General

The Witch of Wall St: Lessons from one of the greatest financiers you’ve never heard of

Annie Charalambous, Tuesday, 24 November 2020

wall-street-001


Hetty Green, born Henrietta Robinson, was an eccentric financier and, at the time, the wealthiest woman in the world. That time was the late 19th century – America’s Gilded Age – an era of rapid economic growth after the Civil War that saw industries booming, wages rising, and millions of migrants flocking into the country for a piece of the pie.

Coming from a well-to-do family, Hetty had inherited close to $7 million over her lifetime, but it’s how she grew her fortune that cemented her place in the history books. Dubbed the Witch of Wall Street, Hetty was ruthless, and amassing and holding onto her wealth was her top priority. She was a frugal albeit formidable woman; upon marrying millionaire Edward Green, it was Hetty who had asked for a prenuptial agreement to keep their finances separate, which turned out to be a wise decision as Edward went bankrupt in 1885, after which they separated.

Having developed an interest in the finance world young, Hetty was reading financial publications and even balancing the books for the family whaling fleet and shipping business by age 13. In her early 20s, her father had bought her a new $1,200 wardrobe for Hetty to attract a suitor, which she sold and then used the money to invest in government bonds. She continued to invest, primarily in real estate, bonds, and stocks, as well as dabbling in mortgages and railroads.

She was a contrarian investor: buying when others were selling and vice versa.  After the Civil War, Hetty invested heavily in Greenbacks, the first paper currency, which was undervalued at the time. She’d claimed to make $200,000 in a single day.

By the Bankers’ Panic of 1907, Hetty was prepared, liquidating most of her shares before the stock market crashed, leaving her with somewhere in the realm of $20–40 million cash on hand. It was then that J.P. Morgan came knocking, inviting her and other prominent finance and banking figures to his home to talk solutions – this meeting would famously lead to the formation of the Federal Reserve. Hetty lent over $1 million to the city of New York (and it wasn’t the first time, either – she’d made loans to the city in 1898 and again in 1901) in exchange for short-term revenue bonds.

During her life, Hetty Green turned ~$7 million into $100 million in liquid assets -- equivalent to $2.388 billion today – and had up to 6,000 parcels of real estate by her death in 1916. By comparison, J.P. Morgan, who had passed away just three years before her, had an estate of ~$80 million.

She had said that there was no secret; she was a value investor who believed you should “buy cheap and sell dear”, i.e. buy low and sell high. Hetty understood the importance of research, persistence, and liquidity -- always having capital available for that next big opportunity.

 

Share article