A few weeks ago we had a lot of memories about how the world has changed, but I don’t remember any posts about how investing has changed. This will be mind blowing for the younger investors.
How did you get quotes
Thirty-five years ago or so (1981), you didn’t get quotes on your smart-phone. There were no smart-phones.
Thirty-five years ago or so (1981), you didn’t get quotes on your PC. There were no PC’s.
So how did you get a quote? You looked at your morning newspaper which gave the high low and close for the day before, on the NYSE stocks and some of the Nasdaq type stocks.
If you wanted an intraday quote, you called your “stock-broker” at EF Hutton or Merrill Lynch, to give you a quote and then you could place a trade with him.
What about spreads? Spreads weren’t a penny apart like now. They were a quarter of a point or a half a point, so the brokerages could make more on each trade. (SEC finally ended that after a lot of crocodile tears from the brokerages that they’d go broke).
**And commissions?**Your broker’s job was to get you to trade so he could earn commissions for himself and the company. Commissions were HUGE by today’s standards. Fifty dollar minimums or some such, 1% or 2% on small trades and 0.5% or 0.75% on big trades. My memory may be faulty on the exact percentages). Has Schwab ended that.
How did you get information about stocks? Conference calls? No way! They were for the brokerage houses only. It was a monopoly of information. (Until the SEC mandated that they had to open them up to individual investors, but that wasn’t until the late 1990’s. I remember calling in to an early Amazon CC and being told “analysts only”. I called Investor Relations the next day and told them what they were doing was now illegal. They let me into the call the next quarter. Sometimes you need “big-government” to break a monopoly.)
You probably could get your broker to mail you the latest report by EF Hutton on the company you were interested in (maybe 4-6 months out of date). And you could get the company you wanted to invest in to mail you last years annual report. I’m not exaggerating. In the 80’s it really was that hard to get information about a company you wanted to invest in.
All true. And it was often the practice for brokers personally to load up on stock in some credible opportunity and then recommend it to the clients for the sole and deliberate purpose of withdrawing from the scene as the price rose.
We also didn’t have boards like this to share information. This board just may be the best resource I have found to date on sound investing with no bullcrap sales pitch putting motivation into question.
Based partly on this board I ended up with some LGIH and in a very short time it has become my best performing stock.
I am crushing my mutual fund RRSPs by several % points. Feels good!
Thanks Saul for being the leader of this awesome group, I just hope to become a more significant contributor at some point!
The Brokers loved to churn your portfolio. Gotta sell this and buy that… I still have year end statements from my broker from 83.
In looking in my current portfolio I still own ADP +2900%, GE -40%, DD +500% and MFST +1800% from the early 80’s and 90’s. Holding GE for lesson leaned “never to big to fail”. I have a few more I’ve held in a taxable account and have never sold because of capital gains. All pay a dividend so I don’t give them much attention because I don’t really see a company dropping 500% that has been in business for so long. In some cases my dividend per share is greater than the original cost per share.
Looking back, I sold a lot of stocks because of broker advice that should never been done. However, we didn’t have the likes of GOOG, NFLX, FB, AMAZ, APPL, and SKX back then, that are giving some great returns today. Thanks to the advice of people like Saul and services like Motley Fool.
Fifty years ago I would watch my dad read the stock prices in the daily paper and jot stuff down on index cards. I thought there could not be anything more boring in life than that. Maybe that’s why I arrived at investing so late in life, when my Mom said she could no longer keep up with it.
I bought 200 shares of AMZN on March 12, 1999 at $133 a share, paid .81% in commissions and fees, $215.14. I guess I didn’t like how it was going so I sold them on July 19, 1999 at $133 9/16 a share. Back then prices were not decimal but in eights and sometimes in sixteens. I paid $216.04 in taxes, commissions and fees. So while the stock was up I lost money, $318.68.
But that’s not the important lesson. Had I kept the shares they would be worth $290,000 today, 400 split adjusted shares. That’s 14.8% CAGR over 17 years. Nervous trading isn’t a good idea!
You might wonder how I dug up these old numbers. I was upgrading my Portfolio web-app and when I checked on my new AMZN position I forgot to enter the account number. The Portfolio web-app dutifully dug up all the AMZN trades I had ever recorded. I had long forgotten about that old not-so-smart trade. In 1999 this Portfolio web-app didn’t exist. When I created it I imported the data from my old FileMaker Pro database.
I try not to mention this often, yet it is at the heart of my investing experience/philosophy. I bought 200 shares of AMZN in 1997 at $24 per share and in the next two years or so, it split a total of 12:1 and gained in share price by very large numbers. I still own shares at a cost basis of $2 for a return of about 35,000% on those shares. I trimmed some in the years to come and it changed my life. That is why I am a long term investor. It was the first stock I bought on my own, after opening a TDA online account. I called my full service broker at Paine Webber and told her I did not need her services anymore. Few stocks have received as much negative noise as AMZN in those 18 years and I am most proud that I held through thick and thin.
I started work for the Post Office in 84, the biggest complaint that we received almost on a daily basis was “The Wall Street Journal”. It was delivered to us by a special carrier service that ran late most of the time. The customers wanted their journals in their p o boxes by 6:30 (it was rare for that to happen). Things haven’t changed much today, they still want the Wall Street early.
I try not to mention this often, yet it is at the heart of my investing experience/philosophy. – conifer
Great example, conifer!
I’ve taken the liberty of posting a few places with a link, urging people to read your post. That’s a great example of holding on instead of jumping from one good investment to the other (which is what I typically do). I need to develop more personal examples of what you’ve done, most of my big successes have been special situations where I get in and get out after the story is over. I have a few positions where I think I can hold for a long time, but nothing spectacular yet (6-bagger on PCLN is the best current one).
That brings back memories! I had completely forgotten this, but I was actually in an investment contest in Junior High. Must have been about 1989 or 1990? It was a regional (or state-wide?) contest with a few people from my school being mentored by a teacher sponsoring the program for our school. It was all using simulated money with a real money prize for the winner.
I don’t remember much about it anymore, but I do recall reading the newspaper every day to look up the stock quotes. Trades had a huge commission, but couldn’t tell you what it was. To make a trade, I filled out a form and my teacher called it in somewhere, which I assume was basically calling in to the “brokerage”. I did quite good, having gotten lucky with one of the stocks I picked. I wonder what it was and how I chose it?
Hmm, although I remember almost nothing of this, I wonder if some of the lessons I learned stuck and finally came out in my current investing philosophy?
Thanks, Rob. I have practiced investing patience to a large degree, and that is partly my natural way and partly due to the Gardner brothers’ message back in the day of ‘you can do this, buy and hold, ignore the headlines…’ which just made a ton of sense to me. I had the time to wait (looking out about 20 years before nearing retirement)and I’ve mostly lived within my means, spending on important things but not on keeping up with the Joneses. The early story told by David G. of going to Pennsylvania to review a stock portfolio that he was inheriting and seeing what time had accomplished always stuck with me. I always looked ahead when it came to stocks, and now the future is here
I started with a discount brokerage account in the late 1980’s. Trades were about $25 each, which was super-cheap compared to a full-service broker. I’d get stock prices with a touch tone phone, or from the paper, or by calling the broker if I was thinking about buying or selling. Even though it was a discount broker, they did get me in on an IPO once, Qwest, which was buying, among other things, my regional phone company (Northwestern Bell).
Funny story that hasn’t quite ended yet - in the late 90’s, foolishly (but not Foolishly) thinking that it was still 1962 and that a phone company was a stable utility that grew slowly and paid a stable dividend, I bought into Qwest’s DRIP. I had maybe 10 shares. I even had a physical certificate. Then they got bought by Century Link. I got one share of Century Link for my vast Qwest holdings, and several months ago I sold it back to them for maybe $30, as part of their “buy out the odd lot DRIP holders” program. Yet somehow, I just got another $.54 dividend check and discovered that I still have a share on their books. If I want to sell it through the company that’s holding this stock for them (Computershares), the commission would be about as much as the share is worth. I called them and asked how I could still own a share if they had bought me out, and they insisted that I was still a stockholder. They had some kind of complicated explanation that I didn’t bother following. Instead, I was trying to decide if it was possible that I could still be legitimately holding a share, calculating the loss from my original investment, and figuring that I had done my legal and moral duty and that it was OK to keep the share, since they were so insistent, and it would be crazy to mount a crusade to give back one share. Also weighing in on the decision is the fact that Century Link is my telephone company, and I have wasted too much time in my life dealing with their rotten customer service.
They’re willing to transfer that share to my current broker for free (or almost free), so I’ll probably do that, and then figure out what to do with it. Or maybe they’ll write to me in the future, and tell me that I had that share by mistake, and would I please return it.
Century Link… I guess as a telco stock it’s better than Frontier, but not as good as Verizon?
Guys - don’t know if it exists in the US but in the UK there is a charity that basically collects on trailing lots of odds and sods of shares (paper certs or otherwise). They are able to receive donations and amalgamate for their charity purposes and then distribute to their endeavors.
If you feel charitably minded you might want to try that. It has to be better than giving the value to the broker for no benefit.
Thanks for the idea. I could donate it to my alma mater, for that matter. I think Computershares can transfer the share at little or no cost, as opposed to the commission on a sale.
