Where the Experts Invest

They are worried too, but some havens are better than others

Ming vases? Antiques? Gold? Cattle? All can tumble out of favor and decline in price. So where is the perplexed American investor to park his extra cash and protect its value? Certainly not in a savings account. Had Phineas T. Barnum lived today, his famous dictum might well have been: There's a saver born every minute. In the inflationary 1970s, savers are suckers who stand to lose. If inflation should continue at February's 15.4% rate, every dollar put into a bank at 5 1/4% interest will become 91.4-c- in real money a year from now--and a lot less than that after taxes are paid on the interest.

The rich and the professional economic advisers are also puzzled about where to place their money. But, since they have more of it to worry about, they also tend to spend more time pondering ways to invest it. Here is what some of them are doing with their funds:

Nathan Cummings, 82, retired chairman, Consolidated Foods, Chicago. Having built his celebrated collection of more than 500 paintings and pieces of sculpture, he recommends art as an investment.

Counsels Cummings: "If the investor goes to a good dealer, doesn't look for bargains, buys good pictures and pays a proper price, I don't think he can lose." Cummings also buys stocks of companies but pays more attention to the quality of their managers than the size of their immediate profits. In both the stock market and the art market, he has a philosophy of buy and hold. Once he acquires shares, he hangs on because he believes that sound management will overcome the vicissitudes of the economy.

Reggie Jackson, 32, outfielder, New York Yankees. The baseball millionaire chooses to invest in "tangibles," including a Volkswagen dealership in Canoga Park, Calif., a condominium project in Reno, a twin-engine Beechcraft plane, and five antique cars. Jackson advises friends: "Start building a cash reserve. And then buy things, things you can touch."

Moreton Binn, 42, president of Atwood Richards, the nation's largest bartering firm, New York City. Binn is 32nd on a list of top-money-winning horse owners, and he puts much of his money into a 172-acre farm where he raises thoroughbreds. That is a costly business; prices for a good mare start at $25,000. So Binn advises smaller investors to get into breeding "on a partnership basis only."

Wayne Rogers, 44, actor. Even before Rogers became famous as Trapper John in the TV series M*A*S*H, he was boning up on finance and managing the money of his friends, Actors Peter Falk, James Caan and Jack Webb. In 1969, with those and other pals, he bought 2,500 acres of farm land in Paso Robles, Calif., for $750,000 and turned 500 acres into a vineyard that has become famous for its Merlot grapes. Future plans call for building a 40,000-case winery on the property. The land is now worth $7 million and that, Rogers says, "can make you a very interesting person to talk to at cocktail parties."

Edward Ball, 91, a senior trustee of the multimillion-dollar Alfred I. duPont estate, Jacksonville, Fla. Ball is investing his cash in what he calls "Florida sand and mud." Says he: "Real estate of almost any type is a good buy. There's only so much of it here, and there are more people every month."

Robert Nathan, 70, economic consultant, Washington. Nathan believes that "stocks and bonds are for the birds under current economic conditions. They are not adequate hedges against inflation. Land is the best." For investors who need income, Nathan suggests buying "real property--apartments, office buildings, things that offer a reasonable return and good appreciation." His own investments have been in farm land; one 270-acre spread in Maryland has quintupled in value in the 15 years that Nathan has had an interest in it.

Felix Rohatyn, 50, partner, Lazard Freres, New York City. He has made only one major investment in the past six months, a house on 2 1/2 acres in Southampton, N.Y. "If worse comes to worse, I can always plant some lettuce and corn and live off the land," he says. Rohatyn is filling his house with antiques because "what I paid $1,000 for this year, I probably could have bought for $300 two years ago, and probably would have to spend $2,000 for a year and a half from now." He also cites as a "spectacularly good investment" the Manhattan co-op apartment he bought two years ago that has since doubled in value.

Michael Halberstam, 46, cardiologist and author, Washington. Halberstam chooses real estate investments, largely because he regards his knowledge of stocks and bonds as "minuscule." But, he reasons, "I do know that the home I bought ten years ago has appreciated 300%. That is certainly not the case with the stocks in my mutual fund."

Paul Samuelson, 63, economist, Belmont, Mass. He points to studies going back to the 1920s to show that "putting money out at the shortest intervals has been the best hedge against inflation." So Samuelson recommends that investors place their cash in six-month certificates of deposit in savings banks; or in the money-market funds--open-ended mutual funds that invest in short-term securities such as certificates of deposit, commercial paper and Treasury bills--that offer check-writing privileges.

Alan Greenspan, 53, economist, New York City. "First plant cash in short-term CDs, and then plan what to do with it later. Move the money out only if you find better yields elsewhere."

Murray Weidenbaum, 52, economist, St. Louis. He has been putting his money into short-term securities like Treasury bills. When interest rates peak and start declining, he plans to shift into three-to-five year Treasury notes and perhaps municipal bonds to lock in the higher rates. Less than one-quarter of his assets are in stocks. Says Weidenbaum: "I have been the typical small investor who gets burned repeatedly. I have had a diversified portfolio of lemons."

Henry Bloch, 56, president, H & R Block of Kansas City. He invests in tax-free municipal bonds, as befits a tax expert in the lofty 70% bracket. Bloch points out that munis are safe, and enormously liquid, and they can be bought in denominations as low as $ 1,000.

William Sullivan, 63, vice president, the Pittston Co., Boston. Over the years, a large part of Sullivan's investable funds has gone to the New England Patriots, the professional football team he bought in 1959, and which did not begin to pay dividends until 1972. But he recommends that small investors sink their money into stocks. "Look at companies that have a record of good management, where you see recruiters grabbing off their people for top jobs," he suggests. Such raiding is a sign that a firm is soundly managed.

C. Peter McColough, 56, chairman, Xerox, Stamford, Conn. He compares the current period with the early 1950s, when stock price-earnings ratios were also low and shares, in retrospect, were a good deal. "We're not going to see the end of inflation," he concedes, "but by and large, companies have the chance now to offset inflation with price increases."

William Donaldson, 47, dean, Yale School of Organization and Management, New Haven, Conn. He thinks that "the time to buy stocks is when nobody else seems to want them." For Donaldson, that means now. He is acquiring data processing, office equipment and oil industry service stocks, which he also recommends for other investors.

Louis Rukeyser, 46, TV host, Wall Street Week, Greenwich, Conn. Putting his money where his mouth often is, Rukeyser is building a retirement fund predominantly with stocks. Says he: "I am systematically accumulating underpriced equities of top companies. The rich people of 1989 are buying stocks in 1979.'' Rukeyser advises that the average family should buy its own home, "but if anyone tells you that real estate can't miss, ask him to speak to some of the people who bought real estate investment trusts over the past ten years."

Joan Ganz Cooney, 49, president. Children's Television Workshop, New York City. She calls her investments "a good mix for an amateur"--a co-op apartment, a tax-exempt bond fund for short-term liquidity, and long-term investments in companies on whose boards she serves as a director. This blend of real estate, bonds and stocks would work for others who have as little time as Cooney has to worry about investment because, she says, "you are hedged, and you don't need expertise."

Even the experts, of course, can never be more than half safe. Art Collector Cummings was once taken in by a fake Cezanne; tax-shelter swindles have left such presumably smart investors as New York Senator Jacob Javits. Norton Simon Chairman David Mahoney and former Citibank Chairman George Moore with red faces and hefty losses. In the final analysis. Banker Rohatyn has the surest advice: "The only real hedge against inflation is what you carry around in your head--know-how."

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