Comments on: OK, the 401(k) retirement system didn’t work. What’s next? http://corpintel.wordpress.com/2009/01/10/401k-retirement-system/ ... from the frontiers of business, politics and society Fri, 11 Dec 2009 06:53:43 +0000 http://wordpress.com/ hourly 1 By: shaferfinancial http://corpintel.wordpress.com/2009/01/10/401k-retirement-system/#comment-832 shaferfinancial Sat, 17 Jan 2009 02:18:51 +0000 http://corpintel.wordpress.com/?p=340#comment-832 Look at the history of market returns, it is eneven with twenty year periods of good returns followed by long stretches of bad returns. If you are depending upon the return to get you to a decent retirement, then you better be lucky so you are in that twenty year good return period or the whole idea falls apart. It is a crazy ideologically driven strategy that is failing. Active investors aren't dependent on the entire market's returns, so can achieve good returns in good years and bad or at least limit their losses in bad years. Then you have a shot at it. This current stock market swoon is really no different than the six before it! The difference is the individual has been left to deal with the bear market and is not psychologically or intellectually prepared for it! This is the real crisis and it is rearing its ugly head as we speak! Look at the history of market returns, it is eneven with twenty year periods of good returns followed by long stretches of bad returns. If you are depending upon the return to get you to a decent retirement, then you better be lucky so you are in that twenty year good return period or the whole idea falls apart. It is a crazy ideologically driven strategy that is failing. Active investors aren’t dependent on the entire market’s returns, so can achieve good returns in good years and bad or at least limit their losses in bad years. Then you have a shot at it.

This current stock market swoon is really no different than the six before it! The difference is the individual has been left to deal with the bear market and is not psychologically or intellectually prepared for it!

This is the real crisis and it is rearing its ugly head as we speak!

]]> By: Eric Garland http://corpintel.wordpress.com/2009/01/10/401k-retirement-system/#comment-830 Eric Garland Tue, 13 Jan 2009 00:10:14 +0000 http://corpintel.wordpress.com/?p=340#comment-830 The idea of the 401(k) still sounds reasonable, given the assumption that the United States economy grows indefinitely and that corporations are the biggest part of that. The 401(k) incentivized people to save for retirement in what was assumed to be a stable part of the economy - equities of large companies. The problem is, if our economy reaches a major turning point (knowledge economy transition - manufacturing sector + badly run housing bubble - banking debacle + two expensive wars + Boomers retiring) AND corporations merge to the size of dinasaurs, the sacred cow of investing in giant private industry gets made into gristly school cafeteria hamburgers. Business does well (ostensibly) at making profit, but has no vested interested in providing a social safety net to millions of Americans. Our collective mistake was putting so much of the national welfare on the back of the profit performance of a very few organizations. Back to the drawing board... The idea of the 401(k) still sounds reasonable, given the assumption that the United States economy grows indefinitely and that corporations are the biggest part of that. The 401(k) incentivized people to save for retirement in what was assumed to be a stable part of the economy – equities of large companies.

The problem is, if our economy reaches a major turning point (knowledge economy transition – manufacturing sector + badly run housing bubble – banking debacle + two expensive wars + Boomers retiring) AND corporations merge to the size of dinasaurs, the sacred cow of investing in giant private industry gets made into gristly school cafeteria hamburgers.

Business does well (ostensibly) at making profit, but has no vested interested in providing a social safety net to millions of Americans. Our collective mistake was putting so much of the national welfare on the back of the profit performance of a very few organizations.

Back to the drawing board…

]]> By: shaferfinancial http://corpintel.wordpress.com/2009/01/10/401k-retirement-system/#comment-829 shaferfinancial Sun, 11 Jan 2009 16:25:15 +0000 http://corpintel.wordpress.com/?p=340#comment-829 As usual, folks miss the point. It is not that 401Ks are a bad way to save (not that they are great), but that the whole idea of passive investing is just crazy. Mutual funds as a good investment in my opinion is the greatest fraud put upon the public since the Warren Commission. That you can depend upon someone else to make good investment decisions for you is wrong as we get taught again and again. Diversification as an investment strategy and/or asset allocation strategies, fail to reduce risk and guarantee low rates of returns over the long run. The data is out there if anyone takes a little internet time to find out. That the Wall Street Times runs an article so clearly against Wall Street interest is great, but it leaves blank the question as to what workers can do about their situation. As usual, folks miss the point. It is not that 401Ks are a bad way to save (not that they are great), but that the whole idea of passive investing is just crazy. Mutual funds as a good investment in my opinion is the greatest fraud put upon the public since the Warren Commission. That you can depend upon someone else to make good investment decisions for you is wrong as we get taught again and again. Diversification as an investment strategy and/or asset allocation strategies, fail to reduce risk and guarantee low rates of returns over the long run. The data is out there if anyone takes a little internet time to find out.

That the Wall Street Times runs an article so clearly against Wall Street interest is great, but it leaves blank the question as to what workers can do about their situation.

]]>