Tuesday, March 31, 2009
Stocks are a HORRIBLE investment! I have held this belief for a long time. I have been rediculed and shunned by many "responsible" people. These responsible people also told me that people who rented were "losers." Who would be stupid enough to "throw" money away on rent? In my opinion the stock market is just a gambling racket. Like in Vegas the deck is stacked against you. Sure there are insider trading laws, but many people skirt this, and institutional investors can game the system and move numbers to their advantage. The system is not set up to make YOU money. It is set up to make THEM money on fees and other nefarious under the table things.
The generation that lived through the depression knew stocks were a bad investment and shunned them as unsafe. When I worked for a retail banking establishment -now defunct- I witnessed on a daily basis, investment advisors unsuccessfully trying to switch seniors money from 100% safe government guaranteed CD's to mutual funds and variable annuities (variable annuities are particularly toxic). These people of the "Greatest Generation" knew better. I rarely saw a sales pitch work.
If your smart and cautious enough to keep you money in something you know will be safe, that may not be enough. The government through fees and other means funds the Pension Benefit Guarantee Corporation (federal program not private). This program protected pensioners whose company pension was eliminated because of default much like the FDIC protects bank deposits. Since its inception it has invested in government bonds to help fund itself. It made a stable and reliable return on investment totalling over $64 billion to date. That all imploded last year. The monkeys in the Bush Administration appointed a Lehmans Bros. executive Charles Millard to head it up. He decided that Government bonds were for losers, he bet half the farm on stocks in late Dec. of 07'. Gee I wonder how that is going....
Pension insurer shifted to stocks - Concern increases as losses mount; Failing plans could overwhelm agency
Just months before the start of last year's stock market collapse, the federal agency that insures the retirement funds of 44 million Americans departed from its conservative investment strategy and decided to put much of its $64 billion insurance fund into stocks.
Switching from a heavy reliance on bonds, the Pension Benefit Guaranty Corporation decided to pour billions of dollars into speculative investments such as stocks in emerging foreign markets, real estate, and private equity funds.
"The truth is, this could be huge," said Zvi Bodie, a Boston University finance professor who in 2002 advised the agency to rely almost entirely on bonds. "This has the potential to be another several hundred billion dollars. If the auto companies go under, they have huge unfunded liabilities" in pension plans that would be passed on to the agency.
Just months before the start of last year's stock market collapse, the federal agency that insures the retirement funds of 44 million Americans departed from its conservative investment strategy and decided to put much of its $64 billion insurance fund into stocks.
Switching from a heavy reliance on bonds, the Pension Benefit Guaranty Corporation decided to pour billions of dollars into speculative investments such as stocks in emerging foreign markets, real estate, and private equity funds.
"The truth is, this could be huge," said Zvi Bodie, a Boston University finance professor who in 2002 advised the agency to rely almost entirely on bonds. "This has the potential to be another several hundred billion dollars. If the auto companies go under, they have huge unfunded liabilities" in pension plans that would be passed on to the agency.
Charles E.F. Millard, the former agency director who implemented the strategy until the Bush administration departed on Jan. 20, dismissed such concerns. Millard, a former managing director of Lehman Brothers, said flatly that "the new investment policy is not riskier than the old one."
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