baker
Nothing in the history of Ted and Harvey Baker of Chilton, WI spoke of great wealth. Their parents removed them from school in the eighth grade to work on the family farm. Harvey, the older brother, took care of Ted who was mentally disabled. In the late 1950s they sold their family farm for perhaps $50,000 and moved into town to take unskilled factory jobs. How did Ted and Harvey amass $2 million and $4 million estates by their respective deaths in 1989 and 1994?
According to their lawyer they did it through frugality, and by investing in blue chip stocks. The Baker brothers did not turn on lights at night. They cooked in bacon grease, and for years they had no car. According to their long time stock broker, Harvey Baker knew the closing stock prices every day.[6]
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Most if not all of the people described above would be considered eccentric; their frugality something that most readers would find unappealing. However, in addition to frugality, they all seemed to show some form of industriousness, and most were well educated and studious.
While in each of the cases above the players did not have children, which no doubt helped with their saving, the lack of children is more likely the reason why the money was left principally to the charities that spread the word about the gifts, rather than to family.
In each community, while rare, there are likely a few Harvey Bakers, and Florence Ballengers.
How one chooses to spend money is a very personal decision. This is not intended be a lecture on the virtues of frugality since some people would happily spend every penny. What it is intended to highlight is the power of compounding which worked particular wonders during the Nineties when stock market returns averaged 15.9% annually, a rate at which a portfolio’s value will double in only 5 years.
The Eighties, which saw the Dow deliver a 12.9% average annual return, and the Nineties with their 15.9% average annual return produced a lot of stock market believers, and consequently not so many savers. The first decade of the 21st Century has shaken the faith of many in the market.
The 2000s is not the first dark age for stock market returns, nor will it be the last, but in time, handsome returns will come again.
Perhaps what sets these Secret Millionaires from the Nineties apart is that in order to achieve the gains that they did, they had to invest while others shrank from the risk.
These are stories about people who lived through the Great Depression which saw the Dow Jones Industrials lose 89% of its value. They lived through the Thirties when the Dow returned an average of 1.7% per year, and they lived through the Forties when the Dow returned only 3.69% per year. Additionally, they lived, and stayed invested through the period from 1966 when the Dow hit a high of 1001.11 through 1982 when it finally crossed that level for good – a 16 year lost era (save for dividends which can be meaningful) for many buy and hold stock market investors.[7] Yet buy and hold they did, and by investing a little more each year they achieved remarkable compounding.
[1] USA Today, March 13, 1997, pg. 13A.
[2] New York Times, July 13, 1998, section A, pg. 1
[3] The Tampa Tribune, August 18, 1999, pg. 1
[4] St. Petersburg Times, August 18, 1999, pg 1
[5] Chronicle of Higher Education, September 24, 1999, pg. A51
[6] New York Times, July 14, 1996, section 3, pg. 5
[7] Econostats.com
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