Money Observer, the respected financial publication owned by interactive investor, the UK’s second largest investment platform, turns 40 in October.
When it was first published, Margaret Thatcher had come to power months previously, Franco's era in Spain had ended only four years earlier and the UK had just three television channels.
The Falklands War, the fall of the Berlin War and a plethora of economic booms and busts later, and Money Observer is still going strong – a milestone 40 years on.
Building societies dominate the first edition
The Money Observer, as it was then entitled, was launched in 1979 as a quarterly supplement published by The Observer. It sounds surprising these days, but the cover story for the inaugural edition was a round-up of building society interest rates. However, at that time the average savings account paid a meaty 17% interest, boosted by Margaret Thatcher's strategy of raising rates to combat 13% inflation.
Four decades and only three editors down the line, the magazine's focus has evolved with the times to focus increasingly on funds and investment trusts, as these have gained traction and significance for a wider cross-section of investors over the years – but also on pension-related stories as investors have been pushed steadily towards taking personal responsibility for their retirement income.
Over the years, Money Observer has also exposed a number of crooks trying to peddle exotic investments including carbon credits, forestry, farmland, property developments, storage units, renewable energy and biofuels. Some were making wildly inflated claims about bad investments; others did not exist at all.
To mark its milestone anniversary, Money Observer has produced a bumper issue complete with a fresh look for the magazine. The anniversary issue, currently on newsstands in WH Smiths and all good newsagents, features plenty of special editorial content along with the usual slew of news, features and investment data.
Faith Glasgow, Editor, Money Observer, said: "Our editorial content continues to inspire, guide and entertain our readers.
"With the big 4-0 fast approaching, we thought it was a good opportunity to give the magazine a facelift to ensure it is looking trim, well-honed and elegant as it heads for middle-age. The aim was to make it an easier read, so we've introduced more infographics, made the pages less dense textually and generally tried to declutter.
"Who knows what the future holds for the investment landscape, but we aim to continue to produce top quality content for our readers for many more years to come."
Richard Wilson, Chief Executive Officer, interactive investor, said: "We are thrilled to be celebrating the 40th anniversary of Money Observer. While the brand and the magazine has evolved with the changing times, its core tenet of providing its readers with useful and practical guidance to help improve their financial position remains.
"The fact that Money Observer is still going strong 40 years since launch, with proudly independent editorial content, is testament to the quality of the content underpinned by award-winning journalism. Only this week, Money Observer Deputy Editor Kyle Caldwell was awarded 'Best Consumer Journalist' at the Association of Investment Companies annual media awards."
Comment from one of Money Observer's longest subscribers:
John Roach, a Money Observer reader since 1989, says: "I started taking the Money Observer in 1989. This time also coalesced with a movement from employment to self-employment plus marriage and three young children. It's interesting that everyone talks about the move into your forties as being life-changing but in my opinion it's the move into your thirties instead. At 30 you begin to take on responsibilities, you start to think of your own position in the world and even your own mortality; in other words, you start to worry.
"Mainly with the help of Money Observer, though with occasional extra IFA scrutiny, I've managed my finances for nearly 30 years.
"I'm now into my 60s, have sold my business and became employed again, whilst working part-time. I've used Money Observer to help develop a healthy pension pot, a gradually increasing stock of shares and investment trusts, some rental properties both residential and commercial and (still) some rainy-day savings.
"I may have been able to do this alone, maybe not. But using Money Observer, I have confidently and slowly amassed a differentiated series of assets to ensure a comfortable move into older age."
40 years of financial and economic highs and lows
October 1979 – Money Observer launches
The 1979 energy crisis
Iranian Revolution's impact on oil supply meant prices doubled in a year.
On 5 July 1979 president Carter abruptly canned plans to address the US on the crisis and went fishing. Rumours swirled – OPEC had a secret plan; Brezhnev was not dead but hiding.
1980 was marked by rocketing inflation worldwide.
In the UK it peaked at 22% following the Winter of Discontent. But in Argentina an increase of 300% a year 1975-1990 meant restaurant prices changed from the time a dish was ordered to the time it was eaten.
Thatcher revs up her privatisation plan, partly to suppress wages & inflation. British Aerospace is followed by Jaguar, Rolls, BG, BT & 40 other enterprises.
The public love the Tell Sid campaigns (BG) & the easy bucks. Shareholder numbers explode from three million to 15 million.
1982 Falklands War
The Falklands war is often seen as helping Thatcher win the election but her big battles were already won. Union membership had dived and Norman Tebbit was rewriting employment law while unemployment hit 11%, causing the Iron Lady to declare she was not for turning.
Back when a Budget might include pleasant surprises, chancellor Geoffrey Howe raised personal allowances by 14% & cut employers' NI surcharge from 1.5 to 1% & corporation tax on small businesses from 40% to 38%.
Duties on beer & fags rose by just 1p and 3p respectively.
1984 Hard-selling rife
Heyday of hard-selling. Advisers often pocketed first two years' premiums as commission.
Best example: Porchester Group led by Trevor Deaves, who owned 19 Ferraris and burned £50 notes in front of his 700 sales staff as incentive. Deaves lost his license in 1999.
1985 Pensions revaluation
Apart from Live Aid and Sinclair C5s, 1985 saw Social Security Act introduce revaluation to deferred pensions in excess of Guaranteed Min Pension to prevent inflation diminishing them. Unintended impact: final salary schemes became too expensive to run
1986 Personal pension mis-selling
1986 Financial Services Act allowed workers to leave employer's pension. Commission-driven advisers convinced over 1 million to ditch final salary schemes and take out personal pensions based on market returns.
Royal & Sun Alliance alone was fined £1.35 million.
1987 Storm and crash
The Great Storm ravaged southern England on 16 October, with 115mph winds destroying six of Sevenoaks' seven great oaks & the reputation of weatherman Michael Fish.
Markets crashed the next Monday. By 9:30, FTSE 100 was down 136 points, with program trading blamed.
Comedian Harry Enfield invented Loadsamoney character for Saturday Night Live.
The loud-mouthed plasterer was on TV for just 20 minutes (two minutes a week for 10 weeks), yet his single reached No 4 in charts in April 1988. Even Thatcher mentioned him in Parliament.
1989 Housing boom
The housing slump of 1989 was largely caused by interest rates of nearly 15%. Greater London average house prices fell 28% from the 1989 peak to 1993 (Halifax Price Index). 250,000 homes were repossessed and many borrowers in negative equity threw in their keys.
1990 Japanese bubble
The messiest bubble of all time burst in Japan. 1985-1989, the Nikkei tripled to 39,000 on p/e of 60. The lunacy was reflected in 20 golf clubs costing $1m to join. Over the next decade the Nikkei lost 80% and at 21,616 now has never made up the lost ground.
Remember John Major's Tessa - Tax Exempt Special Savings Account, designed as low-risk sister to the Personal Equity Plan. You could invest up to £9k over five years.
They were replaced in 1999 by Individual Savings Accounts, with initial total subscription limited to £7k.
In 1992 Britain was forced to leave the European exchange rate mechanism, despite John Major's attempts to prop up the pound by buying £ billions of FX reserves & raising rates to 10%.
George Soros had built up a huge short position in sterling and sold it at a profit of $1 billion.
1993 State pension equalisation
The equalisation of State Pension Age to 65 was announced in Budget of '93. Age will now rise to 68 between 2037 and 2039. The Treasury has saved £4.2 billion on women aged 60-62, and gained £900 million in tax as they work longer, but Gov Actuary says fund will run out in 14 years. Means-testing next.
1994 Channel Tunnel
The Channel Tunnel, opened by the Queen in May '94, cost £9 billion, of which £770 million was raised by public share offer. It caught fire twice: on the eve of gaining its operating certificate, and when a group of journalists had been invited aboard to demonstrate its safety.
1995 Amazon founded
From Jeff Bezos' Seattle garage in 1995, Amazon went on to revolutionise shopping and now sells 65% of all e-books. Although Bezos rarely screws up, his 2013 plan for drone deliveries within 10 miles of base was ridiculed, but commercial drones are now a £79 billion industry.
1996 Berkshire Hathaway
Berkshire Hathaway, the most lauded investment in history, opened up to retail investors in May 1996 by giving existing Class A shareholders the right to convert each share into 30 shares of a new Class B stock. At the time, an A-share cost $30,000. They're now worth $315,000.
1997 Asian crisis
The Asian crisis of 1997 began when Thailand abandoned its fixed exchange rate against the dollar, citing lack of FX resources. Billions of speculation in the Asian Tiger economies was quickly reversed, and the IMF stepped in with humiliating bailout packages.
1998 BlackRock established
The world's largest asset manager BlackRock was founded in New York by Larry Fink, and now manages $6.52trn. That's nearly 3 times the UK's GDP. Its biggest rival is Vanguard – together they'll manage $20trn by 2025.
ISAs replaced Peps & Tessas in 1999, with a limit of £7,000pa, rising to £20,000 from 2017/18. The ISA millionaire club reportedly has around 1000 members.
2000 Dot.com bubble
In 2000, investors went mad for internet start-ups that often had no proprietary tech, spent fortunes on promotion & typically crashed within a year. Super Bowl showed 14 dot.com adverts at $2.2 million each, including Pets.com which lost $147 milliom & Lastminute.com which lost £54 million.
2001- BRIC coined
BRIC, an acronym for Brazil, Russia, India & China, was coined by Goldman's Jim O'Neill in 2001 amid much enthusiasm about their growth prospects. The term has fallen into disuse, as these countries are not at the same stage of economic development and don't grow uniformly.
2002 Equitable Life
It started with a catchline – It's an Equitable Life, Henry – but there was no fairness in Equitable Life's collapse from selling with-profits plans with bonuses it couldn't afford. 2002 marked a low point: chairman Vanni Treves thought to sue govt for inadequate regulation.
2004 Pensions Act 2004
The 2004 Pensions Act aimed to strengthen the security of occupational pension schemes, but placed a huge burden on sponsors, who after all had offered these benefits voluntarily.
2005 PPF set up
The Pension Protection Fund was set up in 2005 to pay pensions to people whose employer schemes fail. Although well run, it has a growing deficit of £51.7 billion. How long can it hold out? Mercer research shows 73% of schemes are cashflow negative & selling assets to meet outgoings.
2006 Hutton reforms
In 2006, Britain finally repaid the Anglo-American Loan - $3.75 billion given to Britain to support overseas spending in the post-war years. But it would have been useful to pay for Labour's welfare reforms which, along with auto-enrolment, were hatched by Lord Hutton that year.
2007 Northern Rock debacle
Northern Rock asked the BoE for a bailout in 2007, after its backers pulled out over its sub-prime exposure. It offered mortgages based on 6x salary, 120% loan to property value & self-certification. Rock shares fell 32% as thousands queued at branches to withdraw their cash.
2008 The credit crisis
On 15 Sept 2008, Lehman Brothers filed for bankruptcy, starting a global downturn. The Dow fell 4.5%, its worst day drop since 9/11. The bank held 30 times more in sub-prime loans than it had capital, while CEO Dick Fuld sent his chief risk officer out of board meetings.
2010 Deepwater oil spill
The Deepwater Horizon oil rig explosion in 2010 killed 11 & caused the biggest ever environmental disaster in the US. That very day, BP and Transocean bigwigs were on board to celebrate their safety record. BP's bill topped $65 billion & the Gulf seafood industry has never recovered.
2011 Waspi campaign
Women Against State Pension Inequality campaigns against equalisation of state pension age being accelerated so that some women wait 6 years longer to collect it. In 2011, Waspi's petition got 117,716 signatures prompting a Commons debate, which fell on deaf ears.
2012 Eurozone near collapse
In 2012, Mario Draghi's ‘whatever it takes' remark calmed a eurozone verging on collapse amid member bailouts. What if the press had instead focused on the disquieting analogy in his speech, comparing the euro to a bumblebee that “shouldn't fly but instead it does?”
2013 FANG stocks
FANG, the acronym for the tech stocks Facebook, Amazon, Netflix & Google that would swiftly change the world, was coined by Jim Cramer in 2013. Facebook for example would later buy WhatsApp, all but ending the concept of texting. FANG stocks gained 691% in the next five years.
2014 QE ends
2014 marked the end of Quantative Easing, as the Fed tapered its bond purchases. Over the five years of the Great Experiment, the rich got richer as a result of bubbles in markets such as bonds and equities, encouraging disaffection with the establishment and the rise of populism.
2015 Pension freedoms
The pension freedoms of 2015 allowed people to take their pension at age 55, and instead of buying an annuity do whatever they liked with it. Although few splurged on Lamborghinis, the Treasury gained £1.5 billion in extra tax receipts that year, pushing the problem on to future governments.
2016 Flat rate pension
The new 'flat-rate' state pension was launched, but confused people because it is not flat rate at all & now requires a 35-year National Insurance record. A full state pension in Britain is worth 29% of average earnings, the lowest in the developed world, even smaller than Mexico's.
2017 Article 50
In March 2017 the UK served Article 50 on the EU after 44 years as a member.
There is much resentment about boardroom pay when the CFA reported salaries of FTSE 350 CEOs have risen 82% in 13 years.
In the 1950s, a CEO made 20x the wages of an average worker; now it's 361 times more.
2018 Trade wars
China and the US became embroiled in a trade war that has sent stock markets gyrating ever since. It's a battle for global economic and technological dominance, reflecting the rise of populism, isolationism, nationalism and protectionism almost everywhere in the world.
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