July 1989 Money Magazine: Where to put $1000 Now!

[njhowie]

Reprinted with permission from the publisher.

Enjoy!

 

[bloom2708]

The year I graduated from high school.

A pretty conservative bunch of recommendations.

Nobody said put it all in Microsoft stock.

 

[Al18]

Very conservative advice - considering these were investing professionals.

 

[MichaelB]

I think going back 20 or more years to see investment recommendations by the pundits and gurus is fun and enlightening.

 

[audreyh1]

James Grant - last one - really funny!

 

[FREE866]

OMG


One awful recommendation after the next.

 

[MarieIG]

Interesting. The astrologist recommended art.

 

[razztazz]

Doesn't say (that I saw) if this is where to put $1,000 for long term storage or for the next year, altho one person does say "for the next year." In 1989 1 yr CD's and MMF's were paying just south of 8%. For 1 year beat the market. 1989 - 2003 lagged a bit. This would also work till circa 2009 also. Not the worse guess a person could make. I didn't look for any charts longer than that.

 

[scrabbler1]

Tiffany (Darwish), the pop singer of the late 1980s (who was 17 in July, 1989)? You have got to be kidding me!

I remember how, in 1989, the interest rate on my money market savings account dropped like a rock throughout 1989. The bank printed it on the bottom of the monthly statement every month. I recall it was north of 7% early in the year before falling bigtime to under 2% by the end of the year. This helped nudge me toward investing my surplus money (which I didn't have much of in most of 1989) elsewhere in 1990, starting with muni bond funds to avoid income taxes (which were much higher back then).

 

[MichaelB]

Well, the small print is difficult to read but I don’t recall any of the gurus suggesting the SP500. According to Shiller data it’s up 13x since then, and in real terms, 11x. I wonder if any of the recommendations come even close to this.

 

[CardsFan]

Well, the small print is difficult to read but I don’t recall any of the gurus suggesting the SP500. According to Shiller data it’s up 13x since then, and in real terms, 11x. I wonder if any of the recommendations come even close to this.

Yeah, I looked at that too. Of course, it was less than 2 years after the black Monday crash. Maybe that was in play

 

[jollystomper]

Money Magazine was the publication I subscribed to the longest, from 1980 through 2013. I found its personal finance information helpful. I especially enjoyed the "One Family's Finances" analysis feature.

Interestingly the question "Where would you put $1,000 now" did not come with any time frame reference. In retrospect, it would have been more interesting to see what the replies had been with a time frame included. I think most of the replies took a short term view. I am too lazy at the moment to go through evaluate how those recommendations would have held up over 34 years .

Also, they asked folks who all had a lot more than $1,000 at that time, so the answers would vary wildly. Kind of like asking folks here "If you came into an unexpected $1,000, what would you do with it?" - the answers would range from socking it away to BTD . It is not the same as asking "if you were starting out with $1,000 where would you put it now?"

 

[njhowie]

OMG

One awful recommendation after the next.

There are some good ones in there. Those recommending the Treasuries at 9%+ - nothing wrong with those. 10.52% one year CD - how awful was that? YTD through June 1 that year (cutoff for the July magazine issue), Vanguard Government Bond fund led the pack of US Government Bond funds with 16.0% return, while Vanguard Wellesley Income led the Flexible Income group at 18.1%. Again, those are 5-month returns through June 1 that year.

Ravi Batra pointing to the overbought Japanese market crashing by year end - it peaked a few months later in October, then crashed. Spot on.

Richard Young - short-term U.S. Treasuries and long-term zero coupons...because rates will be forced down and zeros offer the best bang for your buck when rates drop. "From now until 1993, many fortunes will be made in zero-coupon bonds." Between 1989 (start) and 1993 (end) 30-year Treasuries fell from 9.09% to 6.35%. Spot on as well.

 

[CRLLS]

!

In a little more than a year, in 2025, I'll be selling my 444 mint Sesame Street magazines. Then let's see who's getting the last laugh.

Actually, it wasn't the worst idea of the bunch. In 1989 the price for the May 1989 2pk newstand special (magazine + coloring book) was $2.25. It recently was sold on eBay for $21 + 6.50 shipping. Probably shipped for less than 2 bucks, leaving the seller 24.50 Thats close to 11x (minus fees). Of course, many of those vintage magazines were sold on eBay for <$5.

 

[dunkelblau]

Panel seems to have a conservative tilt, but these are "luminaries" and not financial experts per se, so perhaps this article is more in the spirit of "portfolios of the rich and famous" rather than financial advice for the reader?

This brings back memories, my inspiration for pursuing FIRE appeared a few issues earlier, it was the story about the Terhorsts who retired at 35 after accumulating a half million USD liquid. There's a link to the text portion of that original Money article here:
https://money.com/mark-cuban-says-this-one-book-changed-his-outlook-on-money/

A decade ago the Money magazine editor who assigned that 1988 story wrote a follow-up here:
https://www.nextavenue.org/30-years-ago-they-retired-35-update/

Looks like the Terhorsts have made the most of their FIRE years. Like Mr Cuban I put in way too many OMYs, but I don't have billions to show for it.

 

[audreyh1]

Yeah, I used to read money magazine in the 90s. Mainly picked one up for a flight. So sporadically, I don’t think I ever subscribed. I did learn quite a bit at first, but once I started seriously researching investing for retirement I quickly grew out of it - realized it was mostly fluff and advertising.

But these on the “panel” many are not investing gurus at all.

 

[CincyDave]

The two financial advisors recommended mutual funds with a 5.75% load. Too funny.

 

[racy]

I loved Money magazine although it did lead to over-complicating our portfolio including dabbling in single company stocks. I guess too much information was dangerous for me. Thankfully I've recovered.

 

[jj]

What jumped out for me was two mentions of mutual funds with 5.75% front-end loads.

 

[njhowie]

The two financial advisors recommended mutual funds with a 5.75% load. Too funny.

No different than what financial advisors today recommend. If you work with a financial advisor, then you're going to pay one way or another. There is no free lunch.

 

[njhowie]

What jumped out for me was two mentions of mutual funds with 5.75% front-end loads.

And at the same time, Fidelity Magellan was the best performing mutual fund with 211% 5-year gain, charging 3%, far outpacing Vanguard's best at 178%.

 

[Closet_Gamer]

I loved Money Magazine. In its later years it had a very solid core of logic built around saving discipline, staying invested and indexing. It did continue to fill its pages with active investing strategies, etc. but overall I felt like it was an interesting, monthly reminder to continue investing and managing money well.

I wish it was still going so I could buy my kids subscriptions.

But some of those recommendations are hilarious and definitely showing their age. 5.75% loads ... kill me!

 

[audreyh1]

5.75% loads were extremely common back then. No load funds were more rare.

 

[njhowie]

5.75% loads were extremely common back then. No load funds were more rare.

Indeed.

I'm going through the 5-year top performing funds table in this issue and of the 10, only 3 were no load - Scudder Capital Growth, Loomis-Sayles Capital Development, and Vanguard Windsor. Loomis-Sayles and Vanguard funds were closed to new investors. The other 7 that were charging loads ranged from 3% up to 8.5%.

In fact, coincidentally, it's the same ratio of no-load to load for the one month and one year top 10 performers, 3 vs. 7.

 

[audreyh1]

There was a tremendous bull market most of the 80s and 90s. I’m sure front-end loads and high expense ratios didn’t look so bad compared to equity growth.

Things sure changed in 2000.

Of course by the later 90s people were much pickier about loads and expense ratios.