When I started writing about the changing ways Americans spent their time a few years ago, I ordered boxes full of old Good Housekeeping magazines. Now that I’m writing about how we earn and spend our money, I’m working my way through a pile of old Money, Fortune and Forbes issues (btw, I use Past Paper, a small company out in the Lancaster PA area for all my old magazines, and have been impressed with their selection).
What have I learned from a special 1988 “extra” edition of Money on the “100 Best investments for the 1990s?” Basically, that human nature doesn’t change, and no one can predict the future. Even people who seem to make their living doing this.
In general, the tone of Money was right — following the great stock market crash of October 1987, it was inevitable that a recession would come at some point. And it did, in 1990. In general, Money thought it would be a mild recession, and that the US economy was poised to grow in the 1990s.
But this general correctness covers a host of funny quotes. For instance, the bears are always among us. James Dale Davidson, co-publisher of Strategic Investment told Money that in the 1990s, “We are going to see not only a recession, but a depression not unlike the one the country went through in the 1930s.”
As it turned out, the Dow ran with the bulls for the entire 1990s. Money predicted that the Dow would hit 3000 in the early 90s and “At least one market watcher, economist A. Gary Shilling, predicts that the Dow could rise from there to 5000 or 6000 before the end of the decade.” Gary must have really felt he was putting himself out there with that prediction, but the reality, of course, is that the Dow closed at 11,497 on December 31, 1999.
It wasn’t just stock prices that people tried to predict. One of the fun parts of forecasting is to guess what people will think and feel in the future. The problem with this is that we tend to believe we’ll be better than we are now, though much of human history has not seemed to warrant this. For instance, on the heels of the 1987 crash, Michael Metz, chief market analyst for Oppenheimer & Co., told Money that “The period of great permissive spending, the narcissism, the idea that you could speculate in stocks without risk — that’s all over now.” Um, yeah.
Money, likewise, assured readers that we would all now be more sober and austere. “Fortunately, a massive, economy wide shift from consumption to saving may already be under way,” the editors noted. If it was under way, it immediately stopped, as the personal savings rate dipped into negative category before the recent recession.
But most humorous were the attempts to predict our future preferences. Tired of the over-the-top food of the 1980s, one food industry insider predicted that people would go back to steak and potatoes. In an article on this, Marlys Harris wrote that “We ate it all in the ’80s, and there’s nothing new under the sun-dried tomatoes, with one possible exception: the neglected cookery of the Soviet Union. Glasnost will provide U.S. restaurateurs and cookbook authors with the only new major cuisine to exploit — glasnosh.”
Remember that? The great Russian food craze of the 1990s? Me neither. Must have slipped by me, along with that great depression — unless you think James Dale Davidson was right, but about 15 years early (which makes you wrong when it comes to buying stocks).
