INVESTMENT OUTLOOK : ASSESSING THE MAJOR MARKETS : MAKING MONEY WORK : Views on Investing From Those Who Give Advice and Those Who Take the Risks : The Investors
It’s almost 1990. Do you know where your money is?
If you’re Vicki Hahn, Parker Bartlett, Jack A. Brill or Dr. Jeannette Richards you certainly do. And what’s more, you know why it’s there.
These four Southern California investors have devoted much thought to the new decade and the effect it could have on their money. The strategies they propose are suited for their life styles and abilities to cope with risk. They are not necessarily recommended for other investors.
PARKER BARTLETT, 69
Years Investing: 37
Breakdown: 15% stocks, 85% stock mutual funds
The time was midnight, the setting was Vail, Colo., and it was vacation as usual for Parker Bartlett. The retired aerospace executive was investing, not relaxing--on the telephone, tinkering by touch tone with his mutual funds.
“I read Investors Daily, the Wall Street Journal, local papers when I’m away from home,” says Bartlett, 69. “I’m keeping track of the market even when I’m traveling. It’s not unusual that I may be traveling, call up at midnight and move in or out. That’s the convenience of mutual funds.”
Bartlett bought his first shares of stock nearly 40 years ago and has been investing steadily ever since. What started out as a shrewd move--he bought shares of Capital Airlines in 1952 just before it merged with United Airlines--has become a way of life.
“I continuously watch Financial News Network on television and generally track the status of the market,” Bartlett says. “I track my funds’ price changes daily and put them on my computer.”
And although he spent earlier years investing in highly speculative instruments such as commodities and risky stocks, he is a far different investor today than he was four decades ago. For Bartlett, the reason has as much to do with his time of life as it does with the upcoming decade.
Because he is retired, he has moved away from heavy speculation and closer to safety. That means more mutual funds and fewer stocks. About 10% to 15% of Bartlett’s investment is in a stock portfolio, he says, and the rest is in mutual funds.
Still, timid is not a word he would use to describe his investment style, even though he doesn’t risk as much--or lose as much--as he did in his youth.
“My strategy is maximum growth,” Bartlett says. “I’m willing to take risk for maximum growth.”
DR. JEANNETTE RICHARDS, 67
Years Investing: 20, though most active in the past three to four
Breakdown: 50% cash, 10% bonds, 10% mutual funds, 30% stocks
Dr. Jeannette Richards has a sharp eye and a system, both hard-earned.
Two decades of investing have taught the retired Santa Monica anesthesiologist not to play long shots, not to look for undiscovered deals and not to trust the advice of a broker, no matter how highly recommended.
Back in 1969, when stock prices fell at the end of a takeover boom not unlike what we’re seeing today, Richards “took good professional advice and lost a lot of money,” she says. “When the market dropped, I lost almost everything. I was never advised to get out or sell or anything.”
Several years of night classes gave Richards, now 67, enough savvy to make money and enjoy the process. Two years ago, before retiring from her practice at St. John’s Hospital in Santa Monica, she got a broker’s license and now works part time at Baraban Securities in Culver City.
As an investor, Richards is poised for the death throes of 1989 and the birth of the 1990s. Her particular formula for personal investment mixes 50% cash with 30% stocks and 10% each in mutual funds and bonds.
The small chunks are easy to explain: Richards doesn’t trust bonds, and she hasn’t moved as quickly as she’d like into the safety of mutual funds.
The cash part is a little more complicated and gets to the heart of her investment strategy.
“We’re approaching the tax-loss selling season,” Richards says. “December usually pokes some lows in stocks. I’ll have a good buying opportunity, and you need cash to buy.”
But that’s not all. Richards analyzes the stock market and contends that the second year after a presidential election is the low point, where stock values bottom out. The next low is 1990, she says, “and I’ll be ready for it.”
As preparation, Richards spends at least an hour each day studying the market and following her shares--except when she’s on vacation. When Richards takes to the mountains for a ski trip in the winter or heads off to teach arts and crafts to diabetic children in the summertime, she leaves her portfolio behind.
When it comes to investing her money, Richards readily admits that part of her wheeling and dealing is for entertainment value.
“I like to play the game, looking for stocks to buy, selling, making a profit, talking about it, that kind of thing,” Richards says. “The major goal is to make money, but you have to recognize that the other factor is there.”
VICKI HAHN, 43
Years Investing: Two with an investment club, one with personal funds
Breakdown: 70% stocks, 20% 401(k) plan, 10% cash
If Vicki Hahn had a spare $50,000 lying around the bank, she would probably buy an apartment building or two. But her investment capital comes in chunks closer to $1,000, so she plays the stock market instead.
And she plays it with boldness and daring.
About 70% of her personal investments are in stocks, where over the long haul she figures she’ll make the most income off her money, with the sole exception of real estate.
“While 70% is aggressive, it’s also going to be my retirement,” says Hahn, a 43-year-old real estate agent from Irvine. “As I get older, I would probably tend to have less in stocks. It’s too bad that most people investing are older. You really have to start young to make a lot of money in the stock market.”
Of the remaining money, 20% goes into her husband’s 401(k) plan--into the plan’s most conservative income fund available at that. The rest is in cash.
“My husband is as conservative as I am not,” she says. “I’m aggressive, but then, I’m in my early 40s, and I can afford to be aggressive.”
Hahn may be young now, but when she thinks about the 1990s, she thinks about getting old. And she’s thrilled.
No, she doesn’t have a death wish, and she has indeed reached the age of reason. Hahn is a founding member of Wall Street Women, an all-woman investment club that actively analyzes how changes brought by the coming decade can make its 14 members wealthier and wiser.
“We’re going to look a little bit more at demographics in the 1990s,” Hahn says. “Because there are all these baby boomers getting older, we’re going to be buying more drug research companies.”
The reasoning behind the group’s investment strategy is simple, she says: “So many of us are getting old that those companies will be making much more money in the future.”
Demographic decision-making is a switch for the Wall Street Women. When they picked up their first stock tables in August, 1987, they were looking for strong companies with known histories--stocks such as Anheuser-Busch and Nordstrom.
They made their first purchase in September, 1987--about $1,000 worth of Liz Claiborne and Nordstrom shares. A month later, they learned some fundamental investment lessons at the hands of the stock market crash.
“Together, the stocks went down 33% the month after we bought them,” Hahn says. “We bought Liz Claiborne at $30. It went down to $12. So we bought three times as much. There were some investors who bought Liz at $30 and sold at $12.”
The point is one she has taken to heart: “Individual investors . . . shouldn’t panic.”
JACK A. BRILL, 58
Years Investing: 20
Breakdown: 40% mixed-asset mutual funds, 40% bond funds, 20% real estate
To those who contend that ethics and investment don’t mix, Jack A. Brill has only one thing to say:
“You can be a power in the marketplace and a power for peace. You can use the American system to profit without guessing who’s going to be a takeover candidate, without ripping apart a company . . . without laying people off.”
It’s called socially responsible investing, and Brill is its slightly breathless, wholehearted advocate. The 58-year-old former engineer from San Diego puts his own investment money where his heart is. In his past six years as a broker, he has been helping clients to profit without plundering their own codes of conduct.
Brill’s personal politics are peaceful, and he wants to make sure that his investment dollars don’t go to benefit a company that makes tanks or bombs or computer systems for the Defense Department. But he wants a good return at the same time.
He’s found just the investment: a managed growth portfolio that is a fiscally conservative mutual fund and places his money in companies that are non-polluting, non-defense-related, non-discriminatory employers, among other liberal attributes.
And through his work as a broker at First Affirmative Financial Network, he does the same for others. For a client who lost a lung to cancer, no investments are made in tobacco companies. For a recovering alcoholic, no money is put into liquor companies.
“Nobody suffers because of social screening,” Brill says. “The managed growth portfolio returned approximately 13% per year since its inception in 1982. . . . I’m very excited about the kinds of returns we can get.”
About 40% of his own investment capital is tied up in this managed growth portfolio and other screened mutual funds. Another 40% goes into bond funds. The rest is in real estate.
“I’m very conservative,” says Brill. “As a socially responsible investment and financial planner, I am personally not trying to catch highs and lows, and swing in and out and play the market. For my own portfolio, I have zeroed in at 12% to 14% real growth per year.”
Brill’s view of investing for the next decade counts on making money and doing good at the same time--activities that were much more difficult to wed in the early 1980s.
“About five years ago, there were just a couple of mutual funds, and they were not fully screened on nuclear power, war, equal opportunity for all minorities, environmental issues,” he says. “Today, we do that and also screen on apartheid and other repressive regimes.”
The result, he says, is peace and plenty.
