It's amazing how a big bankroll can stir the creative juices. Back in the '80s, what was then the "Big Three" automakers collectively thought they had a better idea: Take their healthy profits and invest them in financial firms, car-rental companies and aircraft builders.

The goal was to offset "cyclicality," the tendency for car and truck sales to go up and down like a roller coaster every three or four years. By shifting some of their bucks to areas less prone to violent swings, they'd provide a profit cushion to cover them during the automotive dips.

While all of this was going on, however, their foreign competitors, notably the Japanese, stuck to their knitting, concentrating on "continuous improvement" in everything from technology to manufacturing and distribution.

Among other things, that meant spending billions in North America on new plants - a building spree that continues and one that has cost the Americans big gobs of market share.

The Big Three's diversification moves, in part, were a sop to Wall Street, which has seldom held their stocks in high esteem because of their lower ROS, or return on sales. In theory, profits from non-automotive operations, especially during downturns, would garner more favorable treatment from the analysts who make their handsome livings recommending investors to "buy," "hold" or "sell" automotive stocks.

No one back then could have predicted that the 1990s would prove to be one long up-cycle of healthy 15-million-plus sales years now in its eighth year with no end in sight. Forecasters already are indicating sales this year could exceed 16 million.

That market strength, led by the sizzling pace of trucks and sport/utility vehicles (SUVs), has prompted the Americans to shift their attention to what they now commonly call their "core business," with billions being spent on new facilities and upgrades.

Meanwhile, they've exited many of the businesses that captured their fancy during the great diversification binge of the mid-'80s.

So what does one do with all of that cash they've been generating? Now that it's part of DaimlerChrysler AG, Chryler Corp. no longer breaks out its cash and marketable securities. On March 31, however, Ford Motor Co. had $23.5 billion on hand and General Motors Corp. $13.2 billion. That's over and above spending on new products, plants and equipment, research and development and overseas.

Some of it is being banked so that projects won't have to be killed or postponed when the inevitable down-cycle arrives. But, like in the '80s, that still leaves plenty of excess cash to invest.

Acquiring another automaker is an obvious choice, but things don't always work out. Ford Motor Co. went after bankrupt Kia Motors Corp., in which it already had a 9% interest, but found the price too steep considering the debt it would have taken on. GM took a hard look at Daewoo Motor Co. Ltd., with which it had a long affiliation, but that didn't pan out either.

Moreover, the list of viable potential acquisition candidates has been steadily shrinking. The DaimlerChrysler deal, followed recently by the Renault/Nissan tieup and Ford's acquisition of Volvo's AB car division, considerably narrows the possibilities.

The $6.45 billion Volvo deal put a dent in Ford's nest egg, but it still was a master stroke by President Jacques Nasser and his team. Ford could afford it, and in the bargain gets $12 billion in annual sales - and a prestige brand with an enviable reputation for engineering safe vehicles to go along with its Jaguar, Aston Martin and Lincoln luxury brands.

But Mr. Nasser's more recent moves are even more intriguing. Within a few weeks he moved the No.2 automaker into automotive recycling by acquiring a Tampa operation, which Ford says eventually could generate $1 billion in annual sales; purchased Kwik-Fit plc, Europe's largest independent automotive repair chain, adding $800 million in yearly volume; and this month expects to complete acquisition of the interiors division of Plastic Omnium, which has $400 million sales, mainly to other European automakers.

Thus, within a few weeks Ford polishes its environmental reputation by getting into the junk reclamation business (not really a bad business considering the large new-vehicle sales and an 11-million annual scrappage rate); gains a toehold in the repair business, which is likely to be expanded beyond Europe; and jumps into interior modules, another area charted for hot growth.

If GM's top honchos are frustrated by this flurry of investments by their archrival, perhaps that's understandable. Historically GM has been the leader, Ford the follower. Now the tables seemingly have turned, spurred by Ford's creative flair that focuses almost exclusively on the automotive side.

This time Ford, at least, is focused on diversification from within when it throws its money on the table.

Maybe if the then-Big Three had done the same in the '80s, Camry and Accord would not be the best-selling cars in America.