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Gary_Yngve

Palin's to-be son-in-law HS dropout

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... the millions who are ready to retire, have worked their whole lives without some *training* in financial matters? People who are so busy working at a deadend job, scrimping and saving and doing without so that they will have something later...

 

Do these people exist?

 

In America?

uhh..well my parents are two such people...

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The problem wasn't the products per se, it was the data underlying the products. shoddy ratings, inaccurate data used to model defaults, etc.
No shit oh wise one, believe it or not, even in the ivory tower we read the newspaper. :rolleyes:

 

But your point is...? Since when is it sound business (more importantly risk-free) to blindly believe shoddy ratings, inaccurate data, and unrealistic models?

 

Seriously--this isn't even a question of whether or not the false wizardy was scientifically or even mathematically valid. We are seeing the proof that the people at the controls either don't have a fucking clue what they are doing, or overtly intended to invent some quick profits and run while causing a meltdown.

 

Coming back to my original point (which you have yet to address by the way), trying to blame the insane business decisions of delusional and terribly negligent executives on academics is ridiculous. Part of what these guys (execs) are paid the big bucks for is to know when something is too good to be true.

 

Case in point (and trying to bring this shit back on topic)--you don't automatically agree with Gary just because he is an academic, now do you? Well apparently, that's where you and I differ from the guys in control of these billionaire investment firms.

 

Oh and :ass:

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The problem wasn't the products per se, it was the data underlying the products. shoddy ratings, inaccurate data used to model defaults, etc.
No shit oh wise one, believe it or not, even in the ivory tower we read the newspaper. :rolleyes:

 

But your point is...? Since when is it sound business (more importantly risk-free) to blindly believe shoddy ratings, inaccurate data, and unrealistic models?

 

Seriously--this isn't even a question of whether or not the false wizardy was scientifically or even mathematically valid. We are seeing the proof that the people at the controls either don't have a fucking clue what they are doing, or overtly intended to invent some quick profits and run while causing a meltdown.

 

Coming back to my original point (which you have yet to address by the way), trying to blame the insane business decisions of delusional and terribly negligent executives on academics is ridiculous. Part of what these guys (execs) are paid the big bucks for is to know when something is too good to be true.

 

Case in point (and trying to bring this shit back on topic)--you don't automatically agree with Gary just because he is an academic, now do you? Well apparently, that's where you and I differ from the guys in control of these billionaire investment firms.

 

Oh and :ass:

 

Enter the business world and report back.

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Enter the business world and report back.
God no, I wouldn't want to perpetrate another market meltdown on poor innocent Wall Street! :grlaf:

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Does anyone think that in the coming recession, that "investors who should've known the risks" are the only ones who are going to get hosed? Many of us will be lucky to keep our jobs, so fuck your guys' "free-will, personal responsibility" bullshit! The economic casualties of this fiasco will extend far beyond the casual day-trading douchebags and nest-eggers who "should've seen it coming". Apologies in advance to retirees and soon to be's for whom their investments represented the majority of income. Take it up with the companies you toiled for for decades that made shitloads by dumping your pensions at the roulette wheel and the politicians that've been gutting your entitlements in the name of freedom.

Edited by prole

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Ehh, I don't know about it being the fault of the little people saving for their retirement. 401Ks are made up of mutual funds and common folk (like me) tend to rely on the fund managers to do what's best to keep the funds solvent.

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Retirees Wake Up to a Swindle

 

By Marie Cocco

 

The essential fallacy of the 401(k) has been exposed.

 

It took a historic market collapse—one that threatens to impoverish workers already in retirement and those who are nearing it. But then, crushing hardship is often what’s required to usher out an era of ideological illogic and unconscionable greed.

 

The advent of the 401(k) in the late 1970s and early 1980s was a leading indicator of what became a political mania for shifting the risk and responsibility for life’s big challenges—health care, an adequate income in retirement—from employers and other broad-shouldered institutions to the narrower, weaker backs of individuals themselves.

 

It was never sold this way, of course. The pitch for the 401(k) was a contemporary version of the get-rich-quick scheme: The promise of strolling along a sun-dappled beach in retirement would be realized with ease, so long as workers regularly contributed modest amounts to the accounts, then let the compounding magic of the market work. To hear the mutual fund companies and the media tell it, only fuddy-duddies and dinosaur employers would be foolish enough to opt for the old-fashioned defined-benefit pension, the type employers paid for and professional managers oversaw, and which guaranteed monthly payments in old age. The type that gave the hard-boiled men and women of the industrial age security, but would never reward them with riches.

 

The offer seemed good to media observers, and to the politicians who nurtured the do-it-yourself retirement with successive legislative schemes. During the stock market boom of the 1990s, esteemed business publications published breathless articles featuring manufacturing workers who would use their lunch breaks to track their mutual fund balances and ponder the possibilities of the loan they would take out for a cabin on the lake or an anniversary trip to Hawaii.

 

But despite the hype, the data on 401(k)s have never—ever—shown that these accounts were creating a mass of workers who would be able to retire with security, let alone luxury.

 

The 401(k)s didn’t expand the proportion of the work force with pension coverage, notwithstanding claims that shifting to accounts that required workers to contribute would make employers more willing to offer the benefit. Less than half of workers have any type of pension coverage from their current employer at all, according to the Center for Retirement Research at Boston College.

 

For those who do have retirement accounts, the bottom line has long been grim. In 2004, the last year for which data are available, the median balance in IRA and 401(k) retirement accounts was $35,000, according to the Federal Reserve. For those nearest to retirement—households headed by someone between 55 and 64—the median balance in 2004 was $60,000. That’s enough to generate about $400 a month in retirement income, according to the research center.

 

Follow link for the rest of the article: http://www.truthdig.com/report/item/20081013_retirees_wake_up_to_a_swindle/

 

 

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Ehh, I don't know about it being the fault of the little people saving for their retirement. 401Ks are made up of mutual funds and common folk (like me) tend to rely on the fund managers to do what's best to keep the funds solvent.

 

I'm not saying that at all. Companies have been shedding pensions for years in the name of competitiveness and flexibility, the governments crying "no money" while passing tax cuts. Essentially, they've both, in the name of "no alternative" traded stability for quick profits and given American workers a poker chip and set them loose in the casino. "Oh, you don't have an economics ( or mathematics?!) degree to understand the derivatives market we've invested your future in? Caveat Emptor, muthafucka!"

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Maybe as a result of this little Levi will put a little less blind faith in the financial and investment systems, and find ways to keep his earnings under a tighter reign. Especially as he nears retirement, when most of his investments should be as low risk as he can find, such as federal bonds (they tried to tell his parents' generation the same thing, but some of them didn't listen, and then got angry when the stock market crashed).

 

Or alternatively, we could just tell him that this was all the work of a few evil guys, that free markets are not supposed to be self-correcting, and that he doesn't need to worry because the government will be deciding what's best for his earnings now.

 

Flame away.

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Especially as he nears retirement, when most of his investments should be as low risk as he can find, such as federal bonds

 

Those won't be low risk by the time he retires :grlaf:

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Especially as he nears retirement, when most of his investments should be as low risk as he can find, such as federal bonds

 

Those won't be low risk by the time he retires :grlaf:

 

You mean there'll be something called "retirement"?

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Ehh, I don't know about it being the fault of the little people saving for their retirement. 401Ks are made up of mutual funds and common folk (like me) tend to rely on the fund managers to do what's best to keep the funds solvent.

 

I'm not saying that at all. Companies have been shedding pensions for years in the name of competitiveness and flexibility, the governments crying "no money" while passing tax cuts. Essentially, they've both, in the name of "no alternative" traded stability for quick profits and given American workers a poker chip and set them loose in the casino. "Oh, you don't have an economics ( or mathematics?!) degree to understand the derivatives market we've invested your future in? Caveat Emptor, muthafucka!"

exactly...and this is why i think what assworkedjustified said is about as callous of a thing that could be said...

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Well I am not knowledgeable about 401Ks, but I thought that most gave the employee/investor sufficient leeway in the choice of investments to have at least presented the theoretical possibility of avoiding the stock market depreciation of the past few weeks. Or can you not buy bonds in most 401Ks?

 

I'm not trying to kick people while they are down. I'm trying to make sense of this just like everyone else, and thinking about what individual investors could/should have done differently, which bears directly on how to invest in the future. We don't have a lot of control over what the banks and markets do, but do have (some) control over what we do with our earnings and investments.

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Retirees Wake Up to a Swindle

 

By Marie Cocco

 

The essential fallacy of the 401(k) has been exposed.

 

It took a historic market collapse—one that threatens to impoverish workers already in retirement and those who are nearing it. But then, crushing hardship is often what’s required to usher out an era of ideological illogic and unconscionable greed.

 

The advent of the 401(k) in the late 1970s and early 1980s was a leading indicator of what became a political mania for shifting the risk and responsibility for life’s big challenges—health care, an adequate income in retirement—from employers and other broad-shouldered institutions to the narrower, weaker backs of individuals themselves.

 

It was never sold this way, of course. The pitch for the 401(k) was a contemporary version of the get-rich-quick scheme: The promise of strolling along a sun-dappled beach in retirement would be realized with ease, so long as workers regularly contributed modest amounts to the accounts, then let the compounding magic of the market work. To hear the mutual fund companies and the media tell it, only fuddy-duddies and dinosaur employers would be foolish enough to opt for the old-fashioned defined-benefit pension, the type employers paid for and professional managers oversaw, and which guaranteed monthly payments in old age. The type that gave the hard-boiled men and women of the industrial age security, but would never reward them with riches.

 

The offer seemed good to media observers, and to the politicians who nurtured the do-it-yourself retirement with successive legislative schemes. During the stock market boom of the 1990s, esteemed business publications published breathless articles featuring manufacturing workers who would use their lunch breaks to track their mutual fund balances and ponder the possibilities of the loan they would take out for a cabin on the lake or an anniversary trip to Hawaii.

 

But despite the hype, the data on 401(k)s have never—ever—shown that these accounts were creating a mass of workers who would be able to retire with security, let alone luxury.

 

The 401(k)s didn’t expand the proportion of the work force with pension coverage, notwithstanding claims that shifting to accounts that required workers to contribute would make employers more willing to offer the benefit. Less than half of workers have any type of pension coverage from their current employer at all, according to the Center for Retirement Research at Boston College.

 

For those who do have retirement accounts, the bottom line has long been grim. In 2004, the last year for which data are available, the median balance in IRA and 401(k) retirement accounts was $35,000, according to the Federal Reserve. For those nearest to retirement—households headed by someone between 55 and 64—the median balance in 2004 was $60,000. That’s enough to generate about $400 a month in retirement income, according to the research center.

 

Follow link for the rest of the article: http://www.truthdig.com/report/item/20081013_retirees_wake_up_to_a_swindle/

 

 

Another article proving the inability of individuals to deal with the complexities of personal finance ... the writer, of course.

 

Hey, Obama is proposing that homeowners be allowed to raid their 401ks to pay their mortgage. Another brilliant idea.

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Another article proving the inability of individuals to deal with the complexities of personal finance ... the writer, of course.

 

That's rich coming from someone who appears to believe in the tooth fairy.

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common folk (like me) tend to rely on the fund managers to do what's best to keep the funds solvent.

 

Which often entailed investing in hedge funds that take over companies to dismantle them, force layoffs, ship jobs to places without safety net, and do whatever else is needed to make a buck today!

Edited by j_b

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Well I am not knowledgeable about 401Ks, but I thought that most gave the employee/investor sufficient leeway in the choice of investments to have at least presented the theoretical possibility of avoiding the stock market depreciation of the past few weeks. Or can you not buy bonds in most 401Ks?

 

Theoretically yes, in practicality no.

 

Most 401k plans include a money market fund, basically a savings account with variable interest, none of which have broken-the-buck (yet). Also, a number of plans offer Guaranteed Investment Contracts which offer a guaranteed rate of return. Many of plans offer a selection of stock, bond, or hybrid mutual funds. Pretty much all of which have been getting hammered recently. There are short term investment grade bond funds (a very conservative investment) which are down ~4%. Gov't bonds haven't been spared, as a popular TIPS fund is also down ~3% YTD.

 

 

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Especially as he nears retirement, when most of his investments should be as low risk as he can find, such as federal bonds

 

Those won't be low risk by the time he retires :grlaf:

 

You mean there'll be something called "retirement"?

 

Not after the government can no longer place bounds because of spiraling Social Security and Medicare costs....

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401Ks are made up of mutual funds and common folk (like me) tend to rely on the fund managers to do what's best to keep the funds solvent.

 

Which often entailed investing in hedge funds that take over companies to dismantle them, force layoffs, ship jobs to places without safety net, and do whatever else is needed to make a buck today!

 

1) Mutual funds in the typical 401k do not invest in hedge funds.

2) Typical hedge funds are not corporate raiders. Hedge funds use different mechanisms to (try to) make money.

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1) Mutual funds in the typical 401k do not invest in hedge funds.

 

Pension Officers Putting Billions Into Hedge Funds

http://www.nytimes.com/2005/11/27/business/yourmoney/27hedge.html?_r=1&oref=slogin

 

"Michigan SEIU is urging the state Treasury Department - which has invested $786 million in state pension funds with Carlyle in the past decade - to hold the private equity firm accountable."

http://progressmichigan.org/page/community/post/seiuhealthcaremi/VMz

 

etc ...

 

2) Typical hedge funds are not corporate raiders. Hedge funds use different mechanisms to (try to) make money.

 

Many hedge funds are corporate raiders and those "different mechanisms" are often not much better than raiding a company to dismantle it.

 

"Morgan Joseph’s report, called “Managing Hedge Fund Activism,” examined 94 publicly waged campaigns by 29 hedge funds between January 2004 and March 2006. Steel Partners, with 15 campaigns, was easily the most active, followed by Relational Investors, with eight, and Third Point, with seven.

 

Of those 94 campaigns, nearly half of them involved a hedge fund seeking a seat on the target company’s board of directors. Remarkably, hedge funds succeeded in getting a spot on the board 70 percent of the time, while companies were able to keep them off the board just 4 percent of the time. (The remaining 26 percent of the campaigns are still ongoing.)

 

About 44 percent of the campaigns in Morgan Joseph’s report involved the hedge fund demanding that the company put itself up for sale. In those campaigns, hedge funds were somewhat less successful. They got their wish 55 percent of the time, compared with a 21 percent success rate for the company resisting the call for a sale."

http://dealbook.blogs.nytimes.com/2006/08/01/the-new-corporate-raiders/

 

"Institutional investors also jumped on the bandwagon, beginning with university endowments. The nest eggs of Ivy League schools such as Harvard and Yale, large to begin with, grew to unprecedented levels after investing in hedge funds. Soon some pension funds, which were supposed to be cautious investors, started doing the same."

http://www.corp-research.org/archives/jan-feb06.htm

 

"In addition to his position at Praetorian, Daniel Hevesi is now an employee of Third Point Capital, a hedge fund. A portion of the state pension fund was invested with Third Point through what is called a fund of funds in 2005."

http://www.nytimes.com/2007/10/05/nyregion/05hevesi.html

 

etc ...

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Do you mean that pension funds not only invested in hedge funds but also in private equity funds that both behaved as corporate raiders? Did you also notice I didn't cross all of my t's? Wow, big fucking deal! It sure makes a lot of difference.

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1) Mutual funds in the typical 401k do not invest in hedge funds.

 

Pension Officers Putting Billions Into Hedge Funds

http://www.nytimes.com/2005/11/27/business/yourmoney/27hedge.html?_r=1&oref=slogin

 

"Michigan SEIU is urging the state Treasury Department - which has invested $786 million in state pension funds with Carlyle in the past decade - to hold the private equity firm accountable."

http://progressmichigan.org/page/community/post/seiuhealthcaremi/VMz

 

etc ...

 

 

and Mutual Funds in the typical 401k are not pension funds.

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