Don't panic; get a financial adviser (Liz Pulliam Weston)
Frightened Americans are making lots of stupid moves with their investments right now. They need more professional guidance -- and Uncle Sam should help pay for it.
Uncle Sam should help pay for it? You have got to be frickin' kidding me. Investors have been given professional guidance and it was a blood bath. They sure as heck don't need more professional guidance. The professionals at Citigroup can't even help the entire banking system remain solvent, so what are the odds they can help us? Those are the cream of the crop professionals too, not the sort of mom and pop professional advisers we are likely to find on our own.
What the bloody hell is going on in this country? Have we completely lost our minds? You just know I'm going to go digging up past articles again and I have no great desire to disappoint you.
September 18, 2006
Why bad 401(k) advice is better than none (Liz Pulliam Weston)
When your 401(k) plan offers investment advice, you shouldn't assume it's worthwhile. But if it gets you to invest, take it.
Maybe we can get Uncle Sam to pay for that bad advice too, retroactively. Uncle Sam is sure willing to pay for everything else these days.
The cost of their confusion is enormous. Here's an illustration: A worker who puts aside $4,000 a year starting at age 25 could have a nest egg worth more than $1 million at 65, assuming 8% average annual returns, which is reasonable given the long-term historical gains from a balanced portfolio of stocks and bonds.
Apparently the cost of their confusion wasn't so enormous after all. That money was better spent on beer and cigarettes, especially if those items were saved/hoarded as part of a diversified nest egg.
The S&P 500 closed that day at 1,321.18. It closed today at 682.55. That's a 48% loss. That's what bad advice gets you. How could we possibly know at the time that it was bad advice? It says so right in the article's title. That's how. Using hindsight, bad advice actually turned out to be bad. Shocking.
That brings me back to the first article. Don't panic is the professional advice that was given every month since this crisis started. Using hindsight, it was really bad advice. At some point it is destined to be good advice though, much like a stopped clock is right twice a day.
January 25, 2008
Don't panic on roller-coaster market ride: experts
"Just because it's on the front page of the newspaper doesn't mean that the world's coming to an end and just keep that in perspective," Phillips said, which will allow individuals to face things and be successful.
Those in the role of advising investors are taking similar strategy to heart.
The S&P 500 closed that day at 1,330.61. I'll spare you the bloodmath.
Stag,
ReplyDeleteBad ideas abound. It must be in our jeans/genes!
I'll spare you the bloodmath.
The bloodmath is stunning. A tech led stock bust, followed by a housing bust combined with a stock market crash. We had a commodity crash too, but I'm not sure if that's good or bad?
The funny part is that we decided we had to utterly impoverish ourselves with debt to recover from that quaint little dot.com stock bubble. Talk about a crappy idea.
We've had a full decade of total financial foolishness. That's a tough act to follow. What are we going to do for an encore?
I'm thinking if we give it a little time, people will be begging for another punzi scheme. it's in our jeans/genes.
I can't wait to heckle all bad ideas.
mab,
ReplyDeleteFor what it is worth, I'm thinking that a properly determined government can eventually stumble upon an idea bad enough to generate some actual (en)core inflation.
Here are two ideas.
It could be leaked that Bernanke is in talks with the leaders of Zimbabwe and that he's stumbled upon an idea just stupid enough to work.
Geithner could roll out his next plan to save the banking system on crisp freshly printed trillion dollar notes. Every time a heckler claims his plan isn't detailed enough, he could hand out more copies. At some point he could exclaim, "Don't you people get it yet? In God We Trust! That's the entire plan! That's ALWAYS been the entire plan!" He could then cackle hysterically as his assistants place him in a straight-jacket.
I'm thinking that a properly determined government can eventually stumble upon an idea bad enough to generate some actual (en)core inflation.
ReplyDeleteYou'd think it would be easy. But somehow, our Government seems to always accomplish the exact opposite of its stated goals. It's an (en)core (in)competency.
Consider, if we are "lucky" enough to generate inflation, what happens to interest rates? If they go up, stocks and housing could go down. That looks like another stupidity loop to me.
Anyway, I still think printing is the road to ruin. Once you start, how do you stop?
If you do start printing, everyone will want a piece of the action. And once they get taste, they'll want more and more. Just like the bailouts. The banksters got their bailout, now everyone wants a bailout - car companies, homeowers (pun intended), etc.
What politician would ever make a difficult choice when a printing option is available? What am I talking about, we don't make difficult decisions now, hence the deficits.
I'm really waiting to see how all this deficit government spending affects other asset prices too. So far so bad. Weren't we trying to stabilize asset prices? More core incompetence!
And where does the money for all this government spending come from? It's not like there is a big vault of reserve cash somewhere.
Promises, promises, promises. Promises to pay. If we don't keep expanding our pool of promises, the old promises aren't any good. Really weird. Only madmen could devise such a system.
mab,
ReplyDeleteAnd where does the money for all this government spending come from?
NINJA WARRIORS: No Income, No Job, and no Assets With A Real Rate of Increased Outlandish and Reckless Spending!
NINCOMEPOOPS: Take OIMKs (one income, many kids), lay them off, borrow money from them to bail out the banking system, then subsidize their contraceptives!
Pelosi: Fewer Babies Good for Economy
http://www.jbs.org/index.php/news-feed-archive/4430
Population Implosion?
http://www.rand.org/pubs/research_briefs/RB9126/index1.html
These demographic trends portend difficult times ahead for European economies. For example, a shrinking workforce can reduce productivity. At the same time, the growing proportion of elderly individuals threatens the solvency of pension and social insurance systems. As household sizes decrease, the ability to care for the elderly diminishes. Meanwhile, elderly people face growing health care needs and costs. Taken together, these developments could pose significant barriers to achieving the European Union (EU) goals of full employment, economic growth, and social cohesion.