→ Module 2 The Ultimate 1980s Investing Strategy

The Ultimate 1980s Investing Strategy: A Step-by-Step Guide

The 1980s were a golden era for investors—bull markets, deregulation, and the rise of new technologies. If you could time-travel back with this manual, you’d outperform most Wall Street pros. Here’s exactly how to invest like it’s 1985, using only the tools available at the time.

Step 1: Understand the 1980s Market Landscape

Key Economic Drivers

Reaganomics – Tax cuts + deregulation fueled growth
Falling inflation (from 13.5% in 1980 to 4% by 1988)
Interest rates declined (Fed funds rate dropped from 20% to ~9%)
Japan’s rise – U.S. vs. Japan trade wars (autos, semiconductors)
Black Monday (1987) – One-day 22% crash (buying opportunity)

Available Tools for Investors

Newspapers: Wall Street Journal, Investor’s Business Daily (launched 1984)
TV: CNBC (founded 1989), Wall Street Week (PBS)
Brokerage reports: Merrill Lynch, Salomon Brothers
Early computers: Bloomberg Terminal (1982), Quotron (stock quotes)

Step 2: Pick the Right Investment Style

A. The “Corporate Raider” Strategy (LBOs & Takeovers)

Hostile takeovers and leveraged buyouts (LBOs) created huge gains.

Targets: Undervalued companies with strong cash flows.
Key Players:

Carl Icahn (TWA, Texaco)
T. Boone Pickens (Gulf Oil)
KKR (RJR Nabisco – biggest LBO ever)

How to Play It:

Find companies trading below book value.
Watch for “greenmail” (buyouts forcing price spikes).

B. Tech Boom (PC Revolution)

Winners:

Microsoft (IPO 1986)
Intel (386 processor in 1985)
Apple (Macintosh 1984)

Strategy: Buy and hold (tech was just getting started).

C. Consumer Brands (Yuppie Boom)

Coca-Cola (New Coke flop → classic rebound)
Nike (Air Jordans, 1985)
Disney (Michael Eisner turnaround)

D. Japanese Market Mania (Late 80s Bubble)

Top Picks: Sony, Toyota, Mitsubishi

Warning: Bubble peaked in 1989 (Nikkei 225 hit 38,915).

Step 3: Research Like a 1980s Investor

1. Read These Sources

Wall Street Journal (daily must-read)
Forbes (lists of top companies)
Value Line (stock ratings)

2. Screen Stocks Manually

Look for:

P/E < 15
Revenue growth > 10%
Low debt (<30%)

3. Call Your Broker for Hot Tips

Full-service brokers had access to insider research.

Ask: "What’s the next takeover target?"

Step 4: Execute Trades (1980s Style)

How Trading Worked

Call broker – “Buy 500 shares of Intel at market.”
Floor trader executes – Still some open outcry.
Confirmation slip – Mailed in 3 days.

Costs & Considerations

Commissions: ~$50 per trade (discount brokers like Charles Schwab emerged).
Settlement: T+3 (faster than 1970s).
No online trading: All done via phone.

Step 5: Manage Risk (1980s Rules)

1. Diversify

30% Tech (Intel, Microsoft)
30% Consumer (Coke, Disney)
20% Finance (American Express)
20% Energy (Exxon)

2. Use Stop-Losses (New in the 80s!)

Tell broker: "Sell if Microsoft drops 15%."

3. Hedge with Bonds

10-year Treasuries yielded ~10% (safe income).

Step 6: Monitor & Adjust

Quarterly Checklist

Read 10-Q reports (mailed to you).
Watch Wall Street Week for macro trends.
Rebalance if tech grows too fast.

When to Sell

Company misses earnings 2 quarters in a row.
Stock doubles in <1 year (take profits).

Final Thoughts: Could This Work Today?

Many 1980s strategies still apply:

Buying tech disruptors (like AI stocks today)
M&A plays (still happen with undervalued firms)
Consumer trends (e.g., Tesla as the new Nike)

Modern Twist: Use algorithms to screen for LBO targets faster.

Top 10 Stocks to Own in the 1980s

Stock	Sector	Why It Worked
Microsoft	Tech	PC revolution
Intel	Semis	386 chip dominance
Walmart	Retail	Superstore boom
Coca-Cola	Beverage	Global expansion
Disney	Media	Eisner turnaround
American Express	Finance	Yuppie spending
GE	Industrial	Jack Welch era
Exxon	Energy	Oil recovery
Nike	Apparel	Jordan effect
Sony	Electronics	Walkman craze

The 1980s rewarded bold investors who bet on tech, takeovers, and consumer trends. By following this manual—focusing on growth sectors, leveraging broker insights, and managing risk—you could have ridden the bull market to riches.