INVESTMENT OUTLOOK : MANAGING THE NEW CHOICES : A Light Look at New Strategies
In the 1980s, we had “Megatrends,” the John Naisbitt doctrine of “10 New Directions Transforming Our Lives.”
The person who made money during the decade jumped on these trends--either that, or was tipped off to the takeover bids for Unocal, Phillips Petroleum and Lorimar-Telepictures.
Making money in the 1990s will be more uncertain. The bull is tired. Junk resembles its name. So here are five megatrends to keep in mind and how you can take advantage of them.
Trumpization
Donald Trump will continue his spending spree well into the 1990s.
More importantly, Trump will keep naming everything after himself (as if Trump Castle, Trump Plaza, Trump Princess, Trump Tower, Trump Shuttle and a board game aren’t enough).
Investment Strategy: Copyright as many Trump-related names as possible.
When it comes time for him to name something after himself, you’ll have the rights and can claim that you are entitled to an out-of-court settlement.
Try restaurants (“McTrumps” and “The Art of the Meal”), motel chains (“Trump’s Quality Inns”) and names of firms that will allow him to put his name in front of a lot of others such as “Trump Shearson Lehman Hutton” or “Pep Boys (Donald, Manny, Moe and Jack).”
Theory ZZZZ
In the business book of the 1980s, companies were glorified (“In Search of Excellence”), and chief executives glorified themselves (Lee A. Iacocca, T. Boone Pickens Jr., Victor Kiam II, Armand Hammer and Allen H. Neuharth). Sometimes one book wasn’t enough (as in the case of Iacocca and Hammer).
As the decade closes, companies and executives are increasingly being trashed in the bookstores. Witness “The Predators’ Ball” about Drexel Burnham Lambert and books on convicted inside trader Dennis B. Levine and carpet-cleaning crook Barry Minkow. The man in the pinstripe suit now wears prison stripes.
Investment Strategy: Become pen pals with Ivan F. Boesky. Try to get his book rights before he’s paroled.
Consultitis
The 1980s were halcyon days for consultants. Businesses paid billions to be led by the hand and focus-grouped through such topics as whom to hire, how to get rid of deadbeats, how to be ethical, how to say “the press release speaks for itself” to reporters, how to be nice to workers and how to keep desks clean.
Expect the trend to continue into the 1990s. The downside risk is that businesses may start questioning whether they really need all these consultants.
Investment Strategy: Start a consulting business for consultants. Teach them how to grow a global business while sticking to the knitting, to downsize while staying close to the customer and how to be entrepreneurial by creating win-win situations in niches without changing corporate culture. Then take the $300 an hour you save on consultants’ fees and put it into Treasury bills.
Zero-Based Budgeting
This term was coined in the Carter Administration. Give yourself credit if you come close to remembering what it meant.
In the 1990s, zero-based budgeting will take on an entirely new meaning. The idea stems from a proposal considered earlier this year in Japan to slice a zero or two off the currency, something some Third World countries have tried before. The basic theory is that it’s hard to justify spending a couple of hundred of anything for a Big Mac.
Look for the idea to catch on in the United States later in the decade. Lopping off even one zero would have a huge impact.
Who would be upset if the savings and loan fiasco costs $100 for every man, woman and child in the country instead of $1,000? And a $25-billion acquisition by KKRRJR would hardly cause waves on Wall Street if it were only for $2.5 billion. Lopping a zero off a $150-billion budget deficit would do more than Gramm and Rudman did.
The most positive impact of lopping off a zero or two would be to bring some sense of reality back to Monopoly. In Atlantic City, one hotel is costing $1 billion to build. In Monopoly, they go for $1,000 or less.
Investment Strategy: Hold off building on Boardwalk, Park Place, Pennsylvania, North Carolina and Pacific.
Name Gimmicks
Credit NeXT Inc. and founder SteVE JoBS for pretentiously breaking the rules of capitalization.
What nExt? There will be no capital shortage in the 1990s. Look for AppLE, MicrosoFT and Sun MicrosysteMS to follow.
Investment Strategy: Copyright the name “TruMP.”
