Retirees lose in bear markets!

Discussion in 'Current Events' started by archangel, Feb 20, 2005.

  1. archangel
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    archangel Guest

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    During the 2000-2002 bear market,investors lost about $8 trillion.Many reirement nest eggs were emasculated.Meanwhile,Wall street's assets-based strategy gave insiders a cushion.The average American fund investor lost more than 40 percent in the bear market,fund owners and managers took in more than $200 billion annually in fees,operating expenses,transfers and soft money and other hidden compensation from deals with brokers and silent third party investors.(quote from Paul B.Farrell,market watch)

    This is why Wall street is so desperate to get it's hands on trillions in new private accounts ie:SSA...This would mean billions in new fees for Wall Street..This points to hidden costs, expensive funds and lower returns...

    I for one think this is a bad idea..it will only help Wall Street and there is a great potential to lose ones royal ass...ie: Your retirement money! :rolleyes:
     
  2. Comrade
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    Comrade Senior Member

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    The fees are modest as a proportion of total investing with funds of this size, and they exist to compensate the brokers and other parties involved in managing such funds, who you realize have to pay rent, their employees, eat, and other pesky things behind having a real job to do.

    If you ask me the cost of administering such funds through the government instead of the private market, I'm willing go out on a limb here and say its massive compared to the more efficient and competitive fees on wall street.

    So we either pay inefficient government workers, get less than 3% on our returns, and increase the government liability to pay future retirerees, or we provide jobs in the private market, get around 11% on average on our money, and help boost investment in the private economy directly with the immense capital that private SS funds would grant the economy of America.

    Which do you think any rational person would choose?
     
  3. Avatar4321
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    Avatar4321 Diamond Member Gold Supporting Member

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    The problem is the left is far from rational most of the time. Give us freedom in our finances. Let us control our own money.
     
  4. KarlMarx
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    KarlMarx Senior Member

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    PFFFFTTTTTT!!!!!!!! Wow.... that was original! The old "greedy, Wall Street corporate" conspiracy theory... how trite! If you can manage to work in Elvis, aliens or the two headed wolf boy into that tripe, you'll probably be able to score a job writing for the "Midnight Star" or "National Enquirer".

    The trillions lost in the 2000-2002 bear market has all been regained because of the upturn in the economy. I don't know how to break this to you, but it is now 2005, the economy has changed dramatically in the past 3 years. The Dow Jones Industial Average currently stands at about 10700.

    Let's take a look at history, and not the distant past, either, just the past twenty years.

    Fact: The Dow Jones Industrial Average (DJIA) has increased in value by a factor of over 10.
    Fact: In addition, our economy has grown in size by at least that amount during the same time period.
    Fact: 401(k)s, IRAs and other investments geared towards retirement were made available to people in order to supplement their income at the start of the 1980s.

    The first two facts were caused by the third. And guess who was president then. The same things you are now claiming were said about Reagan and his ideas. Your claim that privitizing Social Security will only help Wall Street is true, because "Wall Street" is made up of those who invest in the markets, which is you, me and millions of other people..... exactly the reason why we should do this..... I want to make more money so I don't have to depend on some government beaureacrat for my monthly check! Furthermore, the money that I invest will be managed by a company or group of companies that will be overseen by the Securities and Exchange Commission, the Social Security fund is managed and overseen by no one except the government. That is like having the fox guarding the henhouse. And how many times have politicians "borrowed" from the Social Security fund in order to finance their latest pie in the sky liberal fantasy?

    Privatizing Social Security will make investment capital available to the private sector and generate jobs for this country (did you stop to think about that?), it will provide a positive rate of return for those who invest and put the money to more efficient use (I believe that the Social Security fund gets less than 3% return on its funds) which would not be hard to do.

    The Social Security system is a government run ponzi scheme, it only works so long as the number of people who contribute to it continues to grow. That is no longer the case, nor has been for over two decades.

    From the tone of your post, it seems as if you're saying the corporations and those who run them are greedy but the government is not. Not True. Governments and politicians are greedy, for power. They are on a power trip and Social Security is their Nirvana. And what better way to control people than by contolling the retirement income of the fastest growing segment of society i.e. the elderly?

    The government cannot manage the hard earned money of millions of workers better than the workers themselves can. After all, the government did not earn the money that goes into the system, the workers that contribute to the system did.

    Under the current system, you have no say with what is done with your money.... none... at all. Under privitization, you would have the power to decide how part of the money the government takes from you is invested. You will be able to shift your money from one investment to another and that is Power To The People (Right On!)! And you know, that really irks government bureaucrats and liberal politicians, because they lose power.

    LINK TO THOMAS SOWELL ARTICLE ON SOCIAL SECURITY
     
  5. archangel
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    Vanguard's founder Jack Bogle says:"The costs of offering mutual funds to millions of small accounts making weekly or monthly contributions would be even larger than todays already excessive level of fund costs."The new layer of expenses will result in returns"even less than the current yield on the U.S.Treasury bond."

    Also:"Everything points to hidden costs,expensive funds and lower returns.And that amounts to a backdoor tax increase.But nobody's talking about that.Instead,were being pitched a rosy scenario,just like last year with the grossly underestimated Medicare drug program.All other Social Security reform issues are only talking points in Wall Street's aggressive pro-privatization sales pitch...."

    To be blunt Wall Street is acting like a desperate child acting on impulse and very self centered...again they are the ones who would gain by privatization not the small SSA investors... :duh3:


    Oh yes jobs would be created by investment money...however they would just be outsourced to third world countries...and pray tell how would this help the average working man or woman?...humm who is being trite here? :bangheads
     
  6. KarlMarx
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    KarlMarx Senior Member

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    Gee wiz.... how are IRAs and other mutual fund holdings handled (IRA contributions are $2000 or less --- isn't that true? Many mutual funds have small start amounts, and allow small contributions like $50 or less)? Where are the insurmountable costs for those hiding? Those are small accounts too! And there are millions of them! What are we missing here?

    Also, money taken out of a person's paycheck can be placed in a temporary account until there is enough to purchase the minimum amount. That's what they do with Savings Bonds......

    This isn't rocket science....
     
  7. no1tovote4
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    no1tovote4 VIP Member

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    There are stockbrokers such as buyandhold.com that will allow you to purchase as little as $20 at a time. You can also purchase a fraction of a stock if the stock is worth more per share than you can invest at the time.

    People think poorly of the Market because it is so misunderstood and they think it is difficult to invest, and that people with little money cannot invest directly in the Market and expect good results. I disagree entirely. I suggest people educate themselves and will suggest a site for that as well. www.fool.com
     
  8. Merlin1047
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    Merlin1047 Senior Member

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    You don't have a single, solitary clue what the hell you're talking about. Increased investment in the stock market will NOT produce funds with higher fees. It has been historically proven that a proliferation of funds produces LOWER fees through competition.

    Can market swings affect income? Well du-UH. Ya reckon? But of the mutual funds that I have had for over thirty years, the cash value is over twenty times what it would have been had I "invested" the same money in savings accounts with a bank.

    And those investments are worth a whole lot more than the money I've paid into FICA. Because anything is worth more than zero - which is exactly what the government has in my name in my mythical social security account.
     
  9. rtwngAvngr
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    rtwngAvngr Guest

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    The current system is a guaranteed loser.
     
  10. Merlin1047
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    Merlin1047 Senior Member

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    Bullshit. It's all handled by computer - except the actual investing which is done by the fund manager and staff. The only increased costs are in the area of customer service and mailing. But if statements are sent by wire, even that cost can be minimized.

    Again, compare the earnings and increase in valuation of the average mutual fund over any five year period to the earnings which would have been received from a bank and see which comes out better. Then compare the earnings of the money paid into FICA to either of the previous. Oh - that's right - money sent to the government is simply SPENT - it doesn't EARN a damn thing. Or did you conveniently forget that?

    Damn, I see that foretelling the future is numbered among your talents. I'd love to rebut that, but I can't. The vertical hold on my crystal ball is out.
     

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