What was the stock trading environment like in 70's-80's?

Reply Sat 20 Nov, 2010 01:33 am
With all the super active, high frequency trading/day trading that’s going on in the markets today, I’m curious to know what the trading environment was like back in the 70’s & 80’s when you had to phone in to your broker, before the fast executions and high speed computers. Specifically, what were trading stocks like back then? How long were trades held? Where there day traders? How active was trading during the day?

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cicerone imposter
Reply Sat 20 Nov, 2010 12:02 pm
It was the best of times, and the worst of times for day-traders. It was the best of times for some of us who started saving for our retirement, but investment houses like Prudential charged an arm and a leg to hold our investments - even while stock performance was terrible. This taught me one important lesson; there isn't anybody "out there" who is interested in your financial security more than yourself. All they want is the fees from your portfolio. This was a time when my best friend day-traded, and he bragged about how he was worth over one million dollars, while our investments were considered conservative, and struggled along. Many years later, I learned that the majority of day-traders lose money, and those who made money barely paid for the cost of doing their trades. That was lesson number two.

Our retirement investments grew 500% during that two decade period, so we were on our way. I told my wife early in our marriage that we were going to invest 15% to 20% of our earnings into our retirement fund, and we stuck to this for most of our working life.

We are not rich, but comfortable now. Many lost 40% of their investment in 2008, but my wife and I lost less than half that.

I started withdrawing from my retirement funds in 1998 when I retired. I also consolidated all of our investments into Vanguard Funds, and sold our income property, because I didn't want to manage anything after retirement.

I still putter around with our investments, but I told my wife two years ago that she needed to manage her own investments, because I'm not going to be around forever. I've shifted more of our investments into bonds before the 2008 crash, and increased the ratio ever since in my portfolio. Our intermediate bond funds YTD gain is over 13%.

When I think our economy will begin to hire back the unemployed folks, and before we see more improvement in the world economy, I plan to shift my bonds back into a higher ratio of equities. That's when I believe inflation will be much higher along with interest rates, and the price of bonds will shrink. That period is a long time ahead of us.
Reply Sat 20 Nov, 2010 02:24 pm
@cicerone imposter,
Oh yeah, the fees. Boy, you had to make huge investments, or pick nothing but big winners to come out ahead of brokerage fees if you were buying individual stocks. A stock move that would be considered a big deal for a hedge fund wouldn't have been enough to clear the brokerage fees in those days.
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Reply Sat 20 Nov, 2010 02:27 pm
Several large corporations had begun, then, in fact, to offer their shares for direct sale to the public, precisely because of that. Not that many, though.
Reply Sat 20 Nov, 2010 02:32 pm
I didn't know that, though many companies did offer shares to employees with little or no commission. Some also permitted dividends to be applied to new share purchases without charge. I think it was to their advantage because it encouraged to 'buy and hold'.
cicerone imposter
Reply Sat 20 Nov, 2010 04:04 pm
That is the best investment strategy; let dividends and appreciation accumulate over the long term to effect the multiplier asset accumulation until retirement. Nobody can guess the daily/weekly/monthly flucutations of the market, but the long-term has always produced net increases. That's lesson number three.
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