Friday, March 06, 2009
As noted here often before, there are many things to like and dislike about the nation's number one personal finance magazine, but their unwavering dedication to stocks as the only important asset class certainly falls into the latter category.
Given their propensity for equities, it's natural to wonder just how they are coping over there these days, given that, over the last 18 months, we've experienced the biggest stock market decline since the Great Depression and, unfortunately, we're not done yet.
After noticing the change in tone for recent Money Magazine covers, that is, since late last year when all four wheels flew off of the world-wide financial system, it occurred to me that it might be an interesting little exercise to see how these covers have changed over the last year and a half. The latest issue is shown to the right.
Just what sort of transformation has occurred, if any, as the writers and editors endured these tumultuous times? Without a doubt, they have had to become less certain of their long-standing asset allocation preferences and, surely, they've heard more than an earful from loyal subscribers who have followed their advice, only to witness their retirement dreams slip away.
Can anyone really "rescue" their retirement today?
To find out how dramatically things have changed, all you have to do is turn back the clock and look at the cover from the S&P500 peak in the fall of 2007. Back then, there was nothing in need of rescuing - it was just a matter of how RICH we'd all be and how best to get there.
The font on the word RICH is slightly smaller but, in November, there's no question about where we're all headed.
In December, things are looking a little precarious, as if a major top in equity markets had just been completed. The word RICH is still there on the cover, but now it's a tiny little thing.
It's a new year - 2008 - and, oddly, October's headline "Roadmap to a rich life" is just below the magazine title for some reason. Hmmm...
There it is again in the February issue - the word "safe" in big bold type as in "Your Safest Investment Now". As it turns out, those investments weren't very safe at all.
Well, here comes the March issue and the Bear Stearns crisis is set to unfold. Equity markets are only down about ten percent so far, but people are starting to whisper "bear market".
In the April issue, the bad stuff had already started and the economy had turned "mean" as commodity prices soared, but equity markets were still hanging in there.
Time for a short break from the market driven covers - some top 100 lists to peruse. At this point, many thought that the stock market was recovering, but, as it turns out, it was just the oil companies setting themselves up for a fall.
As the May issue hit the stands, everyone was thinking about how they were going to pay for gasoline over the summer and equity markets begin to stumble.
With the July issue, the stage was being set for a sequence of event that would change the world forever. Crude oil was headed to $147 and then to $47 and people were getting really worked up about inflation.
It's summer time - a month for happy magazine covers about idylic places to live. Equity markets are still hanging tough, above "bear market" territory, but that would not last long.
The kids are about to go back to school and the stock market has now turned into a "bear market". People are still worried about the safety of their money.
Now the really bad stuff starts to happen, but not much of it made it into the October issue due to their publishing schedule. Ironically, there's another cover story on taxes (in October?) and retiring rich remains a viable option for some.
The November issue hit the newsstands in October, so it had all the post-Lehman Brothers market mayhem in a special report - that's a lot of questions there on the cover.
In December, the questions get even more dire. "Can I ever retire?" is something that millions of Americans have asked themselves over the last six months. Unfortunately, here too, there are no good answers.
After the worst few months for stocks since the Great Depression, equity markets continue to tumble and readers are tempted with ideas about how to "get your money back".
Hope for the new Obama administration runs high in the February issue with hope for a better economy about all that is left.
All of this brings us full circle to the March 2009 issue that talks about rescuing your retirement. In the span of 18 months, the Money Magazine editors went from RICH in monstrous fonts with people happily riding horses to this dismal broken nest egg image, all the while never wavering from their advice to buy-and-hold U.S. stocks - all the way from 1,500 down to below 700.