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The Late Jack Dreyfus Really Roared
The Late Jack Dreyfus Really Roared
Investor’s Business Daily
April 07, 2009
Originally published in Investor’s Business Daily
Jack Dreyfus, the mutual fund pioneer who died March 27at 95, was known as "the Lion of Wall Street." And for decades, the lion has been the advertising symbol of Dreyfus funds.
Dreyfus' investing prowess certainly justifies this title signifying the king ofthe jungle. As IBD has reported, the Dreyfus Fund posted a return of 604% from 1953 to 1964, compared with 346% for the Dow Jones industrial average during the same period.
And when Dreyfus himself ran the fund, which is now owned by Bank of New York Mellon Corp., it exceeded the second best fund by 102 percentage points.
Dreyfus' investing style, loosely known as "buy high and sell higher," influenced scores of investors from Charles Schwab to Fidelity's Edward "Ned" Johnson III to IBD publisher Bill O'Neil.
But Dreyfus was a lion in other important ways as well. He had anabundance of courage in taking on government agencies from the Securities and Exchange Commission to the Food and Drug Administration.
And he let out a loud roar whenever he thought these bureaucracies were denying ordinary Americans access to information that could improve their health and wealth. In his memoir, "The Lion of Wall Street," Dreyfus wrote that he got energized whenever he felt that "theAmerican people have been jerked around."
In the 1950s, Dreyfus tangled with the SEC over an action he pioneered that is now commonplace: the advertising of mutual funds onTV. Dreyfus recalled that shortly after his first ad aired — with the trademark lion emerging from a New York subway — the SEC restricted mutual fund commercials.
For a time, the fund couldn't get any new ads approved, but, as Dreyfus recalled, "nobody got tired of the lion" or the message that the company "hopes to make your money grow, and takes . . . sensible risks in that direction." Soon, after thousands of ordinary investors saw their nest egg grow under Dreyfus, common sense prevailed and funds could once again run TV ads.
But Dreyfus soon took on an even bigger government behemoth: the FDA.
In the 1960s, he found that phenytoin, a drug first approved to control convulsions, worked wonders for the clinical depression he suffered. For the rest of his life, Dreyfus' foundation sponsored medical studies on phenytoin's uses and promoted these findings to doctors and patients. But he found an impediment to informing patients from the FDA, the agency ironically charged with guarding the nation'shealth.
The FDA has long impeded companies and individuals offering information on so-called off-label uses of drugs, even if these uses are completely legal for doctors to prescribe and recommended by respected medical societies. Dreyfus took on the FDA for these restrictions, meeting with agency officials, senators and even U.S.presidents.
"Without FDA approval, drug companies cannot market phenytoin as anything other than an anticonvulsant, and most doctors remain in the dark as to its versatility," he wrote. "Millions of people in this country alone suffer because of (the) letters FDA."
In later years Dreyfus wrote and spoke as well about the FDA's deadly overcaution that keeps many beneficial drugs and information off the market. In so doing, he highlighted the deaths and suffering that result from the FDA's restrictive policies and he made patients and doctors better informed.
In 2005, Dreyfus wrote, "The FDA requires everything bad about a drug be included in their literature, and nothing good, unless it's had their approval."
Dreyfus continued to publicize to doctors the FDA's own 1982 statement that federal law "does not limit the manner in which a physician may use an approved drug." And he continued to pound away at what he saw as the "flaw in the system" of drug approval.
"Apparently full disclosure is required on the negative side, but no disclosure is permitted when the evidence is positive, unless it has an FDA-listed indication of use," Dreyfus wrote. "No matter how flimsy the evidence for the negative, it must be disclosed. No matter how solid the positive evidence, it may not be mentioned. It seems a poor way to run a railroad."
And Dreyfus did know how to "run a railroad," keeping on top of financial and medical issues till the end of his life.
In 2004, IBD noted in a profile that Dreyfus, then 90, "still goes to his office overlooking Central Park in New York every day . . .still dabbles in the markets and still studies charts." On how he developed his investing style, Dreyfus told IBD matter-of-factly, "I just saw the patterns. The same things happened over and over again."
Seeing the patterns and sticking to his guns — in investing, public policy and life — was what made Jack Dreyfus a lion with a legacy to live up to. May others find his courage to roar for freedom.
Berlau is director of the Center for Investors and Entrepreneurs at the Competitive Enterprise Institute.