posted on January 29, 2003 10:23:55 AM new
Non-wealthy investors in the stock market have a lesson to learn that has been forgotten since 1929. Non-wealthy people don't belong in the market, they get skinned.
posted on January 29, 2003 10:28:58 AM new
Yep. And that's precisely why I don't want to see Social Security "privatized". Can you see what a market cycle like this one would do to all those unsavvy investors who put in their retirement monies in an "up cycle", only to have to retire during times like this and literally see their life savings wiped out. In light of Enron and WorldCom, I honestly don't see how anyone could support such a measure.
posted on January 29, 2003 10:42:16 AM new
KatyD,I agree with you,There is something wrong with that mind set.Social Security privatized,Is the next great bank robbery.If people fall for that garbage,They have them selves to blame.Great way to hide the red ink tho.
posted on January 29, 2003 10:44:56 AM new
WorldCom and Enron are extreme examples. If you invested in the "stalwart" AT&T in the last decade you lost your a**.
There used to be the rule that you only invested money in the market that you would/could set fire to. Now they are making out that the market is as safe as a savings account.
Some also tout that the markets average return is better than anything else. Well if you live to be 100 and were fully invested at birth, the average looks nice. However, the event horizon for human non-wealthy investors is at most 45 years but more likely around 20 years or less.
In that 20 year window the market has to be right when you cash out. So the bottom line is that the non-wealthy investor is what is called a "market timer" with little or no flexibility. A recipe for economic disaster.
Does anyone remember when the IRA was sold as a way to be a millionaire when you retire? What happened to that sales scheme ? Interest rates dropped and looks like no one with an IRA will be amillionaire, unless they were a millionaire to begin with.
The advent of 401ks and working people investing in the market has caused too many dollars to chase too few stocks. The results are sky high P/Es, people investing in junk stocks, and people losing a lot of money.
Social Security is the best invesment you can ever make.
posted on January 29, 2003 10:57:51 AM newSome also tout that the markets average return is better than anything else.
Yep...I'm one who has praised it. Stats show the proof. We each have our own prejudices. We each invest in ways we judge will be in our best interests. My husbands grandfather made a killing in the stock market. We did quite well too. You can't just invest and then not pay attention to what's happening. You must watch it closely all the time. Know when to sell, when to buy.
Investing in the stock market has provided a great retirement for many of our friends and us too. Are things in the toilet now? Yes, as they have been before. And no one knows the future....
posted on January 29, 2003 11:57:41 AM new
People in mutual funds and 401ks can not manage their own accounts. The vast majority of people lack the time and expertise to manage stocks.
And for every person that made money in the market, there are 10 who lost.
posted on January 29, 2003 12:01:30 PM new
The odds are even worst at a casino. Stocks, bonds and mutual funds are sold with a declaimer. NO Guaranteed.
Life is a gamble you have to play. The market is a choice.
Amen,
Reverend Colin
posted on February 4, 2003 08:33:22 AM newPeople in mutual funds and 401ks can not manage their own accounts. Just reading you last post, Reamond. Missed it before.
Yes, here are people who work for large companies and most corporations who CAN manage their own accounts. We did and so did all of our friends who each worked for different companies.
I do understand some can't, but there are many who can.
For example, my husbands company had 5 different types of investments where he could put his 401k funds. Some with more risk than others. We personally were pretty diversified and when our stocks headed down, all we had to do was pick up the phone and switch them to another 'safer' [in our opinion] fund.
Guess that's why there are times when I don't understand those who are so anti-corporations. They always provided well for our family and those of our friends. Guess it's what one's own personal experience in life is like.
posted on February 4, 2003 10:39:38 AM new
Linda- having a choice of 5 different funds is not managing your own account, it is merely picking which mutual fund you will be in.
Those mutual fund managers all held stocks like Enron and WorldCom on the advice of analysts who had their arms twisted for good reports by the consulting arm of the brokerage houses that ran the mutual funds.
Managing your own accouts in my reference is picking what individual stocks to buy and sell whenever you wish. It also means that you get the voting rights of the shares you own, which also entails that the shares are actually in your name.
posted on February 4, 2003 10:48:05 AM newYou get voting rights....stocks in your name....Yes, we had some of those too. Used to get all the invitations or we could vote by proxy and mail it in.
I hope I'm not giving the impression that what those at the top did to the 401k funds was defenseable, it's not.
posted on February 4, 2003 11:28:55 AM new
Stocks Sink on AIG Charge, Iraq Fear
AIG is more than a bellwether, it's a reflection of where the global economy is, and for them to say they have balance sheet problems, it calls into question valuations everywhere," said John Gillette, ADR trader at investment firm Lazard Freres.
posted on February 4, 2003 11:36:39 AM new
Another shoe to drop is the budgets defecits of the states, not to mention the Fed defecits. Watch the states such as Florida that show 0 defecit this year and have n/a for the next year-- that n/a will turn into a huge defecit because they have shifted revenues back and expences forward. Any tax cuts you get from the Feds will be offset by tax increases by the states.
State budget gaps for this year and the estimated gaps in 2004, in millions of dollars:
posted on February 4, 2003 11:44:57 AM new
"Non-wealthy people don't belong in the market, they get skinned."
Actually this should be "stupid people don't belong......."
The stock market has not so much "fallen" as it has returned to normal. If you buy a stock that is selling for $10 and the COMPANY is worth $0.21, how do you complain when the stock goes to $0.21? You don't see too many stock brokers or investors jumping off buildings. I'll bet not too many of these guys hold eBay or Amazon, etc. People call up brokers and tell them to buy some of that cool eBay stuff, meanwhile the eBay insiders are selling as fast as they can.
posted on February 4, 2003 12:05:24 PM new
Read today that Japan's financial position is so bad they made decisions that will, once again, further reduce their foreign aid...I believe they said by 8-9% last than they contributed last years. Third year in a row they've decreased their foreign aid.
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Question please. AR shows 0/0 does that means things are great? Or that the don't have the #s?
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posted on February 4, 2003 12:11:17 PM new
" You don't have to be stupid to be a victim of liars/accountants/consultants/insiders."
In most cases you do. The only people who can gripe are the ones who had no control of their pension plans and the people who did bought the junk.
If you take your life savings and let some dope you don't know manage it in something your clueless about, you're asking for disaster. Most people gruel over buying a refrigerator than they do buying a stock.
While it's true most brokers have the morals of streetwalkers, many are strait arrows. When my friends would kid me when they were up 80% on Int'l Fuzz and I would ask my broker, he'd tell me the stock was worthless and to go somewhere else if I wanted to buy it. In the end, the friends are 50% down.
posted on February 4, 2003 02:47:41 PM new
Even if your broker is as honest as the day is long he is acting on information from dishonest analysts and corporate accountants and financial officers. Enron and WorldCom were widely held by state retirement funds which have some of the strictest investing rules there are, yet the funds lost billions based on false information from the corporate officers, "independent" accountants, and "smart" analysts.
An investor is totally dependent that all actors in the information stream are honest. There is no way an individual investor has the time to investigate all the information about a corporation. The alternative is not to invest.
posted on February 4, 2003 03:19:09 PM new
That's an excuse they gave about some companies including options in their final numbers. When I asked my guy at the time, he replied "yes and it was always in the company report, if anybody bothered to read it." Final numbers with an asterick. I think you are referring to what I would call "traders" not a broker. By "analyst" do you mean some employee of say, Merrill Lynch who justifies his company selling junk?
posted on February 4, 2003 03:56:45 PM new
What is in the company report is not the issue, but the truthfullness of what is in the report is. It doesn't make any difference how "good" you perceive your broker to be, if he/she acts on false information.
Enron and WorldCom investors were not the victims of "astericks", or bad brokers, but rather plain lies right in the company reports.
Would you blame a car buyer if he received a counterfeit title and the car was stolen ?
posted on February 4, 2003 04:11:45 PM new
No, but I wasn't referring to an aberration like Worldcom, etc, but the normal way a rational person should go about investing. If your broker doesn't have time to do any research, why even pay his fee? Open the newspaper and throw a dart at the financial section.
posted on February 4, 2003 04:22:49 PM new
If you think WorldCom was an "aberration", you better review the financial headlines for the last two years. There is more than just the bankrupt corps that lied on their reporting, but there has also been a host of companies amending there financial reports. Another came out yesterday for the years 2000 nad 2001. Xerox and their accountants are now under investigation. This type of phony accounting was industry wide. You can not have big five accounting firms doing these reports and it not be industry wide.
And that's precisely why I don't want to see Social Security "privatized". Can you see what a market cycle like this one would do to all those unsavvy investors who put in their retirement monies in an "up cycle", only to have to retire during times like this and literally see their life savings wiped out. In light of Enron and WorldCom, I honestly don't see how anyone could support such a measure.
