Who invented hedge funds: 7 iconic phrases Fortune coined

But how does one invent a word or a phrase, anyway? 

With the flick of a wrist and copious time spent around copious time spent in corner offices, on factory floors, and anywhere else business leaders congregate, Fortune has been generating timeless phrases in our global vernacular for decades. Founded in the wake of the Great Depression, the magazine has persisted through 16 presidents, five contemporary market crashes, and a global pandemic. That makes us just a few months senior to Warren Buffett, the Oracle of Omaha himself, whose popular nickname may even have originated in Fortune—it was bestowed by former Fortune senior editor-at-large Allan Sloan. However, Sloan is pretty sure that he coined the moniker while writing a June 1985 article for one of our distinguished competitors.  

In a 1929 prospectus for the magazine, founder Henry R. Luce defined Fortune’s style, proclaiming that “accurately, vividly and concretely to describe Modern Business is the greatest journalistic assignment in history.” Here is a sampling of some of the most iconic descriptions that Fortune editors have minted over the past nine decades:

Groupthink: 1952

You may recall from your Intro to Communication Theory 101 course one vocabulary term that was to be starred, highlighted, and underlined because it would appear on your final exam: Groupthink. 

In our March 1952 issue, editor William H. Whyte Jr. introduced the term, inspired by the phrase “doublethink” in George Orwell’s recently released masterpiece, Nineteen Eighty-Four. Set in a dystopian future version of London, the novel hit bookshelves in 1948 with a strong warning against totalitarianism.

Whyte would go on to a long career as an influential sociologist and would bring the voices of many socially minded writers into Fortune’s pages, including early work by the great urbanist Jane Jacobs. He described groupthink as a “perennial failing of mankind” in which we copy our friends, family, coworkers, and acquaintances, and fail to listen to dissenting opinions.  

While Whyte used “groupthink” to describe American culture and the study and practice of management in the 1950s, the phenomenon is still alive and well in our present-day workplace. Look no further than the second-biggest banking collapse in American history, the demise of Silicon Valley Bank, which featured a once unthinkably fast version of an old-school bank run, powered by social media but really by groupthink at hyperspeed. It only took 36 hours for regulators to shutter SVB after the first rumblings of trouble started.

The danger with groupthink, Whyte explains, is not only that the average person will be influenced by the “social engineers” of the group, but that they will become another puppeteer themselves and “embrace groupthink as the road to security.”  

The “groupthinker is taught that one wins by being directed by others — and that the most important thing in the world is to be a team player,” Whyte writes. Who in your workplace is a victim of groupthink, or is it even you?

Organization Man: 1953

Do your coworkers make their jobs their entire personality? That’s far from a new trend in corporate America. 

For our May 1953 issue, Whyte was at it again, studying the emerging class of managers who had left their hometowns to start careers in big cities before settling in suburban communities that fit their lifestyles. These workers exuded a strong commitment and loyalty to their employers, and provided the “sharpest picture of tomorrow’s management,” he writes.

“Though it may be the automobile dealer and the owner of the local bottling franchise who drive the Cadillacs, it is the organization man who now makes the decisions that most affect the lives of others,” Whyte explains. 

Simply put: Their personal life is heavily influenced by the company that they work for, and the individual feels a very strong moral obligation to fit into that corporate culture. 

Whyte warned that this cohort was becoming an increasingly dominant force in American society and prophesized a soulless culture lacking in independence, risk-taking, and progress. 

“The future will be determined not by the independent entrepreneur or the ‘rugged individualist’ whom our folklore so venerates; the future will be determined by Organization Man,” Whyte writes. The concept was such a hit that Whyte would go on to further explore the topic in the bestselling book of the same name. In the literature on managerial culture in the aftermath of “Taylorism,” which introduced the concept of scientific management, Whyte’s book was a key pivot point spanning James Burnham’s 1941 work, “The Managerial Revolution,” and John and Barbara Ehrenreich’s coining of “the professional-managerial class” in 1977.

Whyte’s hypothesis stands true today, as America continues to be dominated by large companies with leadership concentrated in the hands of the country’s elites. The COVID-19 pandemic and Great Resignation ushered in a new culture of hybrid work with an emphasis on employee happiness and choice, allowing employees to reinvent their daily schedules, parenting duties, and work environments, but return-to-office mandates at the largest companies, including Goldman Sachs, Disney, and Amazon, demonstrate the prevalence of that tension between individual choice and organizational conformity. 

Fortune 500: 1955 

Editor Edgar P. Smith called it a “lightbulb moment,” saying at the time: “I think that our readers just might be interested in this list.”

The Fortune 500 list has catalogued the rise and fall of America’s biggest companies ever since, but the iconic nature of the list is clear from how the ranking itself has become synonymous among business leaders and publishers as a shorthand for big and successful. 

First gracing our cover in the July 1955 edition, the “Fortune Industrial 500”—later shortened to Fortune 500—was first published at a time when the U.S. economy was “colossal in size and the envy of the world,” according to the legendary Carol Loomis, who was then a rookie reporter on the magazine’s staff. 

Over the years, more than 2,200 companies have graced the Fortune 500 list. This year’s ranking collectively generated a record $16.1 trillion in revenue and $1.8 trillion in profits.

Hedge fund: 1966

Carol Loomis won many awards throughout her long and illustrious career, and even served as the pro bono editor of Warren Buffett’s annual letter to Berkshire Hathaway’s shareholders, but her biggest contribution to the language may have been when she coined the phrase “hedge fund.” In April 1966, Loomis profiled the millionaire investor Alfred Winslow Jones (who would later become a Fortune contributor himself), and while he is credited for being the father of the hedge fund industry, Loomis became the person who named an entire sector.  

By pooling investors’ money and short-selling stocks, hedge funds use leverage to maximize their returns, but they also risk intensified losses. As she chronicled Jones’ affluent lifestyle and successful career, Loomis defined this kind of fund as the engine of his success. Such funds use capital that is both leveraged and “hedged,” which puts the investor in a position that “partially shelters him if he misjudges the general trend of the market.”

The main advantage to these investment vehicles, according to Loomis, is that the hedge fund investor’s short position enables them to make decisions with “maximum aggressiveness.” 

After a crash in the 1970s, hedge funds benefited from a resurgence in the go-go ‘80s and subsequent boom in the ‘90s as managers developed new strategies for investing. Riding the high of a bull market, the industry grew from $38.9 billion in 1990 to $536.9 billion in 2001, according to Hedge Fund Research (HFR). 

Today, hedge fund managers are navigating macroeconomic and geopolitical challenges from interest rate hikes and Russia’s invasion of Ukraine, but the industry overall has surged from Jones’ day to ours. Jones’ firm launched with $100,000 in assets while the industry was $3.83 trillion in size as of the fourth quarter of 2022, according to HFR. That year also saw the greatest profit in hedge-fund history: $16 billion from Ken Griffin’s Citadel. And to think, once it was a twinkle in Alfred Jones’ eye and a tickle in Carol Loomis’ brain.

Trophy wife: 1989

It’s not really okay to describe someone as a “trophy wife” anymore. Often a derogatory phrase, it can easily imply that a woman married to a wealthy, successful spouse has little to no personal merit other than her physical appearance. 

In the late 1980s, during a time of growing acceptance of divorce among corporate America’s power elite, Fortune senior editor Julie Connelly not only coined the phrase but defined its rise.

As Connelly writes in the August 1989 issue, “it took the roaring Eighties to make divorce fully respectable.” After all, the decade began with the election of America’s first divorced president, Ronald Reagan, who was remarried to his second wife, Nancy Reagan, when he moved into the White House.

“If the CEO of the United States could shed and rewed, why not the CEO of a Fortune 500 company?” Connelly posited. 

Connelly surveyed the rising prominence of a spouse “a decade or two younger than her husband, sometimes several inches taller, beautiful, and very often accomplished.”

This partner “certifies her husband’s status,” Connelly said, but she was sure to note: “this trophy does not hang on the wall like a moose head—she works. Hard.”

Trophy husband: 2002

As the old adage states: “behind every great man is a great woman.” But that quote needs some updates. 

After coining “trophy wife,” Julie Connelly later documented the increasing number of women leaders climbing the corporate ladder while sharing parenting duties with a “trophy husband” at home. 

“Call him what you will: househusband, stay-at-home dad, domestic engineer,” Connelly writes. “But credit him with setting aside his own career by dropping out, retiring early, or going part-time so that his wife’s career might flourish and their family might thrive.”

Progress for working women is slow but measurable: This year, for the first time in history, women CEOs ran more than 10% of companies on the Fortune 500. 

Co-parenting duties are still evolving, too. Today, most Americans don’t assume working mothers will stay at home with their kids, according to a recent survey of more than 2,000 U.S. adults conducted by The Harris Poll on behalf of Fortune.

Instead, more than half (55%) of respondents believe the parent making less money should be the one who stays home with the kids. 

Additionally, the number of stay-at-home dads has increased slightly in recent years, according to the U.S. Census Bureau, though that definition doesn’t fully encapsulate the full scope of fathers including those who are unmarried or identify as LGBTQ+.

According to Pew Research Center, an estimated 2.1 million stay-at-home dads were living in the U.S. in 2021. That’s up from 1.1 million stay-at-home dads recorded in 1989, the same year Connelly coined “trophy wife.”

HENRYs (High Earners, Not Rich Yet): 2003

How about that $4 cup of Starbucks?

It’s a spending choice symbolic of a particular demographic: The person who spends money as soon as it hits the checking account, resides in a city with a high cost of living city, and usually neglects their monthly budget. If you earn six figures but don’t have enough in savings or investments to be considered “rich,” then this might be you.

You’re a HENRY, a “High Earner, Not Rich Yet.” 

Fortune writer Shawn Tully, who is still on staff today, having first been hired as a researcher in 1978/79, first introduced the world to the “HENRYs” in 2003, and revisited the subject in an article in the November 2008 issue that described individuals earning over $250,000 annually but getting taxed to “high heaven.”

At the time, then-presidential nominee Barack Obama and other congressional Democrats frequently referred to these high earners as the “rich” and the “wealthiest Americans” in a push for more tax increases, but that’s debatable, as Tully explains. 

“Unlike millions of Americans, most HENRYs don’t need to worry about making the next mortgage or credit card payment,” Tully explains. “Still, HENRYs are getting a bad rap from those who lump them in with America’s conspicuously wealthy.”

Mostly members of two-income families, HENRYs interviewed by Tully said they were strapped for cash mainly due to rising federal, state, and property taxes, “plus the knife of the (Alternative Minimum Tax).” They blamed the squeeze on investments in their children, including paying for private colleges, day care, and private lessons, like “dance, tennis, or gymnastics.”   

HENRYs are still alive and well today, and are also still feeling the pressure from falling home prices from a global correction in addition to rising interest rates, just like the early 2000s. The majority of today’s HENRYs are millennials, who are saddled with unprecedented levels of student debt and have weathered two historic recessions before the oldest of them reached the age of 40. But who can really resist a Starbucks in a time of stress?

Before America’s richest person built rocket ships destined for Mars, designed implants for the human brain, and nicknamed himself “Chief Twit,” Elon Musk was a member of the “PayPal Mafia.”

Fortune’s Jeffrey O’Brien profiled the leaders behind the online payments company’s monumental rise in the November 2007 issue, introducing the world to not just Musk but other future tech luminaries such as Peter Thiel. While O’Brien reported this coinage, he didn’t create it; the supercharged roster of founders and developers including the likes of YouTube cofounders Steve Chen, Chad Hurley, and Jawed Karim gave themselves the name “PayPal mafia.” Like American organized crime in the postwar period, the merger of several rival payment startups made them all richer, and the title of “don” at the then-fledgling company was reserved for venture capitalist Peter Thiel. 

Now a Fortune 500 company, PayPal was once a “brainchild” of Max Levchin and Thiel that “would change the course of the Internet.”

After selling out to eBay for $1.5 billion in 2002, most of PayPal’s key employees left the company but stayed in touch.

Altogether, these PayPal veterans have gone on to work with unicorns, startups, and Fortune 500  companies including YouTube, Affirm, Tesla, Twitter, LinkedIn, Yelp, Palantir Technologies, SpaceX, and Yammer. 

“Many of PayPal’s early hires matched a specific profile: highly intelligent workaholics who were good at math. No frat boys, MBAs, or, God forbid, jocks,” O’Brien writes.

More recently, however, economic headwinds have halted PayPal’s history of breakneck growth, resulting in layoffs, slumping shares, and a CEO exit. 

Bonus: Fortune’s First Cover

The very first issue of Fortune that was distributed to subscribers beginning in February 1930 featured the Roman goddess Fortuna with her wheel on its cover. 

However, that wasn’t our first-ever cover.

In a letter to advertisers in September 1929, Time co-founder Henry Luce proposed a new magazine (hint: Fortune) and included it in a prototype issue,  “Volume One, Number 0.”

The rest is history.