David Rosenthal: commitment

Transcript context

…The interesting thing about this, you might say, well, what do you mean mutual funds were new at this point in time? Well, that comment that I made before the Great Depression in the '20s, only 1 or 2% of Americans owned stocks. By 1949, that was still only up to 4.2% of Americans. And what they were doing is they were working with a stockbroker to buy individual stocks. There really hadn't Ben any academic research around finance of any kind yet, let alone sort of investment and diversification and funds. So this notion of you are going to mutually pool your money with a bunch of other investors into a fund and buy a basket of stocks in that fund and hold it for an open-ended period of time, these public equities, that was brand new. Yes. And this is what Jack decides to write his thesis about, this new phenomenon. Now, there are actually two important things to talk about here that you started to allude to, Ben. One is this concept of an open-end fund versus closed-end funds. So this is the real pioneering thing that the Massachusetts Fund—we're not going to call it MIT here—pioneered, which is there's no set fund size. It's elastic. So it's not like they have to write a prospectus and go out and say, we are raising a $100 million fund and get everybody in it. And then, you know, it gets to $100 million and then they close it and they manage it. Nope. Could be $1 million, could be $100 million, could be $5 trillion, as we will see approaching towards the end of the episode. You keep dumping more dollars in and we'll keep buying more stuff in the basket.…

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