4

I'm doing a school project on four fictional people who are about to retire in 2020 and have worked since 1975. Three of them consistently invested $1,000 per month (adjusted for inflation) into their stock portfolio while one person kept it in his bank account. Two of them stubbornly invested in two randomly picked stocks and stuck with them unless the company went bankrupt and the third one was more of a gambler.

The problem I'm facing is that I have no idea what kind of stocks someone would have invested in in the 70s. I can't use current stocks since that would be survivorship bias.

What would someone living in the 70s and onwards have realistically invested in? I need a set of about 50 stocks.

  • Possibly helpful: etfdb.com/history-of-the-s-and-p-500 – chili555 Nov 26 '19 at 14:38
  • The case of Ronald Read - the "millionaire janitor" - might provide some insight into what a long term US investor would have purchased back then. The very nice article at philosophicaleconomics.com/2015/02/janitor claims he was into "high-quality, dividend-paying U.S. equities ... AT&T, Bank of America, CVS, Deere, GM, GE, and so on" – timday Nov 26 '19 at 21:51
  • ...Sears Roebuck, Bethlehem Steel, Pennsylvania Rail Road... – Harper - Reinstate Monica Nov 26 '19 at 22:29
  • 1
    @user662852 Penn Central, there ya go. Two great names for the price of one. What could go wrong? – Harper - Reinstate Monica Nov 27 '19 at 8:57
  • 1
    depending on which stocks you pick there might be quite a bit of work involved. You'll have to track mergers or splits. The same company may have been acquired several times. – xyious Nov 27 '19 at 16:17
5

For the United States you can use the list of stocks that made up the Dow Jones Industrial average in the 1970's. That will be a list of 30 stocks, plus a few others if changes were made in the 1970's.

You could expand the list by looking at companies that are in the same sector. For example if one automaker was in the index you could use another automaker. You could also look at socks that were added in the 1980's or later but got started in the 1970's that could include Microsoft or Apple.

  • I feel like Microsoft and Apple is incredibly unfair to bank guy. But using index stocks is a great idea, thanks – user2741831 Nov 26 '19 at 13:50
  • 2
    @user2741831 Considering that neither of those were public in 1975, yes I'd say that's unfair :) – D Stanley Nov 26 '19 at 13:53
  • But Apple did in 1980 and read the question is that they might have made changes during the next few decades. – mhoran_psprep Nov 26 '19 at 13:57
  • I would maybe add one of them as a golden ticket (the user can re-randomize as often as he wants), but adding both just seams unrepresentative of stocks vs bank account – user2741831 Nov 26 '19 at 14:00
  • @user2741831 For a random twist, you could have the "gambler" getting in on the basement floor (price wise) of Apple, then happily selling as soon as his stock had tripled. – Michael Nov 26 '19 at 22:21
4

An important part of a research project is figuring out your methodology, and justifying it.

Money magazine was a personal finance magazine that was first published in 1972, so it should suit your research purposes well.

The stubborn investors could simply pick two stocks that were recommended from articles in the year 1975. The question becomes why two? I would use two very different criteria for picking stocks. For one, I might use Time magazine instead, and pick the two that have the highest article count from that year surveying a few different issues.

For the third one, I would pick some number of stocks from that year, and then reevaluate in subsequent years. Deciding on a time frame for reevaluation is kind of crucial.

If you are feeling ambitious, I would add other investor(s) that went the mutual fund route. Some might be stubborn, others re-balance using different asset allocations, others changing with the popular MF strategy every three to five years.

  • No, its a project about data visualisation. In hindsight I could have used something with more data readily available. Its just a Web App where a user can click a button, randomize the scenario and see how everyone was doing. Thanks for the magazine though. – user2741831 Nov 26 '19 at 14:02

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.