Video:60 Minutes - Those Who Are 401(k) Screwed & Even Unemployed; Wall Street Racket

[Pa(b)st Prime]

You're smarter than that tripe. THINK OUTSIDE THE BOX. By definition the market has a seller for every buyer. If I sell and hence underweight and you buy and hence become fully invested, in a bull market I have UNDER PERFORMED the market even though I'm long.

The majority of Americans do not own stock-directly or indirect. Just three decades ago only 13% of Americans had equity investments. The bull market left many behind and CAUSED the enormous gap between rich and poor. This break is a wealth gap buster. The broke guy is still at zero but the asset holder just went from 50b to 20b. The guy living under the bridge is a DE FACTO SHORT. The same way a renter is short a residence. To those without stocks or renting a house, a bear market should be rejoiced.

I'm a perfect example. I had what was considered a decent sum of money for a 35 yo in the mid-90's. But instead of buying stocks-which I've been bearish on since like 1994-I bought Treasuries. The result? I'm a HUGE LOSER. Is my "loss" part of your zero sum definition? No because I'm not a participant. In fact I even made quite a bit in interest and appreciation on the Treasuries. But in the SUM OF PORTFOLIO LIFE I was a gross under performer to a basket of SPX bought at 400.

Example: If tomorrow the dollar goes to zero and the Dow trades 50,000 is everyone a winner? NO!! The 60% of America with no stock are DE FACTO short and the 30% who're under weighted will under perform the rally. Thus the winners are only those who're all in.

The irony is that around the time the masses exit stocks for the "safety" of Treasuries is about the time Bonds too will crash. Perhaps 60 Minutes forgot that Bonds broke 50% in the early 80's.
Always cracks me up when a moronic liberal talks about the superior performance of stocks under a Dem President. How about the performance of the one market directly under the perusal of the President-Treasuries. T-Bonds do considerably better under GOP administrations.

Quote from Cutten:

The stock market is positive sum to investors, so long as corporations make money. It is positive sum to the extent of the annual retained earnings of the corporations listed on it. If the stock market component companies are annually making a return on capital of 8% per annum (for example), then the long-term return will converge to 8% compound per annum.

The bond market is positive sum to investors, to the amount of the interest paid to them.

Even futures are positive sum if the risk-reduction benefits to hedgers outweigh the transactions costs - and clearly that is the case, otherwise there would be no demand for hedging.

In a free market, people do not engage in economic transactions unless they perceive some benefit to them.

Furthermore, investment decisions need to be made by anyone with any capital. The optimal decision is a function of their risk preference, financial needs, and the long-term risk/return prospects of each asset class. Any advice which can make investors decisions closer to the optimal allocation for their given preferences & situation, is by definition value-additive. This is true regardless of whether the stockmarket soars or collapses for the next 10, 20, 30 years. It is true regardless of whether markets are perfectly efficient or very inefficient. With a given market situation, it is still a necessary and very important task to match your investment profile with your risk tolerance and your estimated financial situation(s) now and in future.

Poor advice, or no advice, has cost hundreds of millions of people between 30% and 100% of their life savings. It is a particularly strange time here in 2009 to claim that good advice would have made no difference to these people.

 

[Trader666]

I feel bad for these people but when was it decreed that bear markets had been eliminated? Nobody's entitled to live a pain free life, especially when they can't be bothered take responsibility for their own finances.

Quote from Big Money:

I have to agree with those who believe in personal responsibility... In a bull market, all these people in trouble now will think they are geniuses.

The problem is people spend more time worrying about what latte to get and where they want to retire to instead of actually learning and watching their investments

As to trying to help others, most just won’t listen. People just don’t listen and they never will. They only learn the hard way.

 

[runningman]

Even a hooker tells you the price upfront. How bad is that? If you buy a mutual fund, it takes hours to find out what you pay. You have to CALL TO ORDER A STATEMENT OF ADDITIONAL INFORMATION to get the full trading costs. A prostitute gives you the price in dollars right up front. So which is the crime?

 

[Trader666]

How would you know that?

Seriously, maybe there should be a thread called "the death of common sense and the rise of victim hood in America." Do people need to be told that if the fees are opaque there's a problem? Or if the fees are really high, invest somewhere else? Or bear markets can still happen? Or save for a rainy day?

Quote from runningman:

Even a hooker tells you the price upfront. How bad is that?

If you buy a mutual fund, it takes hours to find out what you pay. You have to CALL TO ORDER A STATEMENT OF ADDITIONAL INFORMATION to get the full trading costs. A prostitute gives you the price in dollars right up front. So which is the crime?

 

[Illum]

Great points about taking responsibility for one's own investments but these people trusted Wall Street for a reason. The same way if they became ill they would trust a highly rated doctor. If they got in trouble they would trust a highly rated lawyer. You do not operate on your own heart, defend yourself in court, etc. The problem here is that Wall Street professionals can not be trusted as other professional people can. People didn't know that, they do now. It was never presented to the public as gambling, it was presented as sound.

 

[Trader666]

The doctor and lawyer comparison is made all the time and you just made it so let me ask you this... if you were diagnosed with something serious would you get a second opinion? Would you learn about your disease or condition? Or would you passively go along with whatever you were told, even if it was by a nurse's assistant which BTW some "financial professionals" have less education than. And what about bear markets? Why would you think they'd been eliminated?

Quote from Illum:

Great points about taking responsibility for one's own investments but these people trusted Wall Street for a reason. The same way if they became ill they would trust a highly rated doctor. If they got in trouble they would trust a highly rated lawyer. You do not operate on your own heart, defend yourself in court, etc. The problem here is that Wall Street professionals can not be trusted as other professional people can. People didn't know that, they do now. It was never presented to the public as gambling, it was presented as sound.

 

[Illum]

Quote from Trader666:

The doctor and lawyer comparison is made all the time and you just made it so let me ask you this... if you were diagnosed with something serious would you get a second opinion? Would you learn about your disease or condition? Or would you passively go along with whatever you were told, even if it was by a nurse's assistant which BTW some "financial professionals" have less education than. And what about bear markets? Why would you think they'd been eliminated?

Yes you're right, good point.

 

[Bootsie]

Quote from ByLoSellHi:

I'm being serious here - in the U.S., from a demographic standpoint purely, there are about 1 persons under the age of 25 for every 3 baby boomers.

If those recently burned, and burned badly, who are great in number (much greater than what happened during the focused 'tech crash,' this is much more widespread), swear off equities (and they're past the point of prime year investing anyways, being in their 50s and 60s), and the 33% of young people who will replace those boomers are told not to ever trust the markets by observation or outright advice by their parents, uncles, aunts, etc., then don't we have a trust and integrity issue now that is - maybe larger than anything we've seen since the 1930s?

You literally have millions of Americans who have seen their retirement nest eggs wiped out, just at the time they needed that money most, and with a lack of hope that there will be a V shaped recovery in the economy or equity markets.

I forgot to add that they've seen their 1st or 2nd biggest asset - their home, drop precipitously in value, also.

That's the problem right there... almost the entire problem rests in your last sentance. Americans view their homes as assets. They're not - a home is an EXPENSE.

B

 

[Roman Candle]

I seem to recall some highly appointed officials (Hank Paulson, Ben Bernake) and an elected official, Barney Frank telling the public AKA 401k holders, that the crisis was contained. During this time they know doubt we being bombarded by CNBC as this being a god time to buy.

These people don’t spend all day educating themselves about the crooked markets. They have normal jobs. There problem now is they listened to those in charge. These appointed officials who are responsible for this mess.

What is the link that connects these three mentioned above?

 

[skippy's alias]

Quote from Roman Candle:

I seem to recall some highly appointed officials (Hank Paulson, Ben Bernake) and an elected official, Barney Frank telling the public AKA 401k holders, that the crisis was contained. During this time they know doubt we being bombarded by CNBC as this being a god time to buy.



What is the link that connects these three mentioned above?

They're all bipedal?