WILLIAM WITHERSPOON - A BIT OF BUSINESS BACKGROUND.

     William Witherspoon entered the investment business in the fall of 1928 when he finished high school.  He started as a "board boy" marking the Bond Board for the New York Stock Exchange firm of A.  G.  Edwards & Sons.   He started shortly after William McChesney Martin, began with the same firm after graduating from Yale University.  He took over Mr. Martin's first job with the firm.  They had known each other from boyhood; hence, Bill Witherspoon asked Bill Martin to help him learn the business.  Mr. Martin's father at that time was Governor (now termed president) of the St. Louis Federal Reserve Bank and therefore Bill Martin had grown under the influence of Central Banking.  Martin's family background in finance influenced the selection of books that Witherspoon studied and in turn formed Witherspoon's basic economic understanding and future research that he was eventually to do as a writer of a weekly Financial Letter.

     Witherspoon left Edwards a few years later and in 1934 became associated with the firm of Newhard Cook & Company, also a St .Louis member firm of the New York Stock   Exchange.  Soon thereafter, he was appointed Director of Research and, except for the war years of 1943-45, retained that position until 1953.  After returning from war duty where he served as Chief of the Price Analysis Section of the St. Louis Ordnance District, he was asked to write a weekly Financial Letter for Newhard Cook & Company.   During that time, in the late 1940s, Mr. Witherspoon discovered an important relationship between gross national product (now designated as gross domestic product) and the M1 money supply.  During the 1920s this relationship ranged between about 3.50 to 4.25 of GNP for each dollar of the M1 money supply, but it had declined to the ratio of about 2.00 by the end of World War II in 1945 because of the huge inflow of gold into the United States during the 1930s and the financing of the war.  Many persons in 1946 and subsequent years were predicting an economic recession, but Witherspoon said there was to be economic prosperity for many years because of the huge expansion of the money supply from 1934 through 1945.  This Financial Letter gained considerable prominence and was widely distributed throughout the United States and to some extent in Europe.  In the early 1950s the Federal Reserve Board began to chart this relationship in its monthly Historical Chart Book and continued until this publication was discontinued in 1986. This remains the basic foundation for Witherspoon’s economic outlook even to today, with the surrogate to the M1 money supply and known as Money Zero Maturity (MZM) as developed and published by the Federal Reserve Bank of St. Louis.

     In 1953, Witherspoon opened his own Investment Counsel office that proved to be remarkably successful. However, in the late1950's, Witherspoon believed that the economy was becoming more and more complex and that possibly a computer could solve some of the problems of common stock analysis in this growing complexity.  He purchased a computer at that time and labored for about five years trying to solve this problem of common stock analysis, but he could not do so to his satisfaction at that time. Therefore, he chose to close his investment counsel office rather than to render portfolio management advice to clients with what he believed were inadequate tools for common stock analysis.

     Meanwhile, in 1948, the Dean of University College of Washington University in St. Louis asked Mr. Witherspoon to teach a non-credit course in the evening school entitled Investment for the Layman.    Mr. Witherspoon accepted this invitation and continued to teach this course for the next nineteen years until 1967.

     Also in 1948, Mr. Witherspoon was one of the organizers of the St. Louis Society of Financial Analysts and served as its first President in 1949-1950.   At that time, this Society became affiliated with the national association known as the Financial Analysts   Federation (now known as the Association for Investment Management and Research (AIMR)).  That association in turn formed the Institute of Chartered Financial Analysts in the early 1960's, which is located at the University of Virginia, and Mr. Witherspoon   received the designation of Chartered Financial Analyst in 1964.

     After closing his Investment Counsel office in 1964, Mr.Witherspoon returned to Newhard Cook & Company as a Limited Partner.   While in this position, he continued to experiment with fundamental common stock analysis, using the McDonnell Douglas computer. This was a very expensive experiment at that time; hence, only limited progress was made until 1968 when the firm of Stifel Nicolaus & Company invited Mr. Witherspoon to come with them as a vice-president on the basis that the firm would underwrite all of the computer cost, which by then was becoming somewhat less expensive because of the introduction of direct access computers. He accepted this invitation and held that position until 1981.

     In the late 1960's, Mr. Witherspoon's son, James T. Witherspoon, was becoming a mathematician, working on his doctorate degree that he received from Washington University in 1972.   He was, in 1968, able to show to his father the kind of mathematics to solve the fundamental common stock analysis problem and how to apply this type of mathematics.   It was at that time that the two working together developed a rather unique regression analysis Model of the Stock Market to be used as a tool to determine the intrinsic worth of common stocks.  The intrinsic worth is the price at which a common stock would be selling at any given time if its earnings, dividends, the growth rates of each, and the stability of those growths were to be evaluated for that stock as similar factors are being evaluated for the average stock on the market at that time.   The record of this Model and the attendant system of ratings that were also developed has been remarkably good.

     Mr.Witherspoon left Stifel Nicolaus & Company in 1981 to open an Investment Counsel office in his home with the aid of a personal computer that by then had been developed.   He, with his son, has continued to offer economic and portfolio management advice to a limited number of clients, both personal and institutional, with rather good success.